When someone is served pizza and soda for dinner, it is typical behavior to eat some pizza, then drink some soda, then eat more pizza, and so on, until the person stops consuming both. How can this behavior be explained using economic concepts?
A. The individual is revealing that he can't decide whether he gains more utility from pizza or from soda.
B. People tend to act irrationally around food, and the concept of utility maximization cannot be applied.
C. The person eats pizza until his marginal utility for pizza is lower than it is for soda, then he switches to soda.
D. The concept of unlimited wants says he will never tire of eating pizza and soda.
C. The person eats pizza until his marginal utility for pizza is lower than it is for soda, then he switches to soda.
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Why do societies face a tradeoff between the size of the economic pie and the degree of equality with which it is shared?
What will be an ideal response?
A tariff
A) makes everyone worse off. B) makes domestic consumers better off. C) makes domestic producers better off. D) makes both domestic producers and consumers better off.
Using the market for loanable funds, which of the following has the potential to raise the real interest rate?
A) an increase in the supply of loanable funds B) an increase in the quantity of loanable funds demanded C) an increase in the quantity of loanable funds supplied D) an increase in the demand for loanable funds
If you thought the share price of a stock was going to fall, would you be more likely to buy a call option or a put option?
A. a call option B. a put option C. a call option and a put option D. There is not enough information given to answer this question.