Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget. If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would
a. eat a fourth calzone because it has higher marginal utility
b. drink a third glass of juice
c. drink a third glass of juice if its price is lower than the price of calzones
d. drink a third glass of juice if its price is less than half the price of the calzone
e. drink a third glass of juice because it has lower marginal utility
D
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Explain what is meant when it is said that the demand for labor is a derived demand.
What will be an ideal response?
The product-variety externality arises in monopolistically competitive markets because
a. firms produce with excess capacity. b. firms try to differentiate their products. c. firms would like to produce homogeneous products, but the large number of firms prohibits it. d. entry and exit is restricted.
For the period 1961 to 1969, the Phillips curve for the United States displayed the same shape that A. W. Phillips found for the United Kingdom for the period 1861 to 1913---it was
A) horizontal. B) vertical. C) downward sloping. D) upward sloping.