Joe consumes pizza and movies. He is currently spending his entire income and his marginal utility of pizza is 10 and his marginal utility of movies is 5
If the price of a pizza is $10 and the price of a movie is $5, then to maximize his utility Joe should A) increase consumption of pizza and decrease consumption of movies.
B) increase consumption of movies and decrease consumption of pizza.
C) not change his current bundle of movies and pizza.
D) increase consumption of both goods.
C
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Federal Reserve notes are
A) paper currency. B) checks issued by the U.S. government. C) savings bonds. D) travelers' checks.
The circular flow model is used to show the
A) flow of renewable natural resources. B) expansions and contractions of economic activity. C) recycling process of production materials. D) flow of expenditures and incomes in the economy. E) flow of supply and the flow of demand.
Which of the following is true of the relationship between price and marginal cost under monopolistic competition?
a. P = MC at all levels of output b. P = MC only at the profit-maximizing quantity c. P > MC at the profit-maximizing quantity d. P < MC at the profit-maximizing quantity e. P < MC at the quantities below the profit-maximizing quantity
The way in which an oligopolist acts in response to a price change by a competitor is known as a
A) zero-sum game. B) positive-sum game. C) reaction function. D) cooperative game.