If Mr. Smith thinks the last dollar spent on shirts yields more satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should:
a. decrease his spending on cola.
b. decrease his spending on cola and increase his spending on shirts.
c. increase his spending on shirts.
d. increase his spending on cola and decrease his spending on shirts.
QUESTION 2At a price of 5, 24 units of the good would be sold; at a price of 7, 25 units of output would be sold. The marginal revenue of the 25th unit of output is:
a. 14.
b. 55.
c. 6.
d. 168.
e. 175.
QUESTION 3If Mr. McLean thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent on hamburgers, and McLean is a utility-maximizing consumer, he should:
a. bowl less, so the marginal satisfaction from expenditures in this area will increase.
b. spend more on hamburgers, so total satisfaction from that activity will increase.
c. eliminate spending on hamburgers.
d. bowl more and spend less on hamburgers.
QUESTION 4There is only one gas station within hundreds of miles. The owner finds that when she charges 3 a gallon, she sells 199 gallons a day, and when she charges 2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:
a. .01.
b. 1.
c. 2.99.
d. 3.
e. 600.
QUESTION 5If Jane's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans:
a. Jane will not purchase any more jeans.
b. Jane can benefit by purchasing more jeans.
c. the opportunity cost of a pair of jeans is lower than the price.
d. Jane will decrease her total utility by purchasing more jeans.
QUESTION 6For a monopolist, marginal revenue is always:
a. below market price.
b. equal to market price.
c. greater than market price.
d. equal to total revenue.
e. equal to total cost.
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