For a monopoly, when the price effect outweighs the quantity effect of increased production:
A. total revenues will increase.
B. the demand must be price inelastic.
C. marginal revenue must be increasing.
D. All of these statements are true.
B. the demand must be price inelastic.
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For a risk-averse individual, as wealth increases, total utility ________ and marginal utility ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
Most towns were initially established at locations with
(a) an excellent harbor and river stretching into the hinterland. (b) an excellent harbor and flat land so roads could be easily built into the hinterlands. (c) in mountainous areas which provided better protection against Indians. (d) extensive forests to provide fuel and lumber.
One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would: a. agree, since the ugly stepsister's reasoning is sound
b. want to know how much utility each will receive from attending the ball in order to determine which woman should attend. c. point out that making interpersonal utility comparisons is not possible. d. ask how many balls each woman has attended in order to calculate the marginal utility that each would derive from attending, and then decide who should go to the ball.
Monopolistic competition tends to lead firms to have wasted capacity. Why?