During a study session for an economics exam with three other students, Peter Daltry commented on an example of a consumer who had to decide on number of slices of pizza and cups of Coca-Cola he would consume
Peter explained that "To maximize his utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct?
A) Peter described one of the conditions necessary for utility maximization. The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola.
B) Peter's statement is correct but we must also assume that the consumer is rational.
C) Peter describes one of the conditions necessary for utility maximization. The second condition is that total spending on both goods must equal the amount available to be spent.
D) Peter's statement is correct.
C
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Technology
A) is constantly changing at every point along a production possibilities curve. B) is the recipe for combining land, labor, physical capital, and entrepreneurship to produce a good. C) does not have an effect on the amount of a good a society can produce with its given resources. D) only changes if resources change.
The following figure shows the demand curves for baby formula. Which of the following changes is likely to happen if the price of baby formula increases?
