The price of a piece of pizza is $1 and the price of a movie is $4 and the consumer has $10. A consumer has purchased 2 pieces of pizza and 2 movies, receiving 25 units of utility for the second pizza and 100 units of utility for the second movie. The set of goods

A. is an optimum since the entire income is spent and total utility is minimized.
B. is not an optimum because the marginal utility per dollar spent is greater for pizza than for movies.
C. is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.
D. is not an optimum because the consumer has not spent all of his money.


Answer: C

Economics

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A. 34,286 B. 131,429 C. 1,200 D. 90,000

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A regulated firm may have an incentive to spend an inefficiently high amount on capital when:

a. it becomes deregulated. b. fair rate of return regulation is used. c. regulators set price equal to marginal cost. d. it is part of a monopolistically competitive industry. e. it is allowed to charge a monopoly price.

Economics

If a firm is able to charge a higher price for its output, all else equal, the value of the marginal product of labor will decrease to offset the higher price

a. True b. False Indicate whether the statement is true or false

Economics