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Author Question: If a firm produces a given amount of output using the least amount of inputs, it definitely achieves ... (Read 109 times)

fahad

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on: Jun 29, 2018
If a firm produces a given amount of output using the least amount of inputs, it definitely achieves economic efficiency.
 
  Indicate whether the statement is true or false

Question 2

Ricardo likes to rent DVDs and attend concerts. The DVDs cost 4 and the concerts cost 40. Ricardo's marginal utility from the last DVD is 20 units. Ricardo is maximizing his utility. What is his marginal utility from the last concert he attended?
 
  What will be an ideal response?


kalskdjl1212

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Reply #1 on: Jun 29, 2018
Answer to Question 1

FALSE

Answer to Question 2

The marginal utility from his last concert is 200 units. In order for Ricardo to maximize his utility, the marginal utility per dollar must be equal for all goods. The marginal utility per dollar from the last DVD is (20 units)  (4 ) = 5. So the marginal utility per dollar from the last concert also must equal 5, which, given its price of 40, means that concert has a marginal utility of 200, because (200 units)  (40 ) = 5.


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