If the MU of half gallon of milk is $3.50 and the MU of gallon of milk is $3.25, and they both sell for the same price, we would expect consumers to
A. increase their purchases of gallons of milk.
B. increase their purchases of half gallons of milk.
C. not change their purchasing habits.
D. buy only gallons of milk.
Answer: B
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If demand increases and supply decreases, the change in the equilibrium price will be ________, and the change in the equilibrium quantity will be ________.
A. uncertain; positive B. positive; uncertain C. positive; negative D. positive; positive
Which of the following is a primary difference between price searchers and price takers?
a. Price searchers maximize profits, but price takers do not. b. Price searchers have to cut their price to sell additional output, but price takers do not. c. The market demand for goods produced by price searchers is downward sloping, while the market demand for goods produced by price takers is horizontal. d. Profit-maximizing price searchers will expand output to the quantity where marginal revenue equals marginal cost, but price takers will not.
Figure 11-6
The profit-maximizing monopolist in Figure 11-6 will sell its output at
a.
P1.
b.
P2.
c.
P3.
d.
P4.
April lives in a heavily Democratic voting community. Every election, the Democratic candidates win by a large margin. Since April believed that she already knew what the outcome would be, she has not sought out candidate information or voted for the past few elections. Ben tells her she has displayed rational ignorance. What does Ben mean?
a. April is really showing a lack of intelligence by not getting involved. b. From April’s perspective, it makes sense not to waste her valuable time voting. c. April is not a mind reader and does not really know who will win the elections. d. April likes to make excuses and rationalize her inaction on important matters like voting.