Answer the following questions true (T) or false (F)
1. A consumer maximizes her total utility from a bundle of goods when her marginal utility from each good is equal.
2. The economic model of consumer behavior explains how consumers' tastes and preferences are formed.
3. To maximize utility consumers should buy goods and services to the point where the marginal utility of each item consumed is maximized.
1. FALSE
2. FALSE
3. FALSE
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Paternalism is the view that ________
A) consumers do not always know what is best for them, and the government should encourage or induce them to change their actions B) producers do not always have the resources required for the production of a good, and the government should provide them with these resources C) the government should impose a tax on an economic activity only if it generates a negative externality D) the government has the supreme power to decide which goods are to be taxed and which are to be subsidized
Resources are costly because they have alternative uses
a. True b. False Indicate whether the statement is true or false