Let's try to understand Alicia's strong dislike for gambling by applying utility analysis to it. Her dislike makes sense only if
a. the sum of the marginal utility she derives from an anticipated win and the negative marginal utility associated with an anticipated loss is negative
b. the sum of the marginal utility she derives from an anticipated win and the negative marginal utility associated with an anticipated loss is positive
c. she derives zero consumer surplus from a win and suffers a loss of consumer surplus from a loss
d. she continues to bet until she loses
e. the law of diminishing marginal utility cannot be applied to gambling
A
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Firms in perfect competition are price takers because
A) each firm is too small relative to the market to be able to influence price. B) one firm determines the price that all other firms in the industry will charge. C) firms accept the price determined by the government. D) consumers have enough market power to set prices.
The supply-side policies of the Reagan and Bush administrations led to high levels of
a. budget surpluses. b. unemployment. c. inflation. d. budget deficits.