Bill uses his entire budget to purchase Pepsi and hamburgers, and he currently purchases no Pepsi and 6 hamburgers per week
The price of Pepsi is $1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 2, and his marginal utility from hamburgers is 6. Is Bill's current consumption decision optimal? A) No, he should increase Pepsi consumption and reduce hamburger consumption.
B) No, he should purchase more of both goods.
C) Yes, the corner solution is best because his MRS is less than the price ratio.
D) We do not have enough information to answer this question.
C
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At an annual growth rate of 7 percent, real GDP will double in about:
A. 11½ years. B. 10 years. C. 13½ years. D. 9 years.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.