An optimizing consumer makes her purchase decisions based on:
A) the total benefits at various levels of consumption.
B) benefits per dollar spent at the margin.
C) the total benefits per dollar spent at various levels of consumption.
D) the benefits from the first dollar spent on consumption.
B
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A firm uses workers, land, and machinery for its production process. Which of the following statements is then true?
A) The only way the firm can change its output level in the long run is by changing the number of workers. B) The only way the firm can change its output level in the long run is by changing the amount of land it owns. C) The only way the firm can change its output level in the long run is by changing the amount of machinery. D) The firm can change its output level in the long run by changing any or all of its three inputs.
The SSS Co has a patent on a particular medication. The medication sells for $1 per daily dose and marginal cost is estimated to be a constant at $0.20. Assuming linear demand and marginal cost curves, use this information to estimate the deadweight loss from monopoly pricing if the firm currently sells 1,000 doses per day. Can this loss be justified?
What will be an ideal response?