Suppose that Dianne Lindsay spends all her income on two goods, A and B, in a manner in which their marginal utility to price ratios are equal, i.e., MUa/Pa = MUb/Pb. If at that time the price of A is higher than the price of B, then she
a. should increase her consumption of A and decrease her consumption of B because the marginal utility of A is higher
b. is already maximizing her total utility and should make no change
c. should increase the consumption of B and decrease the consumption of A because the price of B is lower
d. should increase the consumption of both A and B since the ratios are equal
e. has made an irrational choice
B
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Differences in productivity can actually benefit society even when this results in increases in income inequality
Indicate whether the statement is true or false
In the above figure, if there is no minimum wage, the equilibrium employment is ________; if the government imposed a minimum wage of $8 per hour, employment is ________
A) 4,000 hours; 2,000 hours B) 3,000 hours; 4,000 hours C) 3,000 hours; 2,000 hours D) 4,000 hours; 3,000 hours