What is marginal utility? Why is the term "marginal" important in utility analysis?
What will be an ideal response?
Marginal utility is the change in total utility due to a one-unit change in the quantity of a good consumed. Marginal means additional or incremental. "Marginal" is important in utility analysis because an individual contemplating increasing consumption of an item by one additional unit compares the utility gain from that one additional unit consumed per dollar spent with the additional utility per dollar spent on all other items.
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A monopoly will be maximizing profits if it is operating at the point where:
a. price is at a maximum. b. average cost is at a minimum. c. average cost is at a maximum. d. marginal cost is at a minimum. e. marginal revenue = marginal cost.
A decrease in the current minimum wage would: a. decrease employment for low skill workers
b. increase firm's demand curves for low skill workers. c. increase the supply of low skill workers. d. decrease the incomes of some low skill workers.