The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the only products Sue consumes. Suppose initially the price of a sub sandwich is $4 each and the price of a Mountain Dew is $2 each. Sue's income is $12
If the price of subs rises to $6 each, Sue will consume A) more Mountain Dews.
B) fewer subs.
C) fewer Mountain Dews so that she can still afford to buy two subs.
D) Both answers A and B are correct.
D
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A machine cost $15,000 to install, and has a resale value one year later of $12,000. If the real interest rate is 10%, then the user cost of capital is ________
A) $4,500 B) $1,500 C) $3,000 D) $1,200
The price of crude oil increased to $100 per barrel in early 2008. What would we expect to see happen to the supply of gasoline, which is produced using crude oil?
A) The supply of gasoline will increase. B) The supply of gasoline will decrease. C) The supply of gasoline will stay the same because the government requires gasoline producers to meet statutory minimum production levels. D) The supply of gasoline will stay the same because of the profit motives of gasoline producers.