Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak will
A) have increased.
B) not have changed.
C) have decreased.
D) not be comparable with the marginal utility before the price hike.
Ques. 2In the long run, a perfectly competitive firm will exit a market when
A) its total revenue is less than its total cost.
B) its marginal revenue curve is below the minimum of its average total cost curve.
C) the price is greater than the minimum of its average total cost curve.
D) Both answers A and B are correct.
Ques. 3Which area in the above figure shows the producer surplus at the price and quantity that would be attained if the industry were perfectly competitive?
A) A + B + C + D + E
B) C + D + E + F + G + H
C) F + G + H
D) F + G + H + I + J + K
Ques. 4Economies of scope exist when
A) the total cost of production falls as the output increases.
B) a firm hires specialized resources to produce a range of goods and services.
C) a firm uses outsourcing to produce a good or service.
D) the cost of producing a unit of a good falls as its output increases.
Ques. 5A (very, very small) country produces milk and shirts and its production possibilities frontier is in the table above. The nation is currently producing at point B.
What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?
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