Waldo Consumes Only Apples and Bananas and Bananas Are an Inferior

question 4

Multiple Choice

Waldo consumes only apples and bananas and bananas are an inferior good for him.The price of apples increases, but there is an increase in his income that keeps him on the same indifference curve as before.(Waldo has convex preferences, and he prefers more to less of either good.)

• A)After the change, Waldo will buy more bananas and fewer apples.
• B)After the change, Waldo will buy fewer bananas and more apples.
• C)After the change, Waldo will buy more of both goods.
• D)After the change, Waldo will buy fewer of both goods.
• E)We would need to know his utility function to determine whether any of the above statements are true.

Calculate profit maximization levels for different production and cost scenarios.

Analyze the effects of taxes on monopoly pricing and production decisions.

Determine the optimal level of production to maximize profit or meet certain economic criteria.

Apply knowledge of marginal costs and fixed costs to make production and pricing decisions.

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