Marginal utility theory concludes that a decrease in the price of a good increases the quantity demanded and
A) increases the demand for substitutes.
B) decreases the demand for complements.
C) increases the total expenditure on the good.
D) increases total utility.
D
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Explain why a firm may hire managers to operate outlets near the firm's headquarters, but may sell franchise rights for the outlets located greater distances from the headquarters
(With a franchise, the firm sells a brand name and a method of doing business to someone who then owns and operates the outlet.)
In general, firms will produce at a rate of output such that marginal revenue equals marginal cost because this output rate will
a. bring total revenue into equality with total cost. b. maximize the difference between the revenue received from the last unit and the cost incurred in producing the last unit. c. result in the lowest possible average total costs of production. d. maximize the firm's profit.
The Redwood City Council has decided that there is an overallocation of resources in the lawn-care industry. Almost every homeowner owns a lawnmower, hose and sprinkler, seeder, spreader, etc., and these items are used, at most, once a week. The council
will establish a legal monopoly and select a private firm that will be responsible for all lawn care in the city. What types of rent-seeking activities can be expected as a result of this action?
Refer to the following table:
What is marginal benefit for the 3rd unit of the activity?
A. 115 B. 175 C. 180 D. 160 E. none of the above