Lisa consumes only pizzas and burritos. In equilibrium, her marginal utility of pizza is 20 and her marginal utility of a burrito is 10. The price of a pizza is $4. What is the price of a burrito?

What will be an ideal response?


In equilibrium, the ratio of the marginal utility of a pizza divided by the price of a pizza must equal the marginal utility of a burrito divided by the price of a burrito. Thus, the price of a burrito must be $2.

Economics

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Answer the following statement true (T) or false (F)

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Economic efficiency is achieved at a particular output level if:

A. average fixed cost is as low as possible. B. average total cost is as low as possible. C. average variable cost is as low as possible. D. marginal cost is as low as possible.

Economics