When a rational consumer has stopped buying, she or he will have allocated a limited budget so that the marginal utility per good will be the same.
Answer the following statement true (T) or false (F)
False
A rational consumer will allocate spending so that the marginal utility per dollar is the same.
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Lisa consumes only pizzas (P) and burritos (B). Her utility function is U = P0.5 B0.5. The price of per pizza is $10 and the price per burrito is $5. In equilibrium, Lisa consumes four pizzas
Using Lisa's utility function, calculate how many burritos she consumes.
The long run supply curve to a market depends on the characteristics of the firms that currently operate in it. Thus, the latter will be more elastic than the short-run supply curve
Indicate whether the statement is true or false
Diseconomies of scale occur when
a. average fixed costs are falling. b. average fixed costs are constant. c. long-run average total costs rise as output increases. d. long-run average total costs fall as output increases.
If the economy could produce 42 consumer goods and 12 capital goods, given the current production possibilities curve, the economy would be producing ___________________ (outside/on/inside) the curve.
Hypothetical Production Schedule for a Two-Product Economy
