The MU of Computers Is Initially Larger Than the MC

question 40

Multiple Choice

The MU of computers is initially larger than the MC of producing them in a free market.We may expect output of computers to

• A)fall, MC to rise, and MU to rise.
• B)rise, MC to fall, and MU to fall.
• C)rise, MC to rise, and MU to fall.
• D)fall, MC to fall, and MU to rise.

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Definitions:

Shifting Demand Curve

A shifting demand curve occurs when there is a change in a non-price factor, such as consumer preference or income, altering the quantity demanded at any given price.

Price-Consumption Curve

A graphical representation that shows the combination of two goods that a consumer can purchase at different prices, keeping utility constant.

Utility

A measure of satisfaction or happiness that a consumer derives from consuming goods and services.

Income-Consumption Curve

Curve tracing the utility-maximizing combinations of two goods as a consumer’s income changes.