Bob values the utility of a single scoop of Baskin-Robbins ice cream at $1.50 . A double scoop gives total utility of $2.25, while a triple scoop yields $2.60 . Baskin-Robbins charges $1.35 for a single, $1.95 for a double, and $2.35 for a triple. How many scoops will Bob buy?
Bob will buy a double. The first scoop has marginal utility of $1.50, which exceeds the price of $1.35 . The second scoop has MU of 75 cents, exceeding the marginal price of 60 cents. The third scoop adds MU of 35 cents, which falls below the marginal 40 cents addition to price.
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A. a shortage of 200 units. B. an unstable market. C. a surplus of 200 units. D. no shortage or surplus.
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A) included; not included B) included; included C) not included; included D) not included; not included
The ability to produce a good at a lower opportunity cost than someone else is called
A) competitive production. B) comparative advantage. C) selective advantage. D) absolute advantage.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher