Suppose Caesar allocates his entire budget to the purchase of soft drinks and chips. The marginal utility of the last bottle of soft drink purchased is 12 utils, and each bottle costs $1.20. The marginal utility of the last bag of chips purchased is 8 utils, and each bag costs $1. In order to maximize his utility, Caesar should
A. Buy more soft drinks and fewer chips because the soft drink has fewer calories.
B. Buy more chips and fewer soft drinks because of the lower price for chips.
C. Not change anything because he has made the choice that gives him the most total utility.
D. Buy more soft drinks and fewer chips since he gets more marginal utility per dollar from soft drinks.
Answer: D
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Identify the characteristics of a monopoly firm
a. The existence of barriers to entry and production of a homogeneous product b. The production of a unique product and a large number of sellers in the market c. The production of a standardized product and the firm is a price taker d. The existence of barriers to entry and the firm is a price taker e. The existence of barriers to entry and the firm is a price maker
When the U.S. government runs a deficit, it usually does the following:
a. It buys government bonds from the public b. It asks the Treasury Department to print money to pay for the deficit c. It sells new government bonds to the public d. It borrows money directly from the Federal Reserve e. It asks the Federal Reserve to print money to pay for the deficit
In Classical economic theory, full employment is thought to be restored in the long-run because:
a. If unemployment were anywhere but at full employment, the government and central bank would react and have time to move the economy to where it should be. b. The natural forces of supply and demand in the labor force change the real wage and eliminate labor surpluses and deficits. c. Antitrust legislation will have time to take effect and to solve any economic imbalances. d. International organizations, such as the International Monetary Fund, step in to ensure the nation returns to full employment. e. None of the above is correct because Classical economic theory does not believe that an economy will move automatically toward full employment in the long run.
What does it mean when a person is underemployed?
What will be an ideal response?