Question 1 Good A Good B Quantity Total Utility Quantity Total Utility 1 20 1 21
ID: 1103189 • Letter: Q
Question
Question 1
Good A
Good B
Quantity
Total Utility
Quantity
Total Utility
1
20
1
21
2
35
2
35
3
45
3
44
4
48
4
47
5
50
5
48
Which bundle of goods satisfies the equimarginal principle?
Select one:
a. 5 units of Good A and 5 units of Good B
b. 4 units of Good A and 3 units of Good B
c. 1 unit of Good A and 1 Unit of Good B
d. 5 units of Good A and 4 units of Good B
e. 4 units of Good A and 4 units of Good B
Question 2
In a perfectly competitive market, the price equals __________.
Select one:
a. Marginal revenue divided by output
b. Average revenue
c. Total revenue divided by marginal revenue
d. All of the above
e. None of the above
Question 3
Complete the following sentence. When the long run average cost (LRAC) curve has a positive slope, it implies there are:
Select one:
a. increasing returns to scale.
b. constant returns to scale.
c. decreasing returns to scale.
d. diseconomies of scale.
e. none of the above
Good A
Good B
Quantity
Total Utility
Quantity
Total Utility
1
20
1
21
2
35
2
35
3
45
3
44
4
48
4
47
5
50
5
48
Explanation / Answer
1)Equimarginal utility means marginal utility of last dollar spent on each good should remain same. Thus ans is e because MU from 4th unit for both good is same
2)B. In perfect competition P=AR=Tr/Q
3)D. Diseconomies of scale means AC increases as quantity increases
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