A decrease in the price of product X will:
a. increase the marginal utility per dollar spent on X.
b. decrease the marginal utility per dollar spent on X.
c. result in an increase in the total utility from consumption of X.
d. do both (a) and (c).
QUESTION 2Suppose the output of a firm hiring workers in a competitive labor market increases by three units when an additional worker is hired. This firm will hire more laborers if the market price of its product is 4 and the wage rate is 9 . Hint: Marginal revenue product of a resource is equal to the product of marginal product of the resource and the marginal revenue of the firm.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Assume that the price elasticity of demand for a commodity is 0.20 . A 10 percent increase in the price of the commodity will be followed by a:
a. 20 percent increase in the quantity demanded.
b. 2 percent decrease in the quantity demanded.
c. 20 percent decrease in the quantity demanded.
d. 0.2 percent decrease in the quantity demanded.
e. 2 percent increase in the quantity demanded.
QUESTION 4In consumer equilibrium, the marginal utility of good A, B and C are 100, 300, and 400 respectively. If the price of good A was 35, then the prices of goods B and C, respectively, are:
a. 105 and 140.
b. 140 and 105.
c. 105 and 175.
d. 140 and 175.
QUESTION 5If the marginal factor cost is greater than the marginal revenue product of a resource, the producer can increase profits by laying off some units of the resource.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza, then the price elasticity of demand for pizza:
a. is equal to 0.5 and demand for pizza is inelastic.
b. is equal to 0.5 and demand for pizza is elastic.
c. is equal to 2 and demand for pizza is elastic.
d. is equal to 2 and demand for pizza is inelastic.
e. cannot be determined from the information provided.
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