When the price of a normal good decreases, people increase their consumption of the good. The reason is
A) the law of diminishing marginal utility.
B) the substitution and income effects.
C) the substitution effect only.
D) the income effect only.
Answer: B
Economics
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Economics
Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If Max is currently at point e,
A) his MRS is less than the trade-off offered by the market. B) he is willing to give up more burger than he has to, given market prices. C) he is not maximizing his utility. D) All of the above.
Economics