Mike Is Maximizing Utility by Working 10 Hours a Week

question 77

Multiple Choice

Mike is maximizing utility by working 10 hours a week and studying 10 hours a week. Mike has only 20 hours to devote to either working or studying. If Mike realizes that another hour of studying will improve his grade on an exam, thus raising the utility of another hour of study, Mike will:

• A) study less to raise the marginal utility of studying even more.
• B) work fewer hours, moving him down along his labor supply curve.
• C) work fewer hours, shifting his labor supply curve to the left.
• D) substitute work for studying, raising his total utility.

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Definitions:

Sellers

Entities or individuals that make available goods or services for purchasing within the market.

Price Taker

An economic actor that accepts the prevailing market prices and lacks the power to influence those prices due to its small market share.

Natural Monopoly

A market condition where a single supplier is most efficient in serving the entire market's demand, often due to high barriers to entry like significant infrastructural costs.

Perfect Competition

A market structure characterized by a large number of buyers and sellers, homogeneous products, free entry and exit, and perfect information.