If marginal net utility is positive, the consumer must be buying too small a quantity to maximize total net utility. Why?
What will be an ideal response?
Because marginal utility exceeds price, the consumer can increase total net utility further by buying (at least) one more unit of the product. In other words, since marginal net utility (which is marginal utility minus price) tells us how much the purchase of an additional unit raises or lowers total net utility, a positive marginal net utility means that total net utility is still rising.
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The economic analysis of extending the duration of unemployment benefits to 99 weeks involves both positive and normative analysis. Consider the following consequences of extending the duration of unemployment benefits:
a. Extending the duration of unemployment benefits to 99 weeks will create less incentive for some unemployed workers to seek employment. b. Extending the duration of unemployment benefits to 99 weeks will increase the total amount of government expenditure on unemployment benefits. c. The benefits received by those collecting unemployment benefits should be valued more highly than the increase in government expenditure needed to pay the benefits. d. By extending the duration of unemployment benefits to 99 weeks, the unemployed will have more time to acquire new skills before reentering the workforce. Which of the consequences above are positive statements and which are normative statements? A) a and b are positive statements; c and d are normative statements. B) Only b is a positive statement; a, c, and d are normative statements. C) a and d are positive statements; b and c are normative statements. D) a, b, and d, are positive statements; only c is a normative statement.
The situation in which the marginal product of labor is greater than zero and declining as more labor is hired is called the law of:
a. diminishing returns. b. negative response. c. inverse return to labor. d. demand.
Because of the law of diminishing marginal utility, total utility of consuming any good or service
a. increases at a decreasing rate as we consume more of any good or service. b. decreases as we consume more of any good or service. c. stays the same. d. none of the above
When there is overproduction in a market,
A. there is excess quantity demanded. B. the total of consumer and producer surplus is maximized. C. market price is too low. D. there is a deadweight loss.