Use the law of diminishing utility to explain why a demand curve is typically downward-sloping.
What will be an ideal response?
The greater the quantity of a good that is consumed, the less marginal utility the consumer receives from that good. This implies that the price a consumer is willing to pay for additional units declines. This establishes the typical inverse relationship between price and quantity.
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Firms in monopolistic competition can achieve product differentiation by
A) expanding plant size. B) exploiting economies of scale in production. C) advertising special characteristics. D) setting the price equal to average revenue.
Perfectly competitive markets are characterized by:
a. a small number of very large producers. b. very strong barriers to entry and exit. c. firms selling a homogeneous product. d. all of these.
Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement
a. Archie is relatively better in repairing cars. b. Archie is relatively better in painting fences. c. Austin is relatively better in painting fences. d. Archie and Austin are equally good in painting fences. e. Neither Archie not Austin are good in repairing cars.
The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time. This suggests that the primary cause of the recession was an
a. inward shift of the aggregate demand curve. b. outward shift of the aggregate supply curve. c. inward shift of the aggregate supply curve. d. outward shift of the aggregate demand curve.