Suppose an individual knows that the marginal utility he receives from the next apple is 5 and that the price of an apple is $2 . He also knows that the marginal utility he receives from the next orange is 3 and the price of an orange is $1 . If the individual is choosing optimally, the next good he will buy is
a. an orange because the marginal utility per dollar spent on an orange is
greater.
b. an orange because the marginal utility of the orange is greater.
c. an apple because the marginal utility per dollar spent on an apple is greater.
d. an apple because the marginal utility of the apple is greater.
a
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The "free-rider problem" of public goods refers to a. individuals' refusal to pay taxes
b. individuals' attempts to hide their preferences for collective goods and to avoid paying for them. c. individuals' overuse of collective goods. d. the inelasticity of individuals' demands for public goods.
The recession that set in after December 2007 can be attributed to: a. an increase in expenditure on war
b. a decline in home prices and an increase in foreclosures. c. an increase in terrorist activities. d. crop failures around the world. e. an increase in oil prices in the international market.
In a constant-cost industry, an increase in price causes:
A. some firms to exit the industry. B. quantity supplied to remain constant. C. some firms to enter the industry. D. price controls.
For a firm in a perfectly competitive market, average revenue equals
A) average cost. B) the change in total revenue. C) the market price. D) price divided by quantity.