In a set of indifference curves, why do the indifference curves that lie to the right represent higher levels of utility?
What will be an ideal response?
An indifference curve represents the different bundles of goods and services that provide a buyer with the same level of utility. Compared to any indifference curve, an indifference curve on the right represents bundles that consist of more of either or both goods and no less of either good than the indifference curve on the left. Hence, it allows for a higher level of consumption and represents a higher level of utility.
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According to economists, an individual who tries to derive utility from the consumption of a good without paying for it is called:
a. a utility maximizer. b. a free rider. c. an opportunist. d. a profit maximizer.
A profit-maximizing monopolist
A. is just as socially efficient as a perfectly competitive firm in allocating resources to production since he or she, too, seeks the largest return on his or her investment. B. produces an output level at which marginal utility exceeds marginal cost. C. produces more output than a perfectly competitive industry. D. always produces in the inelastic region of his or her demand curve.
Suppose that tacos and pizza are substitutes, and soda and pizza are complements. We would expect an increase in the price of pizza to:
A. increase the demand for both soda and tacos. B. reduce the demand for both soda and tacos. C. reduce the demand for soda and increase the demand for tacos. D. reduce the demand for tacos and increase the demand for sodas.
In the United States during the Vietnam War era, as military spending increased:
A. unemployment dropped to very low levels. B. both frictional and cyclical unemployment increased. C. frictional unemployment dropped, but cyclical unemployment increased. D. overall unemployment rates did not change.