Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit.Table 19.3Michael's Utility ScheduleUnits of ColaTU of ColaMU of ColaUnits of PretzelsTU of PretzelsMU of Pretzels14040130302 322 2039624366164112 478 5124 584 Refer to Table 19.3. Suppose Michael has $28 to spend on cola and pretzels. What combination should he purchase in order to maximize his utility?
A. Two colas and three pretzels.
B. One cola and five pretzels.
C. Three colas and one pretzel.
D. Three colas and four pretzels.
Answer: A
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Why is there a supply point and not a supply curve for a monopolist?
a. A monopolist cannot affect the market price by changing its supply. b. A monopolist produces a homogeneous product having similar substitutes. c. A monopolist equates the price which it charges with its marginal cost. d. There is only one quantity and price at which a monopolist operates. e. A monopolist supplies to a large number of consumers.
An externality occurs whenever
A. private costs diverge from social costs. B. private costs plus internal costs equal social costs. C. private costs are the same as social costs. D. private costs are the same as internal costs.