At the point where total utility is at its peak, marginal utility is
a. zero
b. positive
c. negative
d. positive, but declining
e. positive, but increasing
A
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When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? For instance, what is the opportunity cost? And, where in a PPF diagram does this statement apply and where does it not apply?
What will be an ideal response?
Other things remaining the same, the ________ the exchange rate for dollars, the greater the ________ in the foreign exchange market
A) higher; quantity of dollars supplied B) higher; quantity of dollars demanded C) lower; value of U.S. imports D) higher; expected profits from holding dollars
In the above figure, at the price level of 140 and real GDP of
A) $15 trillion, firms will not be able to sell all their output. B) $5 trillion, firms will not be able to sell all their output. C) $5 trillion, consumers will not be able to buy all the goods and services they demand. D) $15 trillion, consumers will not be able to buy all the goods and services they demand.
Smyth Industries operated as a monopolist for the past several years, earning annual profits amounting to $50 million, which it could have maintained if Jones Incorporated did not enter the market. The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually. The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit). One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year. The estimated impact of such a move is a loss of $1 billion. Ignoring antitrust concerns, compute the present value of Smyth Industries' profits if it remains a duopolist in this market when the interest
rate is 5 percent. A. $210 million B. $1.05 billion C. $200 million D. $100 million