What two conditions are met when a consumer is maximizing utility?
What will be an ideal response?
The two conditions that must be met to ensure that a consumer is maximizing his or her utility are: i) all available income is spent, and ii) the marginal utility per dollar spent is equal for all goods and services consumed.
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Picture the graph. When new firms enter a monopolistically competitive market, the result is a(n)
a. shift to the left of the existing firms' demand curves b. shift to the right of the existing firms' demand curves c. more inelastic set of demand curves for the existing firms d. decrease in market output (the sum of all firms' output) e. increase in price and decrease in firm's economic profit
The concept of marginality is important in economics because
A) individuals make decisions at the margin. B) marginal decisions indicate a lack of importance. C) individuals make decisions based on tastes only. D) large expenditures are the only factor influencing consumption.