A Big Mac Meal Costs $3

question 17

Multiple Choice

A Big Mac meal costs $3.00 and gives you an additional 5 units of utility; a meal at the Four Seasons Hotel costs $27.00 and gives you an additional 45 units of utility. Based only on the information you have, using the theory of rational choice, you most likely would:

• A) choose to eat the Big Mac meal.
• B) choose to eat at the Four Seasons Hotel.
• C) be indifferent between eating the Big Mac and eating at the Four Seasons Hotel.
• D) decide that eating at the Four Seasons Hotel is preferable because though the marginal utilities of both meals are the same, the total utility is greater in the case of the meal at the Four Seasons Hotel.

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Definitions:

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Inflation

A continuous rise in the overall price level of goods and services within an economy over a period.

Unemployment

The condition in which a capable worker who is actively seeking employment is unable to find work.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in bank accounts.