Answer the following statements true (T) or false (F)
1. The income and substitution effects will both induce the consumer to buy more of a normal good when its price decreases.
2. Someone who pays $800 to fly from one city to another instead of paying only $100 for a bus trip between the two cities is making an irrational choice and is thus not maximizing his utility.
3. If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease.
4. The budget line shows all the combinations of two products which the consumer can buy, given money income and product prices.
5. If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical, then the slope of the budget line is equal to the price of X divided by the price of Y.
1. TRUE
2. FALSE
3. FALSE
4. TRUE
5. TRUE
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When compared to those in poor countries, poor people in the United States receive
A. Far more goods and services. B. Somewhat fewer goods and services. C. Far fewer goods and services. D. About the same amount of goods and services.
The use of _______________ policy should be countercyclical to counterbalance the business cycles of economic downturns and upswings.
a. monetary b. tax c. trade d. savings
Two years ago Darryl put $3,000 into an account paying 3 percent interest. How much does he have in the account today?
a. $3,180.00 b. $3,182.70 c. $3,183.62 d. None of the above are correct to the nearest cent.
Which of the following best describes the marginal cost of labor?
A. The cost paid by the consumer, through a higher price, when a firm must raise prices to cover the cost of hiring an additional employee B. The additional cost to the firm of hiring one more unit of labor C. The additional cost to the firm of the taxes, fringe benefits, and office space that one more worker will require D. The additional cost to the firm of producing the additional product that will be sold because of hiring one more unit of labor