1. Assume Joseph spends his entire income on X and Y, and his indifference curves have the usual convex shape. If Joseph maximizes his utility, then:
a. he spends his entire available income.
b. there are other bundles that are preferred at the current price ratio
c. the slope of his indifference curve is greater than the slope of his budget line
d. the slope of his indifference curve is smaller than the slope of his budget line
2. The long-run price elasticity of demand for a product is generally___the short-run elasticity for the same product.
a. lower than
b. equal to
c. higher than
d. not comparable to
3. Assume the demand function for skincare products is given by Q = 1,000-20P+5i. if P=$25 and i=$1,000 currently, then:
a. skincare products are a normal good
b. the elasticity of demand is equal to 11
c. skincare products are interior
d. the price is too high