Moe's Sweaters is a firm in perfect competition. Moe's customers ...

[jrubin]

Moe's Sweaters is a firm in perfect competition. Moe's customers don't know who the firm's workers are.
 
  If Moe is the only employer in the market who discriminates against women by paying them less than he pays to equally qualified men, his firm will A) lower its labor cost and receive a greater economic economic profit than its competitors.
  B) receive a positive economic profit while its competitors will only receive a normal profit.
  C) not maximize its economic profit and will not survive.
  D) be able to lower its price and undercut the competitors.

Question 2

Suppose that Arnold spends all his income on bratwursts and piano lessons and his marginal utility per dollar on bratwursts is lower than that on piano lessons. Is Arnold maximizing his utility? Why or why not?
 
  What will be an ideal response?

[matt95]

Answer to Question 1

C

Answer to Question 2

No. If Arnold spends a dollar less on bratwursts and a dollar more on piano lessons, his utility gain from more piano lessons will be greater than his utility loss from the decreased consumption of bratwursts and so his total utility will increase.