In consumer equilibrium:
a. the average utility from each dollar spent is the same
b. total utility cannot be increased by reallocating spending among the goods consumed.
c. total utility obtained from the consumption of each product is at a maximum.
d. the marginal utility from the last unit of each good consumed is the same.
b
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Hale's One Stop and Auto Service competes with Murray's Gas Mart. The local demand is: Qd = 25 - 10P ? P = 2.50 - 0.1 Qd. Both firms sell exactly the same quality of gasoline
Thus, if the firms charge a different price, the lower price firm will capture the entire market share. If the firms charge the same price, they will split the market share. The marginal cost functions are both constant at $1.25. If the firms compete by setting price, what is the market output level? What is the market price level?
Explain the difference between intermediate goods and final goods and give an example of each.
What will be an ideal response?