If Bob Has One Piece of Gum in His Mouth,he

question 36

Multiple Choice

If Bob has one piece of gum in his mouth,he gains a utility of 12.If he adds a second piece to the first,it yields a marginal utility of 6; adding a third will bring marginal utility of 1.Adding a fourth piece will make Bob choke,yielding a marginal utility of 4.We can say:

• A) Bob's total utility from chewing four pieces of gum would be 23.
• B) Bob's total utility will decrease if he chews the fourth piece of gum.
• C) Bob's total utility will be maximized if he eats two pieces.
• D) Bob's total utility decreases after the first piece of gum.

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, homogeneous products, and free entry and exit, leading to price taking behavior.

Labor Market

A marketplace or environment where workers seek employment and employers seek to hire workers, based on wage rates, demand, and supply of labor.

Economic Rent

A payment to a factor of production (such as land, labor, or capital) in excess of what is necessary to keep that factor in its current use.

Equilibrium Wage

A market-determined wage rate where the intentions of workers and employers align, leading to an agreed-upon employment level.