Tom is buying a quantity of wheat at which the marginal utility (in dollars) exceeds price. He should
a. reduce wheat consumption, thus raising P to the level at which MU = P.
b. reduce wheat consumption, thus raising MU to the level at which MU = P.
c. increase wheat consumption, thus raising P to the level at which MU = P.
d. increase wheat consumption, thus lowering MU to the level at which MU = P.
d
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Increasing returns to scale result when
A) in the long-run, an increase in inputs will lead to an increase in the average products of inputs. B) in the long run, an increase in inputs will lead to an equivalent increase in output. C) labor becomes more skilled. D) All of the above
Suppose a consumer spends her income on two goods: music CDs and DVDs. The price of a CD is $8, and the price of a DVD is $20 . If we graph the budget constraint by measuring the quantity of CDs purchased on the vertical axis and the quantity of DVDs on the horizontal axis, what is the slope of the budget constraint?
a. -5.0 b. -2.5 c. -0.4 d. The slope of the budget constraint cannot be determined without knowing the income the consumer has available to spend on the two goods.