A consumer has spent all of his income on pizza and movies. The price of a piece of pizza is $1 and the price of a movie is $6. The marginal utility of the last piece of pizza is 5 and the marginal utility of the last movie is 24. The consumer has
A) maximized utility.
B) not maximized utility. He should cut back on movies and buy more pizza.
C) not maximized utility. He should cut back on pizza and buy more movies.
D) not maximized utility. He should cut back consumption of each good.
Answer: B
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A monopolist faces the inverse demand curve P = 60 - Q. It has variable costs of Q2 so that its marginal costs are 2Q, and it has fixed costs of 30. The monopoly's profit maximizing output is
A) 5. B) 10. C) 15. D) 20.
A tariff is a tax placed on
a. an exported good and it lowers the domestic price of the good below the world price. b. an exported good and it ensures that the domestic price of the good stays the same as the world price. c. an imported good and it lowers the domestic price of the good below the world price. d. an imported good and it raises the domestic price of the good above the world price.
Supply-side policies are focused on ______.
a. short-run stabilization b. both short and long-run stabilization c. increasing long-run industry regulation d. decreasing long-run aggregate supply
The Sweezy model of oligopoly reveals that:
A. perfectly competitive prices can arise in markets with only a few firms. B. capacity constraints are not important in determining market performance. C. changes in marginal cost may not affect prices. D. All of the statements associated with this question are correct.