Lisa consumes only pizzas and burritos. In equilibrium, her marginal utility of pizza is 20 and her marginal utility of a burrito is 10. The price of a pizza is $4. What is the price of a burrito?
What will be an ideal response?
In equilibrium, the ratio of the marginal utility of a pizza divided by the price of a pizza must equal the marginal utility of a burrito divided by the price of a burrito. Thus, the price of a burrito must be $2.
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According to a New York Times article, shoppers from New York City have played a game of "retail arbitrage" by shopping at malls in Northern New Jersey, a state where there is no tax on clothing and shoes
Even after accounting for transactions costs, shoppers could still save money on their clothing and footwear purchases. Source: Ken Belson and Nate Schweber, "Sales Tax Cut in City May Dim Allure of Stores Across Hudson," New York Times, January 18, 2007. Is the term "arbitrage" correctly used here? A) Yes, arbitrage applies even if no resale takes place; in this case the profits are pocketed by the customers themselves. B) No, "arbitrage" does not apply to markets that are not in the same geographic area. C) No, "arbitrage" means buying at a low price and reselling at a higher price but no resale takes place here. D) Yes, because shoppers were able to purchase items at lower prices even after deducting their transactions costs.
In Maslow's Hierarchy of Needs, what is the level that is least likely to be achieved?
a. Physiological b. Safety and security c. Belongingness d. Self-actualization