A consumer was at an optimum. She then discovers that the marginal utility per dollar spent on food is more than the marginal utility per dollar spent on movies. She knows then that
A) the price of movies must have decreased.
B) the price of food must have increased.
C) the price of movies must have increased or the price of food must have decreased.
D) the price of movies must have decreased or the price of food must have increased.
Answer: C
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An economist observes two consumers in a supermarket. One of the consumers buys a case of Coca-Cola and the other buys a case of Pepsi-Cola. Both colas sell for the same price and the ages and incomes of the consumers are also the same
Based on this information, how would the economist explain the consumers' choices? A) Both consumers should have purchased less than a case because they would be able to buy more later. B) Both consumers should have considered buying other colas that had lower prices. C) Apparently, the consumers had different tastes. D) One of the consumers made the wrong choice, but it is impossible to say which one.
The short-run aggregate supply curve is
A) downward sloping. B) upward sloping. C) vertical. D) horizontal.
The balance of payments is the domestic price of a foreign currency.
Answer the following statement true (T) or false (F)
If long-run average total cost decreases as output increases, this is due to:
A. Declining average fixed costs B. The law of diminishing returns C. Economies of scale D. Externalities