Economists consider profit to be
A) a cost of producing goods and services.
B) something that should be eliminated by antitrust laws.
C) the same as a salary.
D) a reward for incurring losses.
A
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Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:
a. is buying too much pizza and not enough soda. b. should purchase more pizza and less soda. c. has maximized his or her total utility. d. needs to equate the marginal utilities for pizza and soda.
The return on human capital
A) tends to be much greater than the return on physical capital. B) tends to be much lower than the return on physical capital. C) is similar to the return on physical capital. D) cannot be related to the return on physical capital since human capital and physical capital are so different.