Exhibit 6-11 -If the Good in Exhibit 6-11 Were Free, Then

question 25

Multiple Choice

Exhibit 6-11
-If the good in Exhibit 6-11 were free, then

• A) total utility, consumer surplus, and consumer expenditure would be undefined
• B) total utility and consumer surplus would be positive, but consumer expenditure would be undefined
• C) total utility, consumer surplus, and consumer expenditure would all equal 0
• D) total utility, consumer surplus, and consumer expenditure would all be maximized
• E) total utility and consumer surplus would be valued at $36; consumer expenditure would be 0

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Definitions:

Normal Profits

The return to the business owners for the opportunity cost of their implicit inputs.

MRP

Marginal Revenue Product, a term in economics that represents the additional revenue generated by employing one more unit of a factor, such as labor or capital.

Investment

The allocation of resources, such as capital or time, in order to generate future profit or income.

Usury Laws

Statutes that set maximum interest rates that can be charged on loans, intended to protect consumers from excessively high rates.