Suppose a Consumer Is Purchasing Coke (C) and Pretzels (P)

question 102

Multiple Choice

Suppose a consumer is purchasing Coke (c) and pretzels (p) in quantities such that he is achieving consumer equilibrium. Then the price of Coke increases. Which of the following will be true?

• A)MU_C/P_C = MU_P/P_P
• B)MU_C/P_C > MU_P/P_P
• C)MU_C/P_C < MU_P/P_P
• D)We cannot say for certain what will happen to the MU_C/P_C relative to the MU_P/P_P.

Understand the concept of economies of scale as it applies to monopolistic markets.

Understand the fundamental characteristics of monopolies, including demand curves and industry supply.

Recognize the role of economies of scale and natural monopolies in the industry.

Distinguish between short-run and long-run profit maximization strategies for monopolists.