If a consumer concludes that the marginal utility of the last dollar spent on vegetables exceeds the marginal utility of the last dollar spent on junk food, he will respond by
A. consuming equal amounts of vegetables and junk food.
B. consuming relatively more vegetables and less junk food.
C. halting consumption of junk food altogether.
D. consuming relatively more junk food and fewer vegetables.
Answer: B
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In the long run, the perfectly competitive firm
A) does not have a shut down price. B) earns only a normal profit. C) may produce even if it suffers a loss. D) earns an economic profit.
Firms that set prices equal to marginal costs will usually recover all of their R&D costs
a. True b. False Indicate whether the statement is true or false
The major criticism of real business cycle models is
A) positive technology shocks actually push real GDP above the economy's potential GDP. B) this model relies too heavily on monetary explanations for fluctuations in real GDP. C) negative technology shocks actually push real GDP below the economy's potential GDP D) negative technology shocks are uncommon and can't explain all business cycle fluctuations.
FDICIA ________ incentives for banks to hold capital and ________ incentives to take on excessive risk
A) increased; decreased B) increased; increased C) decreased; decreased D) decreased; increased