Phyllis spends her income on beer and pretzels, and a six pack of beer costs the same as a bag of pretzels. If she is in consumer equilibrium, we know:
a. she buys the same quantities of six packs of beer and bags of pretzels
b. she gets the same marginal utility from the last six pack of beer as from the last bag of pretzels.
c. she gets the same total utility from beer as she does from pretzels.
d. that all of the above are true.
b
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A sunk cost is one that
a. changes as the level of output changes in the short run. b. was paid in the past and will not change regardless of the present decision. c. should determine the rational course of action in the future. d. has the most impact on profit-making decisions.
The option to buy a company's stock at some future time at current prices is often given to CEOs
a. as an incentive to take actions that will raise the share price. b. because CEOs are often friends of those who hire them. c. as a means of discouraging the CEO from taking any risky actions. d. because this has become the custom of the business culture.