The income is 9 22 when the consumer purchases the

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Unformatted text preview: oices: rent a DVD for $4 and spend 2 hours of time watching it or spend $15 for dinner at a restaurant that takes 1 hour of time. If the marginal utilities of the movie and the dinner are the same and the consumer values time at $15 an hour, the rational consumer will: a) Rent more movies, buy fewer dinners b) Buy more dinners, rent fewer movies c) Buy fewer dinners and movies d) Make no change in consumption to both products. 18. If firms enter a monopolistically competitive industry, we would expect the typical firm’s demand curve to a) Decrease and the firm’s price to decrease b) Increase and the firm’s price to increase c) Remain the same but the firm’s price to increase d) Remain the same but the firm’s price to remain the same as well 19. The individual’s _________ tax rate is 10 percent a) Marginal c) Nominal b) Effective d) Incidence 20. A tax is progressive if it takes a: a) Larger number of dollars as income rises b) Larger number of dollars as income falls c) Smaller fraction...
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