Explain how a consumer maximizes utility
What will be an ideal response?
To maximize utility, the consumer allocates income among goods and services such that the last dollar spent on each good purchased yields the same amount of marginal utility. This occurs if
(MUa/Pa) = (MUb/Pb) = . . . = (MUz/Pz).
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Inequality in the distribution of income in the United States today arises primarily from
A) the collapse of the government's income support system. B) the highly unequal distribution of corporate wealth. C) the tax system. D) the weakness of labor unions. E) unequal abilities to supply valuable human services.
By human capital, economists mean
A) machines that replace humans. B) machines engineered to avoid operator injury. C) the accumulated skill and knowledge of humans. D) humans who perform repetitive tasks.
The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero
a. True b. False Indicate whether the statement is true or false
Competitive firms have
a. downward-sloping demand curves, and they can sell as much output as they desire at the market price. b. downward-sloping demand curves, and they can sell only a limited quantity of output at each price. c. horizontal demand curves, and they can sell as much output as they desire at the market price. d. horizontal demand curves, and they can sell only a limited quantity of output at each price.