We know with certainty that a consumer will buy a newly introduced product rather than an existing product when the:
A. MU/P of the new product exceeds the MU/P of the existing product.
B. price of the new product is less than the price of the existing product.
C. MU of the new product is more than the MU of the existing product.
D. law of diminishing marginal utility applies to the existing product.
Answer: A
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Refer to Figure 1A.2. The slope between points a and c is
A) -5. B) -6. C) 10. D) 30.
Elasticity of demand is likely to be higher for less-expensive goods, other things being equal.
Answer the following statement true (T) or false (F)
For the monopoly in the above figure, if the firm is currently producing 700 units, which of the following is correct?
A) It could earn higher profits if it produced more units each day. B) It could earn higher profits if it produced fewer units each day. C) It is maximizing its profits. D) It is incurring a loss.
Which of the following is not true about income quintiles?
a. Only one in seven households in the bottom quintile has anybody working full time b. Only one in three households in the top quintile has anybody working at all c. A primary contributor to the smaller share of income going to the bottom quintile has been the growth of single-parent households d. Three out of four households in the top quintile have two or more working e. A primary contributor to the larger share of income going to the top quintile has been the growth of two-earner households