Bob's Marginal Utility for Consuming Beer and Pizza with $8

question 282

Multiple Choice

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income

-Referring to the above table, suppose Bob's ratios of marginal utility of beer to the price of beer and the marginal utility of pizza to the price of pizza are equal. If the price of beer increases

• A) Bob will probably consume more beer and less pizza.
• B) Bob will probably consume less beer and less pizza.
• C) Bob will probably consume less beer and more pizza.
• D) Bob will still consume the same amount of beer and pizza.

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Definitions:

Short Run

A period in economics during which at least one factor of production is fixed, limiting the ability of a business to adjust fully to market changes.

Rent Control

Government-imposed limits on the amount landlords can charge tenants for lease agreements, aimed at making housing more affordable.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing companies to adjust to market changes fully.

Price Floor

A government-imposed minimum price charged on goods and services, aimed at preventing prices from going too low.