Suppose that each week Henry buys 12 peaches and 3 apples at his local farmer's market. Both kinds of fruit cost $1 each. From this we can infer that:
A. if Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must be greater than his marginal utility from the 3rd apple he buys.
B. Henry is not maximizing his utility.
C. if Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must equal his marginal utility from the 3rd apple he buys.
D. for Henry the law of diminishing marginal utility does not apply to peaches.
Answer: C
You might also like to view...
In a bakery for a given amount of croissant production, an additional pastry worker produces 100 additional croissants, and one extra mixing machine produces 50 extra croissants. Each pastry worker costs $30 to hire, and a mixing machine costs $10 per unit. The bakery owner should
A. produce fewer croissants. B. hire an additional pastry worker. C. purchase an additional mixing machine and use one less pastry worker. D. hire an additional pastry worker and sell a mixing machine.
In order to study labor markets more easily, we make which of the following assumptions about firms? (i) Firms sell their products in competitive markets. (ii) Firms buy their inputs in competitive markets. (iii) Firms maximize profits. (iv) Firms maximize revenues
a. (iii) only b. (i) and (iii) only c. (i), (ii), and (iii) only d. (i), (ii), (iii), and (iv)
Which of the following statements is TRUE?
A. Rational ignorance exists only in politics. B. Rational ignorance still leads to an efficient outcome. C. Rational ignorance is bad because it leads to uninformed voters making decisions. D. It never makes sense for individuals to be rationally ignorant.
The peak phase of the business cycle represents
A) a temporary maximum output level of Gross Domestic Product (GDP).
B) an increase in foreign investment.
C) a labor surplus.
D) falling prices.