Use the Following to Answer Questions

question 19

Multiple Choice

Use the following to answer questions:
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets at a marginal cost of $2 and no fixed cost. If the industry were perfectly competitive, the output would be _____ gadgets, and the price would be _____.

• A) 0; $10
• B) 500; $5
• C) 600; $4
• D) 800; $2

Understand the concept of utility and how it's measured.

Grasp the law of diminishing marginal utility and its implications on consumption.

Learn how to analyze and calculate changes in utility from consuming different combinations of goods.

Understand the relationship between total utility and marginal utility.

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Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors, leading to specialized production and trade.

Absolute Advantage

A situation in which a country, individual, or company can produce a good at a lower cost per unit than competitors.

Opportunity Cost

The price paid for not choosing the second-best option during decision-making.

Higher Opportunity Cost

The increased potential loss of choosing one option over another, indicating a sacrifice of higher value alternatives.