Use the Following to Answer Questions

question 95

Multiple Choice

Use the following to answer questions:
Figure: Chocolate
-(Figure: Chocolate) If the price in the diagram is $5, what will happen?

• A) The price will increase because of a shortage.
• B) The price will decrease because of a shortage.
• C) The price will increase because of a surplus.
• D) The price will decrease because of a surplus.

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Definitions:

MU-to-P Ratio

The ratio of marginal utility (MU) to price (P), used in consumer choice theory to determine the optimal consumption bundle.

MU ᵦ/P ᵦ Ratio

Represents the marginal utility of good B (MUᵦ) divided by its price (Pᵦ), used in consumer theory to analyze optimal consumption points.

TP or MP Curves

Total Product (TP) and Marginal Product (MP) curves are graphical representations in economics that illustrate the total output produced and the additional output from employing one more unit of a resource, respectively.