econ 3 - 1. Which of the following is true about utility...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Which of the following is true about utility maximization subject to BC: a. MRS is equal to the slope of BC b. The marginal utility of both good consumed is equal c. The marginal utility per dollar of both goods consumed is equal d. all of the above e. a and c 2. If potatoes are argued Giffen Goods then if the price of potato goes up then: a. decrease in consumption of potatoes because all giffen goods are inferior b. decrease in consumption of potatoes because of negative substitution effect offset positive income effect c. an increase in consumption of potatoes because all Giffen Goods are normal goods d. Decrease in consumption of potato because the overall effect of the change in the price of potato E. an increase in consumption of potato because the negative substitution effect is offset by the positive income effect 3. A day’s labor in England can produce 8 units of clothing or 2 units of olive oil. A day’s labor in Spain can produce 6 units of clothing or 1 unit of olive oil. England’s OC of producing 1 unit of olive oil is: a. 6 units of clothing b. 2 units of clothing c. ¼ unit of clothing d. 8 units of clothing e. 4 unit of clothing 4. A decrease in the price of a normal good would increase the quantity demanded because : a. Effective income increases b. The good is less expensive relative to other goods
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

econ 3 - 1. Which of the following is true about utility...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online