If P = MC for all goods in a free-market economy, then
a. the desire for utility maximization will lead consumers to buy the amount of each good at which MU = MC.
b. the desire for profit maximization will lead consumers to buy the amount of each good at which MU = MC.
c. the desire for utility maximization will lead consumers to buy only those goods that have low opportunity costs.
d. the desire for profit maximization will lead all firms to stop producing in the long run (though possibly not in the short run).
a
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The perfect substitution of two inputs implies that
A) two inputs can be substituted at a ratio of 1 to 1. B) one input can be substituted for another up to some point. C) two inputs can be substituted at some constant ratio. D) one input can be substituted for another.
If marginal utility from consuming an extra unit of a good is positive, then the consumer's total utility must increase as more of the good is consumed
a. True b. False