Exhibit 11-4 Supply and demand curves for food servers
In Exhibit 11-4, assume that both input and output markets are perfectly competitive. If one additional server increases the number of meals sold by four per day and each meal sells for $10, each additional food server will be paid:

How do markets provide for an efficient allocation of scarce resources?

What will be an ideal response?

The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Living with this risk gives Bob the same expected utility as if there was no chance of theft and his wealth was

A) $0. B) $20. C) $30. D) $50.