The marginal rate of substitution measures
A. the changes in marginal utility along the indifference curve.
B. the impact of product substitution.
C. the consumer's willingness to substitute one product for another so that marginal utility will remain unchanged.
D. the consumer's willingness to substitute one product for another so that total utility will remain unchanged.
Answer: D
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If two goods have a cross elasticity of demand of -2, then when the price of one good increases, the demand curve of the other good
A) shifts rightward. B) shifts leftward. C) remains unchanged and the supply curve also remains unchanged. D) might shift rightward, leftward, or remain unchanged. E) remains unchanged but the supply curve shifts leftward.
Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7 to $6.50?
A) 0.85
B) 1.08
C) 1.17
D) 0.92
Refer to the data provided in Table 9.1 below to answer the question(s) that follow.
Table 9.1
Refer to Table 9.1. If the market price is $42, then for this firm to maximize profits it should produce ________ units of output and its profits will be ________.
A. five; $70 B. six; $70 C. six; $120 D. seven; $58
When the marginal product of labor rises
A) the marginal cost of production will exceed the average total cost. B) the marginal cost of production also rises. C) the average total cost of production also rises. D) the marginal cost of production falls.