Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:
A. Intercept on the Y axis of the budget line
B. Intercept on the X axis of the budget line
C. Size of the shift in the budget line
D. Slope of the budget line
Answer: D
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A research firm's findings concluded that the demand for movie tickets is price elastic in the afternoon but inelastic in the evenings. Given this information, to increase overall revenue the theatre owners should
a. Reduce the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows b. Increase the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows c. Reduce the ticket prices for the afternoon shows and increase the ticket prices for the evening shows d. Increase the ticket prices for the afternoon shows and increase the ticket prices for the evening shows
Which of the following statements could be used to justify a government redistributing income from the rich to the poor?
a. Marginal utilities of the rich and the poor would be equal after redistribution. b. Only the rich can appreciate the benefits associated with higher income levels. c. The total utility from income is greater for the poor than for the rich. d. Allowing for interpersonal comparisons of utility, it seems reasonable that the marginal utility of an additional dollar is lower for the rich than for the poor. e. The poor have a lower total utility of income than do the rich.