Suppose Carrie's utility function for clams is as follows: If she consumes 1 clam, she gets 10 units of total utility; for 2 clams, she gets 18 units of total utility; for 3 clams, she gets 24 units of total utility; for 4 clams, she gets 28 units of total utility; for 5 clams, she gets 30 units of total utility; and for 6 clams, she gets 26 units of total utility
a. Carrie gets 9 units of marginal utility for the 2nd clam.
b. Carrie gets 8 units of marginal utility for the 3rd clam.
c. Carrie gets 7 units of marginal utility for the 4th clam.
d. None of the above are true.
d
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If for any given inflation rate, the federal government lowered taxes, ________
A) it would have a similar qualitative result on output as an increase in government purchases B) it would raise disposable income leading to higher consumption spending C) the aggregate demand curve would shift to the right D) all of the above E) none of the above
If the initial distribution of two goods between two people is Pareto optimal, which of the following statements is TRUE?
A) It is possible to reallocate the goods between the two people so as to increase the utility of both people. B) It is possible to reallocate the goods between the two people so as to increase the utility of one person without decreasing the utility of the other. C) It is possible to reallocate the goods between the two people so as to increase the utility of one person, but only at the expense of the other person. D) It is impossible to reallocate the goods between the two people so as to increase either person's utility. E) none of the above
An increase in demand:
A. results in a leftward shift of the demand curve. B. could be caused by a decrease in the price of the good. C. could be caused by an increase in the price of a substitute good. D. is shown as movement down along a demand curve.
If the term structure of interest rates in two countries differ, the differences reflect
A) expected price levels over time. B) expected GDP differences. C) the absence of covered interest arbitrage. D) expected exchange rate changes over time.