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 a higher marginal utility
b. drink a third glass of juice because you've had less juice
c. consider the total utility received so far from calzones and juice before deciding what to consume next
d. consider the relative prices of calzones and juice before deciding what to consume next
e. consider whether or not marginal utility is diminishing before deciding what to consume next
D
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What will be an ideal response?
Half of all your potential customers would pay $16 for your product but the other half would only pay $10 . You cannot tell them apart. Your marginal costs are $4 . If you set the price at $10, the expected profit is:
a. $3 b. $4 c. $5 d. $6
Compared to a barter economy, using money increases efficiency by reducing:
A. transaction costs. B. the need to exchange goods. C. the need to specialize. D. inflation.
A monopolist charges a price that is ________ and produces ________ than a perfect competitor.
A. lower; more B. higher; more C. lower; less D. higher; less