Microeconomics (with Digital Assets, 2 terms (12 months) Printed Access Card) (MindTap Course List)
12th Edition
ISBN: 9781285738352
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 7, Problem 1VQP
To determine
The utility maximization and the
Expert Solution & Answer
Explanation of Solution
The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the
Economics Concept Introduction
Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.
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The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry.
Price (dollars)
24
8
MC
ATC
MR
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D
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Quantity/time
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The maximum profit the firm can earn in this situation is $
per unit for this output.
How will the situation change over time?
Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost.
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Chapter 7 Solutions
Microeconomics (with Digital Assets, 2 terms (12 months) Printed Access Card) (MindTap Course List)
Ch. 7.1 - Prob. 1STCh. 7.1 - Prob. 2STCh. 7.1 - Prob. 3STCh. 7.2 - Prob. 1STCh. 7.2 - Prob. 2STCh. 7.3 - Prob. 1STCh. 7.3 - Prob. 2STCh. 7 - Prob. 1VQPCh. 7 - Prob. 2VQPCh. 7 - Prob. 3VQP
Ch. 7 - Prob. 4VQPCh. 7 - Prob. 5VQPCh. 7 - Prob. 1QPCh. 7 - Prob. 2QPCh. 7 - Prob. 3QPCh. 7 - Prob. 4QPCh. 7 - Prob. 5QPCh. 7 - Prob. 6QPCh. 7 - Prob. 7QPCh. 7 - Prob. 8QPCh. 7 - Prob. 9QPCh. 7 - Prob. 10QPCh. 7 - Prob. 11QPCh. 7 - Prob. 12QPCh. 7 - Prob. 13QPCh. 7 - Prob. 14QPCh. 7 - Prob. 15QPCh. 7 - Prob. 16QPCh. 7 - Prob. 1WNGCh. 7 - Prob. 2WNGCh. 7 - Prob. 3WNGCh. 7 - Prob. 4WNGCh. 7 - Prob. 5WNGCh. 7 - Prob. 6WNGCh. 7 - Prob. 7WNG
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