Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Question
When there are two goods (X and Y), the consumer's optimum is typically found by locating the basket where the marginal value of X in terms of Y equalsPX/PY. Explain in words what this equality means, and describe two situations where the consumer's optimum is not characterized by this equation.Answer
This answer is hidden. It contains 813 characters.
Related questions
Q:
Define the terms legal incidence and economic incidence. When the legal incidence of a tax is changed, how does this affect the economic incidence of the tax? Why does this result occur?
Q:
If demand rises and supply falls, which of the following must be true?
a. The equilibrium price will rise.
b. The equilibrium price will fall.
c. The equilibrium price will not change.
d. The change in the equilibrium price is indeterminate.
Q:
If demand rises and supply falls, which of the following must be true?
a. The equilibrium quantity will rise.
b. The equilibrium quantity will fall.
c. The equilibrium quantity will not change.
d. The change in the equilibrium quantity is indeterminate.
Q:
If both demand and supply rise, which of the following must be true?
a. The equilibrium price will increase.
b. The equilibrium price will decrease.
c. The equilibrium price will not change.
d. The change in the equilibrium price is indeterminate.
Q:
Which statement is true regarding a market in equilibrium
a. There is a shortage of the good.
b. There is a surplus of the good.
c. Neither demanders or suppliers are satisfied.
d. Both demanders and suppliers are satisfied.
Q:
Which of the following would result in a decrease in the demand for coffee?
a. A frost in Brazil that damages coffee plants.
b. The proliferation of coffee shops in an area.
c. A 10 cent tax on the sale of a doughnut.
d. Colder than normal temperatures in winter.
Q:
New safety regulations increase manufacturers' costs of producing insulation. What happens in the market for insulation?
a. The demand falls as buyers refuse to bear the higher production costs.
b. The supply falls, resulting in a higher equilibrium price and lower equilibrium quantity.
c. Both supply and demand fall, resulting in less insulation being bought and sold.
d. The supply rises as manufacturers attempt to use higher sales to offset their lower profit margins.
Q:
A fear that consumption of ice cream may be related to a life threatening disease spreads rapidly through France. The market result will be:
a. the demand falls, price decreases and therefore French consumers buy more ice cream.
b. the demand falls, price decreases and the quantity supplied therefore falls.
c. a fall in demand followed by a fall in supply.
d. the equilibrium quantity falls, but the price does not change.
Q:
Suppose the price of a DVD is $15 per unit. At that price, consumers wish to purchase 6,000 units weekly and producers wish to sell 4,000 units weekly. In this situation,
a. unsatisfied consumers will bid up the market price.
b. the market price will fall because producers are unsatisfied.
c. the price will rise and the demand will fall to bring the market to equilibrium.
d. supply will increase by 2,000 units in order to satisfy consumers.
Q:
In a supply-demand diagram, the law of supply is illustrated by
a. shifting the supply curve to the right as suppliers expand production and to the left as they contract production.
b. drawing the supply curve so that it slopes upward.
c. showing how the equilibrium point changes as the supply curve shifts.
d. drawing a vertical line at the quantity that producers choose to supply.
Q:
Surveys show that a small increase in the price of organic potatoes will cause most people to switch to other alternatives such as packaged mashed potatoes. This finding suggests that the demand curve for organic potatoes is
a. relatively steep.
b. relatively flat.
c. upward sloping.
d. vertical.
Q:
Suppliers of a commodity are better off whenever the legal incidence of a tax is shifted away from the suppliers to the demanders.
Q:
If the price and quantity exchanged of a good simultaneously rise, then the law of demand has been violated.
Q:
If the demand for a good is high, then there will be a shortage of that good.
Q:
The supply curve for a commodity will shift to the right when the costs of production rise.
Q:
As defined by economists, the supply of corn refers to the number of bushels of corn that farmers bring to the market.
Q:
A demand curve is drawn downward sloping to show that price and quantity demanded will move in opposite directions as long as other relevant factors remain unchanged.
Q:
If the marginal product of labor is currently 40 units per hour and the marginal product of capital is currently 20 units per hour, then workers must be getting paid twice as much as capital per hour.
Q:
A point on the firm's expansion path both minimizes the cost of producing a given output level and maximizes the output obtained for a given expenditure level.
Q:
Output is held fixed along an isocost.
Q:
All baskets of labor and capital capable of producing a given level of output are technologically efficient.
Q:
A firm has MR = 40 and MC = 10 + Q and has $200 in fixed costs. (a)
If the firm is currently producing 20 units, what are its Marginal cost and Marginal Revenue at the current output level? (b)
Is the firm maximizing profits? If so, how can you tell? If not, what can the firm do to increase profits?
Q:
Suppose the government increases the annual cost of the liquor permit that a tavern needs to serve alcohol. What effect will this increased cost have on the tavern's production and pricing decisions?
a. None-the tavern will maintain its current prices.
b. The tavern will raise its prices to cover the higher cost.
c. The tavern will scale back its operations.
d. The tavern will cut its prices to increase its sales.
Q:
Consider a firm that produces peanut butter. An increase in the price of peanuts will cause the firm to lower its output because
a. fixed costs will rise.
b. marginal cost will rise.
c. the price of peanut butter will rise.
d. marginal revenue will fall.
Q:
Economists use the term variable costs to refer to
a. prices of inputs that are subject to sudden change, like fuel.
b. an increase in the price of any input.
c. costs that vary with the type of final product being produced.
d. costs that vary with the quantity of output produced.
Q:
If the total benefits received from drug enforcement exceed its total costs, then the government should expand its drug enforcement activity.
Q:
If 1000 pounds of steel can produce 3000 cars, then 2000 pounds of steel can produce 6000 cars and 3000 pounds of steel can produce 9000 bushels of cars.
Q:
Firms are so diverse in size and organization that it is not possible to make any general statements about their behavior.
Q:
With an increase in income, we can predict that a consumer will choose a new market basket
a. on a lower indifference curve.
b. on the same indifference curve but the new budget line.
c. on a higher indifference curve that passes through the new budget line.
d. on a higher indifference curve that is tangent to the new budget line
Q:
With an increase in income, a consumer can increase the quantity consumed of
a. only good Y.
b. only good X.
c. either good, but not both.
d. either or both.