Bobby spends 100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is 10 and the price of a CD is 20. Bobby currently buys 6 pizzas and 2 CDs. To maximize his utility, he should
A) buy more pizza and fewer CDs.
B) buy more CDs and fewer pizza.
C) buy more of both goods.
D) stay with the current combination of goods.
Ques. 2The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices from 11 to 9. Therefore, the cross-price elasticity for these two products is
A) -2.0.
B) -0.5.
C) 0.5.
D) 2.0.
Ques. 3In the above figure, if the firm is in monopolistic competition, it will produce
A) 40 units.
B) 60 units.
C) between 61 and 99 units.
D) 100 units.
Ques. 4Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above shows the economic profit that each firm can make. If the game is played only once, then ________.
A) Felix and Oscar will each make 10 million economic profit
B) Felix will comply and Oscar will make 12 million economic profit
C) Felix and Oscar will each make 1 million economic profit
D) Felix will cheat and Oscar will make -2 million economic profit
Ques. 5The average total cost curve
A) is U-shaped.
B) diminishes initially because average fixed costs diminish.
C) increases eventually because of diminishing returns.
D) All of the above answers are correct.
Quick Reply
