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Professor Makrung Spends His Entire Weekly Income of $700 on Economics

question 41

True/False

Professor Makrung spends his entire weekly income of $700 on economics books (E)and coffee (C).The price of an economics book (PE)is $50,and the price of a cup of coffee (PC)is $2.If the professor buys 10 economics books and 50 cups of coffee per week,he finds that MUE = 75 and MUC = 3.This implies that a consumption bundle consisting of 10 economics books and 50 cups of coffee per week maximizes the professor's utility.


Definitions:

Percent

A term used to describe one hundredth of a whole; a way to express fractions, amounts, or changes in quantities in terms of hundredths.

Reserve Requirement

A regulation that sets the minimum amount of reserves a bank must hold against deposits, used as a tool to control banking stability and money supply.

Deposits

Money placed into a financial institution for safekeeping, which can earn interest over time.

Loans

Funds borrowed that are expected to be paid back with interest.

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