The model of competitive markets relies on these three core assumptions: 1. There must be many buyers and sellers—a few players
1 answer:
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Answer: 2.75 blankets.
Explanation:
The opportunity cost is the value of a good that is sacrificed by choosing some other alternative. So, there are certain costs associated with the consumption of some goods.
In our case,
Opportunity cost of producing 1 shirt =
= 2.75 blankets
Opportunity cost of producing 1 shirt is 2.75 blankets which means that 2.75 blankets have to be foregone to produce 1 shirt.
Answer:
Option (B) is correct.
Explanation:
The utility maximization point for a consumer is as follows:
It is given that,
price of Pepsi(x) = $1 per can
price of a hamburger(y) = $2
Marginal utility from Pepsi = 4
Marginal utility from hamburgers = 6
Hence,
4 > 3
Therefore, it can be seen that the consumer's utility is not maximized at this point.
Law of diminishing marginal utility states that as the consumer consumes more and more quantity of goods then as a result the utility obtained from the consumption goes on diminishing.
So, there is a need to increase the quantity of Pepsi consumed and reducing the quantity of hamburgers consumed.