Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is 12 for each lawn-mowing service.
Jason would like to charge 20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price?
A) If Jason raises his price he would lose all his customers.
B) He would lose some but not all his customers.
C) Initially, his customers might complain but over time they will come to accept the new rate.
D) If Jason raises his price, then all others supplying the same service will also raise their prices.
Question 2
Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of almonds. The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.
Is Adhira maximizing her utility?
A) No, she must buy 1 more chocolate bar to equate her quantities of the two goods.
B) No, she must cut back to 3 bags of almonds to equate her quantities of the two goods.
C) No, without information on her income and the prices of the two goods, we cannot answer the question.
D) Yes, the marginal utility from the last unit of each good is equal.
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