If you were to consume five hamburgers at Wendy's. would you enjoy a consumer surplus? Explain your answer.

How do we measure utility? Are interpersonal comparisons valid? Why or why not?

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Kristelle BalandoLv10

29 Sep 2019

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Hello, I would like to double check these if questions for True and Falses Questions are correct for Microeconomics! Thank you

T or F

___T___ 1. An inferior good can be demand inelastic but not demand elastic.

___T___ 2. Demand is elastic if price changes by a smaller percent than quantity demanded

___F___ 3. Total utility always decreases as marginal utility decreases.

___T___ 4. The law of diminishing marginal utility cannot be used to make interpersonal utility comparisons.

___F___ 5. If the demand for a product is highly elastic, a price drop may reduce incomes of the producers.

You can only consume two goods: hamburgers and smoothies. The price of each hamburger is $2.00 and the price of each smoothie is $1.00 and you have only $11 dollars to spend.

A. How do you allocate your budget? (What would you buy first, second, or last). Use the table below to make your calculations. Please show your work.

B. What would be the TOTAL UTILITY you obtain from your purchase? (Show your calculations)

C. Define the Law of Diminishing Marginal Utility. How can it be explained by looking at the table below?

Hamburgers $2each				Smoothies $1 each
Qd	Total Utility	MU	MU/Ph	Qd	Total Utility	MU	MU/Ps
1	45			1	25
2	85			2	45
3	120			3	60
4	150			4	70
5	175			5	77.5
6	195			6	82.5

ochregerbil875

Question #1: When is the Best Time to Quit? Entrepreneurs are, by nature, stubborn. The late Dave Thomas, the founder of Wendy's Old Fashioned Hamburgers, often recounted how many of his friends and advisors recommended that he not start Wendy's since the United States already had plenty of fast-food restaurants. Many new businesses fail, and knowing when to get out can be as important as when to keep going. Let's say that you began a software design business after graduating from college. Your first year accounting profit is $25,000. Should you continue in the business or should you leave?

Question #2: Related to Solved Problem 9.6 on page 297 In 2013, Sony announced that it had suffered losses selling televisions for the ninth straight year. Given the strong consumer demand for plasma, LCD, and LED television sets, shouldn't Sony have been able to raise prices to earn a profit? Briefly explain.