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Author Question: For a monopoly, price always equals marginal revenue. a. True b. False Indicate whether the ... (Read 26 times)

khang

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on: Jun 30, 2018
For a monopoly, price always equals marginal revenue.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

Show, using utility theory, why a consumer who is initially maximizing her utility will alter her consumption pattern in response to a change in the price of a good.


s.meritte

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Reply #1 on: Jun 30, 2018
Answer to Question 1

False

Answer to Question 2

If marginal utilities per dollar are initially equal across all goods, a fall in the price of one will raise the marginal utility per dollar consumed on that good. She can increase total utility by allocating more dollars toward that good.


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