When the price of a commodity rises, we can expect
A. marginal utility of the last unit purchased will rise.
B. marginal utility of the last unit purchased will fall.
C. marginal utility of the last unit purchased will be unaffected.
D. purchases to rise because of the increased marginal utility.
Answer: A
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Jones and Smith are teaching assistants. Jones can grade 20 essays or 50 problem sets a day, while Smith can grade 20 essays or 10 problem sets a day. Therefore
A) Smith sacrifices 2 graded essays for every 2 problem sets she grades. B) Smith sacrifices 10 graded essays for every 20 problem sets she grades. C) Jones sacrifices 2 graded essays for every 5 problem sets he grades. D) Both Smith and Jones have a comparative advantage in grading essays.
Refer to Figure 13-18. The diagram demonstrates that
A) in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing. B) it is possible for a monopolistic competitor to produce the productively efficient output level, Qa, if it is willing to lower its price from Pb to Pa. C) in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa. D) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa, because of product differentiation.
Which of the following is associated with inelastic demand?
a. a limited amount of time for consumers to respond to a price change b. availability of many close substitutes c. large percentage of income spent on the good in question d. all of the above
Suppose the price of butter falls because milk price supports are removed. Will people's tastes shift away from margarine and toward butter?