If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is
A) 25 utils.
B) 20 utils.
C) 5 utils.
D) unknown as more information is needed to determine the answer.
Answer: C
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Which of the following properties can be associated with an indifference curve of a risk-averse investor?
a. Indifference curve for a risk-averse investor is a vertical line parallel to the variance axis. b. Two indifference curves can intersect at the equilibrium combination of risk and return. c. An indifference curve closer to the expected return axis gives a better utility than the one farther away. d. Indifference curve for a risk-averse investor is always downward sloping.
The menu cost theory states that
A. prices depend only on the input costs. B. economic agents quickly learn the likely responses of the Fed to changes in unemployment. C. prices are not fully flexible because it is costly for firms to change prices every time there is a demand change. D. the economy is characterized by perfect competition.
The law of diminishing marginal product indicates that
A. total product will eventually decrease. B. average product will eventually decrease. C. resources are inefficient. D. marginal product will eventually decrease.
Refer to the graph below for a pure monopoly. If the government regulated the monopoly and made the firm set a fair-return price, what price and quantity levels would we observe in the short run?
A. P1 and Q1
B. P2 and Q3
C. P3 and Q2
D. P4 and Q1