After getting an A on your economics exam, you decide to go to your favorite Mexican restaurant to celebrate. You are having trouble deciding whether to order the chipotle chicken chimichanga or the cilantro seafood enchiladas. Use the rule of equal
marginal utility per dollar to determine which one to purchase: (a) the chimichanga for $8 which gives you 120 units of utility, or (b) the enchiladas for $15 which gives you 195 units of utility? Assume your budget is large enough to purchase either item.
What will be an ideal response?
You should buy the chimichanga because the MU per dollar is 15 while MU per dollar for the enchiladas is only 13.
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A monopoly is a seller of a product
A) with a perfectly inelastic demand. B) without a well-defined demand curve. C) with many substitutes. D) without a close substitute.
Suppose that the competitive market for rice in Japan was suddenly monopolized. The effect of such a change would be:
A) to decrease the price of rice to the Japanese people. B) to decrease the consumer surplus of Japanese rice consumers. C) to decrease the producer surplus of Japanese rice producers. D) a welfare gain for the Japanese people. E) increase the consumption of rice by the Japanese people.