Suppose the Price of a Is $20, the Price of B

question 36

Multiple Choice

Suppose the price of A is $20, the price of B is $10, and that the consumer is currently spending all available income. At the consumer's current consumption basket the marginal utility of A is 8 and the marginal utility of B is 2.

• A) The consumer is currently maximizing utility.
• B) The consumer could increase utility by consuming more of good A and less of good B .
• C) The consumer could increase utility by consuming more of good B and less of good A .
• D) Nothing can be said about the consumer's utility because we do not know the consumer's income or utility function.

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Definitions:

Egocentric

The tendency to view everything in relation to oneself, without considering the perspectives or feelings of others.

Limbic System

A complex system of nerves and networks in the brain, involving several areas near the edge of the cortex concerned with instinct and mood. It controls the basic emotions (fear, pleasure, anger) and drives (hunger, sex, dominance, care of offspring).

Brain Plasticity

The ability of the brain to change and adapt as a result of experience, including the forming and reorganizing of synaptic connections.

Myelination of Nerve Fibers

The process of coating the axons of neurons with myelin, a fatty substance that improves the speed and efficiency of electrical impulses along nerve cells.