There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell.
Suppose 10 shells have been fired off. What is the marginal cost of firing off one more shell?
A. $100
B. $25
C. $10
D. $0
Answer: C
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a. A change in consumption due to the fact that you will not buy goods whose marginal value is below the new price. b. A change in consumption due to the fact that you cannot afford your original market basket. c. A smaller percentage change in quantity than in price. d. A larger percentage change in quantity than in price.
Which of the following is the best example of a product or service that provides a benefit externality?
A) the construction of a private road that allows vehicles if a toll is paid B) a public library C) a bookstore that is open to everyone D) All of the above E) None of the above
When the price of wood (which is an input in the production of furniture) falls, the consumer surplus associated with the consumption of furniture
A) increases. B) decreases. C) does not change. D) could be any of the above.
If a customer buys an airline ticket based only on the price of the ticket, then the airline ticket is a(n)
A) experience good. B) credence good. C) logo good. D) search good.