Author Question: Alfred derives utility from consuming iced tea and lemonade. For the bundle he currently consumes, ... (Read 120 times)

Ebrown · **on:** Jul 1, 2018

Alfred derives utility from consuming iced tea and lemonade. For the bundle he currently consumes, the marginal utility he receives from iced tea is 16 utils, and the marginal utility he receives from lemonade is 8 utils.

Instead of consuming this bundle, Alfred should: A) buy more iced tea and less lemonade.
B) buy more lemonade and less iced tea.
C) buy more iced tea and lemonade.
D) buy less iced tea and lemonade.
E) none of the above is necessarily correct.

Question 2

Assume that the current market price is below the market clearing level. We would expect:

A) a surplus to accumulate.
B) downward pressure on the current market price.
C) upward pressure on the current market price.
D) lower production during the next time period.