1. Assume at the current consumption combination that the marginal utility per dollar spent from good A exceeds the marginal utility per dollar spend from good B. To increase the satisfaction associated with the amount spent, the consumption combination should have contained more A and less B.
A. True
B. False
2. For a “normal” good, the income and substitution effects are not opposing forces. That is, for a “normal” good, the substitution and income effects of an increase in the price will both cause a reduction in the quantity purchased.
A. True
B. False
3. Assuming both types of taxes collect the same number of dollars, a wage tax is preferable to a head tax.
A. True
B. False