What is marginal utility and what is the law of diminishing marginal utility?
What will be an ideal response?
Marginal utility is the change in total satisfaction a person receives from consuming one additional unit of a good or service. The law of diminishing marginal utility is the principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time.
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Suppose the government is auctioning the right for a company to mine for gold in a government-owned region of the country. Further suppose that the government has information regarding the amount of gold that is likely to be found in the region, but the companies bidding for the rights do not have this information. This is an example of ________.
A) screening B) the principal-agent problem C) the lemons problem D) asymmetric information
The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which
a. total revenue is equal to variable cost. b. total revenue is equal to fixed cost. c. total revenue is equal to total cost. d. profit is maximized.
What makes advising on mergers and acquisitions particularly profitable for investment banks relative to other services that they provide?
What will be an ideal response?
If the short-run Phillips curve has a very shallow (or flat) slope, a. the self-correcting mechanism cannot work
b. the structural deficit will grow in a recession. c. the structural deficit will fall in a recession. d. the inflation costs of reducing unemployment are fairly low.