13. If it is true that \"the last drop tastes as good as the first,\"then margin
ID: 1165564 • Letter: 1
Question
13. If it is true that "the last drop tastes as good as the first,"then marginal utility must be a. constant. b. decreasing e. increasing d. rising only slowly. e. diminishing Consumer equilibrium exists when a. the marginal utility of all goods purchased is equat b. the marginal utility of some goods purchased is less than for others c. the elasticity of demand equals 1 d. the marginal utility of some goods purchased is greater than for others e? the marginal utility per dollar of expenditure is the same fr all goods and 14. vices. Which of the following characteristics is not exhibited by a perfectly competitive market? a. Many sellers b. Identical products sold by all firms e. Easy entry and exit d. Barriers to entry e. Buyers and sellers who have perfect information 15. The demand curve of an individual firm in a perfectly competitive market structure is always a. perfectly inelastic. b. elastic. c. unit-elastic. 16. Od. perfectly elastic. e. inelastic. Which of the following statements about a perfectly competitive market is true? a. An individual firm will likely set its price above the market price b. The individual demand curve is perfectly inelastic. c. An individual firm will likely set its price at the market price d. An individual firm will likely set its price below the market price. e. The individual firm in the perfectly competitive market faces the question of what price 17. to charge, not how much to produce. The reason that economies of scale can be a barrier to entry is that a. the smaller the production facility is, the lower the per-unit cost to produce is. b. the larger the production facility is, the higher the per-unit cost to produce is c. the larger the production facility is, the lower the per-unit cost to produce is. d. small plants are always more efficient than large plants. e. the lack of exclusive ownership of essential resources 18. 19. When Glaxo-Wellcome introduced AZT, an AlIDS drug, it was able to enjoy high profits because of a. the widespread use of the drug among ordinary people b. the quick response of rivals in introducing substitute drugs c. barriers to entry provided by patents d. its low prices e. economies of scale in advertising
Explanation / Answer
13. Solution: same
Explanation: Since the taste remains the constant thus the marginal utility must be same
14. Solution: the marginal utility per dollar of expenditure is the same for all goods and services
Explanation: MU/P ratio for all goods is the same
15. Solution: Barriers to entry
Explanation: Under perfect competition there is easy entry and exit
16. Solution: perfectly elastic
Explanation: The demand curve of an individual firm is horizontal with a height that equals the product price thus is perfectly elastic
17. Solution: An individual firm will likely to set its price at the market price
Explanation: The individual firms are price takers under perfectly competitive market. The price is determined by the intersection of the demand curves and market supply
19. Solution: of barriers to entry provided by patents
Explanation: Barrier to entry allows firm to super normal profits
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