Suppose that Coke and Sprite each sell for $2 a can. Each month Joe buys 6 cans of Sprite and 30 cans of Coke. From this we can infer that:
A. Joe is maximizing his utility if his marginal utility from the 6th can of Sprite he buys is equal to his marginal utility from the 30th can of Coke he buys.
B. Joe is buying too many cans of Coke.
C. Joe is maximizing his utility if his marginal utility from the 6th can of Sprite he buys is less than his marginal utility from the 30th can of Coke he buys.
D. Joe is buying too many cans of Sprite.
Answer: A
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Production possibilities curve are usually bowed outward. This is because
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If a firm shuts down for a week, during that week its:
A. total variable cost exceeds total fixed cost. B. total cost is zero. C. total cost equals total variable cost. D. total cost equals total fixed cost.
The immediate-short-run aggregate supply curve is:
A. vertical. B. downward sloping. C. upward sloping. D. horizontal.