Author Question: Jane is attempting to maximize utility by selecting a market basket of goods. For each of the goods ... (Read 39 times)

AEWBW · **on:** Jul 1, 2018

Jane is attempting to maximize utility by selecting a market basket of goods. For each of the goods in the market basket the marginal utility per dollar spent is equal.

There are some goods which are affordable but do not appear in the Jane's market basket. If Jane has maximized utility, the marginal utility per dollar spent on each of the goods that does not appear in the market basket is: A) too high.
B) too low.
C) zero.
D) infinite.
E) none of the above

Question 2

When the current price is above the market-clearing level we would expect:

A) quantity demanded to exceed quantity supplied.
B) quantity supplied to exceed quantity demanded.
C) a shortage.
D) greater production to occur during the next period.