When Sam's annual income was only 15,000, he purchased 50 pounds of bananas a year. When his income rose to 18,000, he purchased 55 pounds a year. Therefore
A) for Sam, bananas are an inferior good.
B) his income elasticity of demand for bananas is negative.
C) his income elasticity and price elasticity of demand for bananas are both greater than one.
D) for Sam, bananas are a normal good.
Question 2
Robinson spends all his income on mangos and bananas. Mangos cost 3 per pound. Robinson's marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas.
If Robinson maximizes his utility from consuming these goods, the price of bananas is A) 0.50 per pound.
B) 1 per pound.
C) 2 per pound.
D) 3 per pound.
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