Suppose Dianne Lindsay spends all her income on two goods, A and B, in a manner in which MUa = 15 and MUb = 75, and Pa = $3 and Pb = $15, then she
a. is already maximizing her total utility and should make no change
b. should increase her purchases of B and decrease her purchases of A because MUb is higher than MUa
c. should raise MUa so that the MUa/Pa ratio is higher and therefore buy more of A and less of B
d. should raise MUa so that the MUa/Pa ratio is higher and therefore buy more of B and less of A
e. should increase her purchases of A and decrease her purchases of B because the price of A is lower
A
You might also like to view...
Many residents of the city of Adelphia drive without automobile insurance. Assuming that Adelphia is just like any other city and these are risk averse individuals, which of the following is most likely TRUE?
A) Economic models do not work. B) These people maximize wealth. C) The price of automobile insurance exceeds their maximum value of insurance. D) There are no automobile accidents or thefts in the city of Adelphia.
Jimmy grows corn. His total revenue and total cost are in the above table. What quantity of corn maximizes his profit and what is his profit? What is the marginal revenue and marginal cost at this quantity?
What will be an ideal response?