Author Question: The monopolist faces the market demand curve. a. True b. False Indicate whether the statement is ... (Read 45 times)

rl · **on:** Jun 30, 2018

The monopolist faces the market demand curve.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Justin Field just stopped at the Exxon station on the way to campus and bought four Butterfinger candy bars, two 20-ounce bottles of grape-watermelon Snapple, and 10 gallons of gas. His marginal-utility-to-price ratios are 3.21 for the Butterfingers, 4.8 for the Snapples, and 5.7 for the gas. Explain why this set of purchases did not maximize Ryan's utility and how could he have increased his utility.

rachel · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

True

Answer to Question 2

He has not maximized utility because the marginal-utility-to-price ratios are not equal. He should have bought fewer Butterfingers and more gas. We can't be sure whether he should buy more, fewer, or the same number of Snapples to increase his utility, given the information in the question.