If MRS > MRT, then the consumer is better off than at equilibrium
Indicate whether the statement is true or false
False . MRS > MRT implies that the consumer values the next unit of "x" more than it costs to obtain it. That is, there is a gain from trade to be made. As more "x" is purchased, MRS falls and eventually MRS = MRT. At this point, all gains from trade have been made.
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Which of the following formulas represents total profit for a perfectly competitive firm?
a. MR - MC b. AR - ATC c. P - ATC d. Q ? (MR - MC) e. Q ? (P - ATC)
Flora's Flowers operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $10, AVC = $5, and the price per unit is $7.50 . In this situation,
a. Flora earns positive profits in the short run b. Flora will shut down in the short run c. Flora's supply curve will shift to the left d. Flora's supply curve will shift to the right e. Flora earns negative profits in the short run but will remain open