Suppose there are two goods 'x' and 'y' on which the consumer has to spend his given income. If MUx / Px is greater than MUy / Py, then the consumer will substitute good 'x' for good 'y'.
Suppose there are two goods 'x' and 'y' on which the consumer has to spend his given income. If MUx / Px is greater than MUy / Py, then the consumer will substitute good 'x' for good 'y'. As a result the marginal utility of good 'x' will fall.
the MU/P ratio for all goods is the same. Countries that engage in specialization and trade can consume at a level beyond their production possibilities frontier. True or False
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The consumer’s behavior is based on two factors: (a) Marginal Utilities of goods 'x' and 'y' (b) The prices of goods 'x' and 'y' The consumer is in equilibrium position when marginal utility of money expenditure on each good is the same.
The Law of Equi-Marginal Utility states that the consumer will distribute his money income in such a way that the utility derived from the last rupee spent on each good is equal.
The consumer is in equilibrium in respect of the purchases of goods 'x' and 'y' when: MUx = MUy
A. the quantity of bananas purchased determines the price of bananas.
D. System 1 uses heuristics, system 2 is more calculating, and most decisions are made by system 1. D. System 1 uses heuristics, system 2 is more calculating, and most decisions are made by system 1. Buck carefully plans out an early morning exercise routine to lose weight and get fit.
A. Neoclassical economics believes that government should play a minimal role in the economy, while behavioral economics calls for a more active role for government. B. Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors. C.
Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as:
A. rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants.
D. one cannot generalize about the relationship between the price of bananas and the quantity purchased.
Every topic in economics is either a microeconomic or a macroeconomic issue; a topic cannot be both. D. Topics in microeconomics have public policy implications; topics in macroeconomics do not. A. Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole.
beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
The main determinant of elasticity of supply is the. amount of time the producer has to adjust inputs in response to a price change. If a 10 percent increase in the price of good A results in an increase of 5 percent in the quantity demanded of good B, then it can be concluded that goods A and B are: substitute goods.