If the price of marshmallow exceeds the marginal value that the consumer places on marshmallows, then
a. the consumer is at the optimum.
b. the consumer's level of satisfaction would increase if he buys more marshmallows and less of other goods.
c. a surplus of marshmallows exists in the market.
d. the optimum contains fewer marshmallows than the consumer is currently buying.
d. the optimum contains fewer marshmallows than the consumer is currently buying.
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Which of the following is not an implicit cost?
A) wages B) opportunity cost of using an owner's savings C) owner-provided capital D) owner-provided labor
If an insurance company hires a resource in a perfectly competitive resource market and it wants to maximize profit, it will hire where marginal revenue product equals
a. the price of the resource, which equals its marginal resource cost b. the price of the resource, which is greater than its marginal resource cost c. the price of the resource, which is less than its marginal resource cost d. marginal product e. the price of the product
Which of the following functions is not performed by prices in a free market?
A. Guiding the allocation of resources B. Conveying information about the marginal cost of production C. Making the distribution of income more equitable D. Replacing the need for governmental supervision of production
For a normal good, the
a. income effect is greater than 1.0 b. income effect is negative c. substitution effect is zero d. income effect and the substitution effect work in the same direction e. demand curve is horizontal