Use the following graph for a competitive market to answer the question below.
A price floor of $25 per unit will result in a
A. surplus of 250 units.
B. shortage of 250 units.
C. shortage of 200 units.
D. surplus of 200 units.
Answer: D
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Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50ยข per loaf, and wine costs $6 per bottle. In this situation, the consumer:
a. could increase utility by buying more bread and less wine. b. could increase utility by purchasing more wine and less bread. c. has maximized utility and attained consumer equilibrium. d. is violating the law of diminishing marginal utility.
What should a profit maximizing monopolist do if she is currently producing where MC < MR?
a. Increase output until MC = MR. b. Decrease output until MC = MR. c. Shut down in the long run. d. Keep producing at this level. e. Operate only in the short run.