Author Question: Steve is in a consumer equilibrium. Then, the price of steak increases from 6 a pound to 8 a pound. ... (Read 92 times)

Chloeellawright · **on:** Jun 29, 2018

Steve is in a consumer equilibrium. Then, the price of steak increases from 6 a pound to 8 a pound. Steve decreases the number of pounds of steaks he buys each week ________.

A) and decreases his total utility
B) only if his income also decreases
C) so that the marginal utility per dollar spent on steaks is the same as it was when the price was 6 a pound
D) so that both his total utility and his marginal utility from steak fall

Question 2

If firms in a perfectly competitive industry are making zero economic profit, then

A) some of those firms will leave the industry, because firms cannot persistently go without making economic profit.
B) new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative.
C) there is no incentive for either entry or exit.
D) some of the firms will temporarily shut down.