Suppose that an individual consumes only two goods. What will happen to the individual if her last dollar spent on one good yields more marginal utility than that from another good?
What will be an ideal response?
The individual will consume more of the good that yields more marginal utility. However, because of the principle of diminishing utility, the marginal utility declines as she consumes more of the good with higher marginal utility. She will continue to consume the good with higher marginal utility until an optimum point at which the last dollar spent on each good purchased yields the same amount of marginal utility.
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Which of the following situations is least likely to involve mutual interdependence?
A) Canada is thinking about banning all imported beef from the United States. B) Octavia is thinking about trading in her Toyota Prius for a BMW 220i. C) Walmart is considering moving up the start-time for its Black Friday sales to 12:01 AM on Thanksgiving day. D) McDonald's is thinking about lowering all its menu prices by 50 percent.
A monopolist will maximize profits by:
a. setting his price as high as possible. b. setting his price at the level that will maximize per-unit profit. c. producing the output where marginal revenue equals marginal cost. d. producing the output where price equals marginal cost.
If the demand curve for a good shifts leftward,
A) quantity demanded is less at each price. B) quantity demanded remains constant at each price. C) quantity demanded is greater at each price. D) demand is greater at each price.
Economics
A) is a social science. B) is concerned with limited resources. C) is concerned with unlimited wants. D) All of the above are correct.