Mike's income is $600 per month. He spends all of it on books (B) and CDs (C). Books cost $10 and CDs cost $15. His preferences correspond to the utility function U(B,C) = B × C. For that utility function, the marginal benefit of books is C and the marginal benefit of CDs is B. How many books and how many CDs will he purchase in a month?

When RBC economists work out a detailed numerical example of a more general theory, they are performing

A) econometrics. B) number theory. C) calibration. D) topology.

Assume that supply increases slightly and demand increases greatly. Which of the following will happen?

a. equilibrium price will fall and equilibrium quantity will rise b. equilibrium price will rise and equilibrium quantity will fall c. equilibrium price will rise and equilibrium quantity will rise d. equilibrium price will fall and equilibrium quantity will fall e. neither equilibrium price nor equilibrium quantity will change