Question

The price of Video Game rentals is $2 For MUA/$ and $4 for MUB/$, the price of Energy Drinks is $2, and
the Budget = $28.
19) If the price of video game rentals is $4, the
utility-maximizing combination is ________ video game rentals and ________ energy drinks. (3 points)
A) 1; 4
B) 2; 10
C) 10; 4
D) 11; 10
E) none of the above

20) Suppose there is a large increase in the demand for widgets due to changes in consumer tastes, and a small
decrease in the supply of widgets as a result of higher input prices. The equilibrium price and quantity of
widgets will: (3 points)
A) both increase; the impact of the change in demand on the equilibrium quantity is larger than the
impact of the change in supply.
B) both decrease; the impact of the change in demand on the equilibrium quantity is larger than the
impact of the change in supply.
C) fall and rise, respectively; the impact of the change in supply on the equilibrium quantity is larger
than the impact of the change in demand.
D) rise and fall, respectively; the impact of the change in supply on the equilibrium quantity is larger
than the impact of the change in demand.
E) do none of the above.