Oscar makes purchases of an existing product (X) such that the marginal utility of the last unit he consumes is 10 utils and the price is $5. He also tries a new product (Y) and the marginal utility of the last unit he consumes is 8 utils and the price is $1. The equal marginal principle suggests that Oscar should
A. increase his consumption of product Y and decrease his consumption of product X.
B. increase his consumption of product X and increase his consumption of product Y.
C. decrease his consumption of product Y and decrease his consumption of product X.
D. increase his consumption of product X and decrease his consumption of product Y.
Answer: A
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The situation in which one firm can produce the total output of the market at lower cost than several firms is called a
A) natural monopoly. B) pure monopoly. C) ruling monopoly. D) cost monopoly.
If the price of a good lies between the zero-profit point and the shutdown point, a perfectly competitive firm should shut down immediately
a. True b. False Indicate whether the statement is true or false
Businesses go to credit markets in order to
A. obtain financial assets that can be used to buy capital. B. obtain capital so they can earn rents. C. channel their savings into investments. D. obtain capital.
The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is one of the ways the Fed responded?
A) The Fed banned investment banks from obtaining discount loans. B) The Fed lent investment banks Treasury securities in exchange for mortgage-backed securities. C) The Fed lowered the required reserve ratio on demand deposit accounts in order to increase the amount of bank reserves. D) The Fed helped Citibank to acquire General Motors and Chrysler.