You are studying with a friend, and your friend says "To maximize utility, a consumer must consume the combination of goods so that the marginal utility of good X equals the marginal utility of good Y
" Explain whether your friend's statement is correct or incorrect.
Your friend's statement is incorrect. To maximize utility, a consumer spends his or her entire budget and consumes the combination of goods and services so that the marginal utility per dollar from the goods is equal.
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When a monopolist increases the number of units it sells, there are two effects on revenue. They are the
a. demand effect and the supply effect. b. competition effect and the cost effect. c. competitive effect and the monopoly effect. d. output effect and the price effect.
Economic progress comes primarily through
What will be an ideal response?
Oligopoly is a situation when there
A) is one firm in the industry that is large relative to the size of the economy. B) are a few large firms in the industry. C) are too many firms in the industry and there is excess capacity. D) is one large firm and many smaller firms forming a competitive fringe.
Tom?s Donuts can invest in a new espresso machine that costs $500 and will yield expected profits of $350 each year for two years. At higher interest rates, the present discounted value of profits from the investment
A. is unchanged. B. increases. C. decreases. D. is indeterminate from the given information.