-Refer to the Above Table

question 397

Multiple Choice

-Refer to the above table. If the price of Good A is $1, the price of Good B is $2, and the consumer has $13, the rational consumer will purchase

• A) 3 units of Good A and 4 units of Good B.
• B) 1 units of Good A and 1 units of Good B.
• C) 6 units of Good A and 0 units of Good B.
• D) 5 units of Good A and 4 units of Good B.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, typically represented by an area on a graph.

Supply Curve

A graph displaying the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to provide, holding all else equal.

Diminishing Marginal Product

A principle stating that as more of a variable input is added to a fixed input, the additional output produced from each additional unit of the variable input eventually decreases.

Marginal Costs

The supplementary cost arising from the manufacture of an extra unit of a good or service.