Refer to the figure below. Suppose MC1 is the marginal cost of information and MB1 is the marginal benefit of information. Should a rational consumer pay $6 to get a 5th unit of information?
A. No, because at this price, the marginal cost of the 5th unit exceeds its marginal benefit.
B. Yes, because at this price, the marginal benefit of the 5th unit equals its marginal cost.
C. No, because at this price the marginal benefit of the 5th unit exceeds its marginal cost.
D. Yes, because at this price, the marginal benefit of the 5th unit exceeds its marginal cost.
Answer: A
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Consider a situation where economic theory suggests that you impose certain restrictions on your estimated multiple regression function
These may involve the equality of parameters, such as the returns to education and on the job training in earnings functions, or the sum of coefficients, such as constant returns to scale in a production function. To test the validity of your restrictions, you have your statistical package calculate the corresponding F-statistic. Find the critical value from the F-distribution at the 5% and 1% level, and comment whether or not you will reject the null hypothesis in each of the following cases. (a) number of observations: 152; number of restrictions: 3; F-statistic: 3.21 (b) number of observations: 1,732; number of restrictions:7; F-statistic: 4.92 (c) number of observations: 63; number of restrictions: 1; F-statistic: 2.47 (d) number of observations: 4,000; number of restrictions: 5; F-statistic: 1.82 (e) Explain why you can use the Fq,? distribution to compute the critical values in (a)-(d). What will be an ideal response?
Whenever average total cost exceeds marginal cost,
a. average total cost is rising. b. average total cost is falling. c. marginal cost is rising. d. marginal cost is falling.
A profit-maximizing firm in a monopolistically competitive market charges a price equal to marginal cost
a. True b. False Indicate whether the statement is true or false
Assume Saudi Arabia can produce 4 units of good X or 3 units of good Y. Tunisia can produce 5 units of good X or 8 units of good Y. What would be the terms of trade between Saudi Arabia and Tunisia for 1 unit of good Y?
A. Between 5/8 and 4/3 units of X. B. Between 4 and 8 units of X. C. Between 3 and 5 units of X. D. Between 3/4 and 8/5 units of X.