When Kathryn spends her entire budget and equates marginal utility per dollar across all goods, then Kathryn's total utility is maximized.
Indicate whether the statement is true or false
Ques. 2The Karaoke Channel Online streams professional-grade karaoke for 9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of 1 per customer and total fixed cost is 20,000. The profit maximizing number of customers is 10,000.
Several competitors start to advertise online. Karaoke Channel Online now spends 5,000 a month on advertising and the profit maximizing number of customers increases to 12,000. What is Karaoke Channel Online's average total cost before the advertising begins? A) 3
B) 2
C) 1
D) 2.66
Ques. 3A tax is regressive if the average tax rate
A) increases as income increases.
B) increases as income decreases.
C) is negative.
D) is less than one.
Ques. 4Dustin's copy shop can use four alternative plants. The figure above shows the average total cost curves for Plant 1 (ATC1), Plant 2 (ATC2), Plant 3 (ATC3), and Plant 4 (ATC4).
What is Dustin's long-run average cost if the output is 3,000 copies per day? A) 3.7 cents per copy
B) 5.0 cents per copy
C) 8.5 cents per copy
D) More information is needed to determine the long-run average cost.
Ques. 5When the price of a normal good decreases, people buy ________ of the good due to ________.
A) more; the substitution effect only
B) more; the substitution and income effects
C) less; the substitution effect only
D) less; the income effect only
Ques. 6Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.
A) marginal private benefit; marginal external benefit
B) private cost; external cost
C) marginal social benefit; marginal external benefit
D) marginal external benefit; marginal social benefit
Ques. 7Using the demand schedule in the above table, the marginal revenue for a perfectly price discriminating monopolist from the sale of the third unit of output is
A) 3.
B) 4.
C) 5.
D) 6.
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