If Bella eats one piece of pie, she gains a utility of 10. If she continues, a second piece yields a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth piece of pie will yield a marginal utility of -2. We can say:
A. Bella's total utility will decrease if she eats the third piece of pie.
B. Bella's marginal utility is not diminishing.
C. Bella's total utility will be maximized if she eats three pieces.
D. Bella's total utility decreases after the first piece of pie.
Answer: C
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If aggregate planned expenditures exceed real GDP, then
A) inventories increase above their planned levels and businesses decrease their production. B) inventories decrease below their planned levels and businesses decrease their production. C) there is no equilibrium level of real GDP. D) unplanned inventory changes equal zero. E) inventories decrease below their planned levels and businesses increase their production.
In the above figure, the economy is initially at point B. If the exchange rate falls, there is
A) a movement to point C. B) a movement to point A. C) a shift to AD2. D) a shift to AD1.
If the interest rate decreases
a. or if the price level increases, then people will want to hold more money. b. or if the price level increases, then people will want to hold less money. c. or if the price level decreases, then people will want to hold more money. d. or if the price level decreases, then people will want to hold less money.
Sulfur Dioxide Discharged (Tons)Firm AFirm B10$8,000$9,000910,00012,000815,00018,000720,00027,000628,00037,000Table 16.3Table 16.3 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm. If the two firms agree to swap one permit and split the difference between the willingness to pay and willingness to accept, what is the price of a permit?
A. $4,500 B. $5,500 C. $7,250 D. $9,750