A firm that engages in price discrimination must be able to identify the preferences of every
customer it serves.
Indicate whether the statement is true or false
FALSE
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A tariff is a tax imposed on ________ good.
A. a luxury B. a domestic C. an illegal D. an imported
The above table shows Homer's utility from boxes of doughnuts. As Homer's consumption of doughnuts increases, his
A) marginal utility is positive and increasing. B) marginal utility is positive but decreasing. C) marginal utility is negative but increasing. D) marginal utility is negative and decreasing.
Assume that Anne has $300 to spend on DVDs and CDs. Her optimal consumption of DVDs and CDs is illustrated by a tangency between a budget line and an indifference curve. Now assume that the price of CDs rises but the price of DVDs falls
How can you show that Anne is made better off by these price changes? A) Show that the price changes move Anne along her budget line to a higher indifference curve. B) Show that Anne can now afford to buy more DVDs, which give her greater utility than CDs. C) Show that the price changes shift Anne's budget line outward; the budget line is tangent to a higher indifference curve. D) Show that Anne can afford to buy the optimal combination of DVDs and CDs at their original prices; then show that Anne can now reach a higher indifference curve.
The Yankee Candle Company, in Hatfield, Massachusetts, makes thousands of scented candles each day. The factory emits the odor of the candles it produces, some of which smell quite nice. On days when they make strawberry candles the townspeople really enjoy the smell. On days when they make potpourri scented candles, people close their windows and don't go outside. What can we infer about the
scented candle market? a. b and c. b. Strawberry candles are more expensive than is socially optimum. c. Potpourri candles are priced too low to be socially optimum. d. Candle production generates only negative externalities. e. Candle production technologies are inefficient.