A consumer is maximizing utility when
A) the slope of the budget constraint has reached -1.
B) diminishing marginal utility has set in.
C) the slope of the budget constraint equals the marginal rate of substitution.
D) the consumer has spent all of his income.
Answer: C
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Refer to Figure 17-6. Under Scheme I
A) workers signal their productivity to the firm by consistently selling above 30 vacuum cleaners. B) the incentive to increase productivity only occurs for sales of fewer than 20 vacuum cleaners or more than 30 vacuum cleaners. C) workers compete with each other to see who can sell more than 20 vacuum cleaners in the shortest possible time. D) workers have no incentive to sell more than 30 vacuum cleaners.
Assume that a purely competitive firm uses two resources, labor (L) and capital (C), to produce a certain product. In which situation would the firm be maximizing profit?
A. Case A
B. Case B
C. Case C
D. Case D