# We can explain the fact the marginal rate of

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4) We can explain the fact the Marginal Rate of Substitution of Y for X is often decreasing as X increases because a) The marginal utility of X increases while the marginal utility of Y decreases b) The marginal utility of X increases at a slower rate than the marginal utility of Y decreases c) The marginal utility of X decreases faster than the marginal utility of Y d) The marginal utility of X decreases while the marginal utility of Y increases For questions 5 and 6, consider the supply function is p=8q+2 and the demand function q=20-p. 5) What is the equilibrium price and quantity? 6) Suppose we have two goods (A, B), P A is the unit price of good A, P B is the unit price of good B and M is the level of income of a consumer. What is the slope of her budget line (when good A is on the horizontal axis)

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Questions 7 and 8 are based on the following graph depicting a situation where a unit tax of \$3 is placed on quantities produced.
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• Fall '12
• Danvo

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