Fiona uses all of her income to purchase popcorn and butter. At any two points A and B on Fiona’s budget constraint,
a. Fiona is equally happy.
b. Fiona is spending more money on popcorn than she is spending on butter.
c. Fiona's income is different.
d. the price of popcorn relative to the price of butter is the same.
Ans: d. the price of popcorn relative to the price of butter is the same.
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In making an investment decision, an entrepreneur
A. Must take account of diminishing returns to fixed factors. B. Makes a shutdown decision if price is below average variable cost. C. Decides the level of output to produce. D. Treats all costs as variable.
A monopolist maximizes profits by setting the quantity where:
A. marginal revenue is equal to marginal cost. B. marginal revenue is greater than marginal cost. C. marginal revenue is less than marginal cost. D. total revenue is as high as possible.
Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price. B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price. C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy. D) Both A and B are correct. E) Both A and C are correct.
As an individual increases his consumption of onion rings, it is likely that: a. his marginal utility and total utility both increase
b. his marginal utility and total utility both decrease. c. his marginal utility increases and his total utility decreases. d. his marginal utility decreases and his total utility increases.