Tom is buying a quantity of wheat at which the marginal utility (in dollars) exceeds price. He should
A. reduce wheat consumption, thus raising P to the level at which MU = P.
B. reduce wheat consumption, thus raising MU to the level at which MU = P.
C. increase wheat consumption, thus raising P to the level at which MU = P.
D. increase wheat consumption, thus lowering MU to the level at which MU = P.
Answer: D
You might also like to view...
If the economy receives an influx of new workers from immigration,
A) we will move down along the long-run aggregate supply curve. B) we will move up along the long-run aggregate supply curve. C) the long-run aggregate supply curve will shift to the right. D) the long-run aggregate supply curve will shift to the left.
Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value. B) People measure the value of a good in terms of its purchase price. C) Sunk costs have a higher opportunity cost than costs that can be recovered. D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.