Quiz Maya spends her $50 budget on two goods, cans of tuna and bottles of ginger ale. Initially, the marginal utility per dollar she spends on tuna is equal to the marginal ublity per dollar she...


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Quiz<br>Maya spends her $50 budget on two goods, cans of tuna and bottles of ginger ale. Initially, the marginal utility per dollar she spends on tuna is equal to the marginal<br>ublity per dollar she spends on ginger ale. Then the price of ginger ale decreases, while her income and the price of tuna does not change.<br>a. Her marginal utlity from consuming ginger ale<br>b. The marginal utility per dollar she spends on ginger ale<br>e. Because of the substitution effect, Maya will buy more ginger ale. Can we conclude that ginger ale is a normal good?<br>OA No, because ginger ale is an inferior good.<br>OB. No, because ginger ale is a Gifen good.<br>OC. Yes, ginger ale must be a normal good.<br>OD. No, because normal and inferior good designations are related to the income effect, not the substitution effect<br>d. As Maya adjusts to the change in the price of ginger ale, her marginal utility per dollar spent on tuna will<br>OA decrease because she will buy less tuna.<br>OB. increase because she will buy less tuna<br>Oc. ncrease because she will buy more tuna.<br>OD. decrease because she will buy more tuna.<br>

Extracted text: Quiz Maya spends her $50 budget on two goods, cans of tuna and bottles of ginger ale. Initially, the marginal utility per dollar she spends on tuna is equal to the marginal ublity per dollar she spends on ginger ale. Then the price of ginger ale decreases, while her income and the price of tuna does not change. a. Her marginal utlity from consuming ginger ale b. The marginal utility per dollar she spends on ginger ale e. Because of the substitution effect, Maya will buy more ginger ale. Can we conclude that ginger ale is a normal good? OA No, because ginger ale is an inferior good. OB. No, because ginger ale is a Gifen good. OC. Yes, ginger ale must be a normal good. OD. No, because normal and inferior good designations are related to the income effect, not the substitution effect d. As Maya adjusts to the change in the price of ginger ale, her marginal utility per dollar spent on tuna will OA decrease because she will buy less tuna. OB. increase because she will buy less tuna Oc. ncrease because she will buy more tuna. OD. decrease because she will buy more tuna.

Jun 09, 2022
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