If good A has a marginal utility of 30 and a price of 5, and good B has a marginal utility of 10 and a price of 2, then:
a. good A is a better buy than good B.
b. good B is a better buy than good A.
c. goods A and B are of equal value to this consumer.
d. neither good A nor B is worth the money.
e. goods A and B should both be purchased.
QUESTION 2At the level of output where the marginal cost and marginal revenue curves intersect, a monopolist's demand curve passes above its average total cost curve. The firm will:
a. be able to make a pure economic profit.
b. stay in operation in the short-run, but shut down.
c. shut down in the short-run.
d. increase its price.
QUESTION 3If a consumer allocates income between goods A and B, total utility is maximized when:
a. the marginal utility of A = the marginal utility of B.
b. the marginal utility of A = the marginal utility of B = 0.
c. the price of A = price of B.
d. marginal utility of A / price of A = marginal utility of B / price of B = 0.
e. marginal utility of A / price of A = marginal utility of B / price of B.
QUESTION 4A monopoly will be maximizing profits if it is operating at the point where:
a. price is at a maximum.
b. average cost is at a minimum.
c. average cost is at a maximum.
d. marginal cost is at a minimum.
e. marginal revenue = marginal cost.
QUESTION 5Georgia has a MU/P of 10 for tennis lessons, a MU/P of 6 for sewing lessons, and a U/P of 2 for cooking lessons. In order to maximize utility, she should:
a. take more cooking lessons.
b. take more sewing lessons.
c. take more tennis lessons.
d. stay with her current choices.
e. take fewer lessons of each choice.
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