Label as the Better Choice on Utilitarian Calculations , a or B

question 2

Multiple Choice

Label as the better choice on utilitarian calculations , A or B, using a scale of -10 (very painful) to +10 (very pleasurable) for degrees of pleasure or happiness.

• A) will bring 5 people each 8 days of pleasure and 3 people each 2 days of pain,
• B) will bring 8 people each 3 days of pleasure and 1 person 3 days of pain.

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Definitions:

Marginal Cost

The increase in total cost that arises from an additional unit of production.

Average Total Cost

Average total cost is the total cost of production divided by the number of units produced, indicating the cost per unit.

Price War

Successive, competitive, and continued decreases in the prices charged by firms in an oligopolistic industry. At each stage of the price war, one firm lowers its price below its rivals’ price, hoping to increase its sales and revenues at its rivals’ expense. The war ends when the price decreases cease.

Limit Pricing

A strategy used by dominant firms to set prices low enough to discourage entry into the market by potential competitors.