Why is it that the consumer can maximize total net utility only if the purchase quantity brings marginal utility as close as possible to equality with price?
The decision to purchase a quantity of a good that leaves marginal utility greater than price cannot maximize total net utility, because buying an additional unit would add more to total utility than it would increase cost. Similarly, it cannot be optimal for the consumer to buy a quantity of a good that leaves marginal utility less than price, because then a reduction in the quantity purchased would save more money than it would sacrifice in utility. Consequently, the consumer can maximize total net utility only if the purchase quantity brings marginal utility as close as possible to equality with price.
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If the prices of goods and services were expressed in terms of carved wooden beads, then the carved wooden beads would be serving as a
A) store of value. B) medium of exchange. C) mechanism for transforming present purchases into future purchases. D) unit of account.
What concept does economics primarily deal with?
a) scarcity b) poverty c) change d) power
If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by
a. buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras.
b. buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala.
c. buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala.
d. buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.
The government would use production taxes to remedy the problem of substantial:
A. external costs of consumption. B. external benefits of production. C. external costs of production. D. external benefits of consumption