A bottle of wine costs $8 and a quiche costs $5. At Robert’s present levels of consumption, he spends all his income and receives marginal utility of $10 from the last bottle of wine and marginal utility of $4 from the last quiche. To maximize his total utility, Robert should
A. buy less wine and more quiche.
B. buy more wine and less quiche.
C. spend all of his money on wine.
D. change his spending pattern until he buys 8/5ths as much wine as quiche.
Answer: B
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A gas station in the mountains of Oregon has a monopoly over the retail gas market within a 50-mile radius. The station decides not to price discriminate. As a result, all consumers will pay
A) the highest price each consumer is willing to pay. B) the lowest price possible. C) a single price. D) multiple prices. E) a price that depends on their willingness to pay.
The market price of a factor of production that is in fixed supply is determined only by demand
Indicate whether the statement is true or false
If the budget deficit were reduced,
a. interest rates and investment would increase. b. interest rates would increase and investment would decrease. c. interest rates and investment would decrease. d. interest rates would decrease and investment would increase.
In a competitive market illustrated by the diagram below, a price ceiling of $25 per unit will result in:
A. The market stays at equilibrium price of $15
B. A surplus of 200 units
C. A shortage of 200 units
D. A shortage of 150 units