For any two goods, A and B, if MUA divided by PA equals 2.5 and MUB divided by PB equals 4.0, then with given income and prices the consumer should
A) buy more of good A and less of good B.
B) buy more of good B and less of good A.
C) buy all of good B and no A.
D) stop because an equilibrium is achieved.
Answer: B
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If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/40 of a car, it follows that the absolute price of the laptop is
A) $10,000. B) $1,000. C) $4,000. D) $2,000. E) $1,500.
The fundamental problem associated with the U.S. health care system is that:
A. the financing of health care through insurance has resulted in the underallocation of resources to the health care industry. B. frivolous malpractice suits have increased malpractice insurance premiums for doctors. C. at the margin, the value of health care services may be less than the value of alternative goods and services. D. there are too many general practitioners and not enough specialists.