Author Question: Suppose an economy with two goods (candy and desk) and two identical agents that is in a competitive ... (Read 32 times)

pepyto · **on:** Jul 1, 2018

Suppose an economy with two goods (candy and desk) and two identical agents that is in a competitive equilibrium. The marginal cost of a piece of candy is given by MCc = 4Qc and the marginal cost of a desk is MCd = 2 + Qd. The current production level of candy (Qc) is 4 pieces and of desks (Qd) is 30. What can be said about the marginal utility of candy (MUc) and the Marginal utility of desks (MUd)?

A) 3MUc = MUd
B) MUc = 0.5MUd
C) MUc = MUd = 4
D) MUc = 2MUd

Question 2

Suppose that each worker must use only one shovel to dig a trench, and shovels are useless by themselves. In the long run, an increase in the price of shovels will result in

A) fewer shovels being purchased to produce the same number of trenches.
B) more workers being hired to produce the same number of trenches.
C) the firm wishing to produce more trenches.
D) no change in the firm's input mix.

soda0602 · **Reply #1 on:** Jul 1, 2018

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