economics A Level P4Watch
It increases production of necessity goods and reduces production of luxury goods.
The marginal utility of the consumers of the additional necessity goods produced is greater than
the marginal utility of the consumers of the luxury goods that are no longer produced.
What is the effect on the economic efficiency of the economy?
A increases increases
B increases unchanged
C unchanged increases
D unchanged unchanged
2) A household which spends all of its income on bananas and apples makes the following
fruit price per
The household derives twice as much utility from the last unit of bananas consumed as from the
last unit of apples consumed.
What should the household do to maximise utility from the consumption of these fruits?
A decrease increase
B increase decrease
C no change decrease
D no change increase
8) The average variable costs of a firm are constant over the relevant range of output.
Assuming that fixed costs are incurred, which curve on the diagram could be the firm’s average
total cost curve over this range?
Also num 11,12,13,14
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