Suppose an individual's MRS (of steak for beer) is 2:1 . That is, at the current consumption choices he or she is willing to give up 2 beers to get an extra steak. Suppose also that the price of a steak is $1 and a beer is 25ยข. Then in order to increase utility the individual should
a. buy more steak and less beer.
b. buy more beer and less steak.
c. continue with current consumption plans.
d. Not enough information to answer the question.
b
Economics
You might also like to view...
Which of the following is an impact of an increase in the general price level?
a. An increase in aggregate demand for goods and services b. A decrease in aggregate supply of goods and services c. An increase in the price of the financial assets d. A decrease in supply of bonds and other assets e. An increase in interest rates
Economics
In choosing the form of a tax, there is often a tradeoff between
a. allocative and productive efficiency. b. profits and revenues. c. efficiency and fairness. d. fairness and profits.
Economics