If MUx/Px > MUy/Py, the consumer can increase utility by buying less of good y, which means the MUy will rise.
a. True
b. False
QUESTION 2If MUx/Px > MUy/Py, the consumer can increase utility by buying more of good x, which will cause the MUx to rise.
a. True
b. False
QUESTION 3If MUx/Px > MUy/Pyx, the consumer can increase utility by buying more of good x.
a. True
b. False
QUESTION 4The law of diminishing marginal utility explains why an individual's demand curve is elastic.
a. True
b. False
QUESTION 5Tyrell has 50 per week to spend on good A, which has a price of 5, and good B, which has a price of 4 . He buys six units of A and five of B. The marginal utility of the sixth unit of A is 25, and the marginal utility of the fifth unit of B is 20 . Which of the following is true?
a. He is maximizing his utility.
b. We cannot tell if he is maximizing his utility unless we know his total utility.
c. He is not maximizing his utility and should buy more of A.
d. He is not maximizing his utility and should buy more of B.
e. He is not maximizing his utility because he is not spending all of his income.
QUESTION 6If the price of a good falls, the marginal utility per dollar received from consuming a specific unit of that good
a. also falls
b. stays the same
c. rises
d. will rise or fall, depending on the consumer
e. remains unchanged, provided the consumer buys no more of the good
QUESTION 7Suppose a glass of orange juice has a price of 2 and a glass of soft drink has a price of 1 . If the consumer is maximizing utility,
a. juice must have higher MU than soda drink
b. the soft drink must have higher MU than juice
c. both must have equal MU
d. consumers would buy more soda drink than orange juice
e. the consumer would buy twice as much orange juice as soft drink
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