Suppose the marginal utility of a dollar for Carl is 7 utils and for Judy, 12 utils. According to Lerner, society will maximize its total utility if
a. we transfer money from Carl and give it to Judy as long as the marginal utility of money for Carl is lower than that of Judy's
b. we transfer money from Carl and give it to Judy as long as the marginal utility of money for Carl is higher than Judy's
c. we transfer money from Judy and give it to Carl as long as the marginal utility of money for Judy is lower than Judy's
d. we allow the market to determine the marginal utilities of Carl and Judy regardless of whose is higher
e. Carl and Judy have the same utility functions
A
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Which of the following helps explain why the law of supply exists?
A) Larger outputs result in lower costs of production. B) The law of increasing opportunity cost C) The costs of production remain constant throughout all levels of output. D) Sellers realize that if the price increases, they make larger profits and do not need to change their production. E) The law of demand
Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?
A) 1.5 B) 0.1 C) 10.0 D) 0.67
We don’t need to draw separate curves for demand, average revenue, and marginal revenue curves for a perfectly competitive firm. Why?
What will be an ideal response?
Figure 7.1 shows a monopolist's demand curve. If the monopolist increases output from four to five units, what is its marginal revenue?
A. $16 B. $15 C. $3 D. -$1