Question 4
Given a set amount of money, goods A and B both give the same marginal utility but good A costs
twice as much as good B. You should:
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A. Consume more of good B and less of good A.
B. Consume more of good A and less of good B.
C. Keep consuming the current amounts of both good A and good B.
D. None of the above.
Answer:
Question 5
Suppose that the marginal utility of good A is 4 times the marginal utility of good B, but the price of
good A is only 2 times the price of good B.
A: Is this point consumer equilibrium? (Yes/No)
B: If not, what will occur?
Answer: A
Answer: B
Question 6
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If a 15 percent decrease in the price of pizza results in a 24 percent increase in the quantity
demanded of pizza, then the elasticity of demand for pizza:
A. Is equal to 1.6 and demand is inelastic.
B. Is equal to 1.6 and demand is elastic.
C. Is equal to 2 and is elastic.
D. Is equal to 2 and is inelastic.
E. Cannot be determined from the information provided.
Answer:
Question 7
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