In spending all his income on beer and pizza, Fred finds that the marginal utility of the last pizza he consumed is 8, and the marginal utility of the last bottle of beer is 4. The price of a bottle of beer is $1.50. If Fred has maximized his utility, the price of pizza must be:
A. $0.75
B. $1.00
C. $3.00
D. $4.50
C. $3.00
You might also like to view...
Once a cartel determines the profit-maximizing price
A) each firm faces the temptation to cheat by raising its price. B) each firm faces the temptation to cheat by lowering its price. C) changes in the output of any member firm will not affect the market price. D) entry into the industry by rival firms will not affect the profit of the cartel.
The used car market without warranties suffers from
A) perfect competition. B) oligopoly. C) adverse selection and moral hazard. D) excessive signaling.
Expectations that the price level will increase in the future will:
a. shift the current consumption function upward b. make the current consumption function steeper. c. make the current consumption function flatter. d. result in a downward movement along the current consumption function. e. shift the current consumption function downward.
If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area
a. c + i + e + f
b. i + f
c. i
d. f
e. b + d