If Jack is a utility maximizer, shouldn't a fall in the price of popcorn cause an increase in his marginal utility of popcorn?
What will be an ideal response?
No. If the price of popcorn drops, Jack will buy more popcorn. With diminishing marginal utility, his total utility from popcorn will increase but his marginal utility from popcorn will fall.
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If the GDP deflator is less than 100, which will be higher: nominal GDP or real GDP? Why?
What will be an ideal response?
Let the marginal product of labor and capital be denoted by MPL and MPK respectively. The price of labor and capital are given by PL and PK respectively. Which of the following equations gives the condition for producing a given level of output at the least cost combination of inputs?
a. PL × PK = MPL × MPK b. PL × MPL = PK × MPK c. MPL ÷ PK = MPK ÷ PL d. PL ÷ PK = MPL ÷ MPK
Although monopolistically competitive markets offer consumers a wide variety of differentiated products, there may still be insufficient variety if
a. there are large fixed costs in the market. b. there are no barriers to entry in the market. c. the business-stealing externality is present in the market. d. the government does not impose regulations on the market.
According to Judge Learned Hand, a _____% share of the market is enough to constitute a monopoly.
A. 33 B. 50 C. 64 D. 90