John is maximizing utility by choosing to spend 90 minutes reading a chapter in The Theory of Moral Sentiments, which will give him 450 units of utility, instead of spending 20 minutes reading a chapter of Atlas Shrugged, which will give him 200 units of utility. (Assume marginal utility decreases slowly.)
Answer the following statement true (T) or false (F)
False
To maximize total utility, the ratio of the marginal utilities to each price must be equal. In this case price is in minutes. Since 450/90 < 200/20, John would increase total utility by reading Atlas Shrugged.
You might also like to view...
The terms "saving" and "savings" differ in that
A) saving is a stock, and savings are a flow. B) saving always exceeds savings. C) savings are a stock, and saving is a flow. D) savings can be negative, but saving cannot.
E(ui Xi) = 0 says that
A) dividing the error by the explanatory variable results in a zero (on average). B) the sample regression function residuals are unrelated to the explanatory variable. C) the sample mean of the Xs is much larger than the sample mean of the errors. D) the conditional distribution of the error given the explanatory variable has a zero mean.