question
The law of diminishing marginal utility states that
answer
added satisfaction declines as a consumer acquires additional units of a given product.
question
The pleasure, satisfaction, or happiness obtained from consuming a good or service is what?
answer
Utility
question
Utility is easy to quantify. True or False?
answer
False Utility is difficult to quantify.
question
The utility of a specific product or service may vary widely from person to person what does that mean?
answer
subjective
question
Reginald bought a six pack of soda. The amount of satisfaction he derives from his purchase is called?
answer
Total utility
question
A family that does not own a refrigerator may have a strong desire to have one. Unlike a family who owns two refrigerators may have a reduced desire for a third. What explains this decrease in desire?
answer
Law of diminishing marginal utility
question
Utility is defined as:
answer
the satisfaction or pleasure obtained by consumers from consuming a good or service
question
What is the change in total utility that results from the consumption of one more unit of a product?
answer
Marginal utility
question
What are the characteristics of utility?
answer
It is subjective, it is not synonomous with usefulness, and it is difficult to quantify.
question
utility can be measured in imaginary units called
answer
utils
question
In order to find out the total utility for something you subtract the marginal and
answer
total utility to get your answer
question
The law of diminishing marginal activity says that added satisfaction declines as a consumer acquires additional units of a given product.
answer
True
question
If sue only buys apples if the price decreases because each apple yields a smaller amount of additional satisfaction she is exemplifying the law of?
answer
diminishing marginal utility
question
Which best describes the marginal utility?
answer
The extra satisfaction a consumer gets from buying an additional product.
question
Which of the following explains why the demand curve for a given product is downward sloping?
answer
The law of diminishing marginal utility
question
Which best describes the relationship between total utility and marginal utility?
answer
Marginal utility reflects the changes in total utility.
question
If marginal utility becomes negative, then total utility falls as an extra unit of a good is consumed
answer
true
question
In which of the following ways does the law of diminishing marginal utility support and exemplify consumer behavior?
answer
downward sloping demand curve
question
A change in total utility from five to nine utils results in marginal utility of?
answer
four utils
question
Which of the following best describes consumer choice in relation to preferences for goods and services?
answer
Consumers have a good idea of how much marginal utility they will get from successive units of various products they might purchase.
question
When consumers will purchase additional units of a product only when the price declines, they are acting in accordance with which of the following?
answer
The law of diminishing marginal utility
question
For a consumer with an average income, the what is greater than for a consumer with a high income?
answer
budget constraint
question
If successive units of a good yield smaller and smaller amounts of marginal utility then the consumer will buy additional units of a product only if its price
answer
falls
question
The price of goods, combined with the fact that consumers' financial resources are limited, means that consumers must do which of the following?
answer
compromise on spending
question
As more of a product is consumed, total utility _____ at a diminishing rate, reaches a maximum, and then ____
answer
rises, falls
question
According the utility-maximizing rule, consumers achieve the greatest amount of satisfaction by doing which of the following?
answer
Purchasing a combination of goods or services whereby the last dollar spent on each yields the same amount of marginal utility
question
Which of the following supports the idea that price must fall in order for quantity demanded to increase?
answer
The law of diminishing marginal utility
question
Consumer choice is influenced not only by the ______ utility that extra units of a good will yield, but also by how much ______ must be given up to obtain extra units of the good.
answer
marginal,income
question
When consumers seek to maximize their total utility, they are engaging in which of the following?
answer
rational behavior
question
As a result of having fixed or limited amounts of income, all consumers face which of the following?
answer
budget constraint
question
The marginal utility of successive units of a good or service should always be compared against the added cost or price of the good or service. True or false?
answer
True
question
Which of the following explains why every good has a price?
answer
Goods are scarce relative to the demand for them.
question
The formula for the marginal utility per-dollar-spent of a product is which of the following?
answer
Marginal utility of the product divided by the price of the product
question
People achieve ______ when they have "balanced their margins" according to the utility-maximizing rule.
answer
consumer equilibrium
question
A consumer's choices are directly influenced by all of the following except
answer
costs of production
question
Given the different combinations of goods and services a consumer can obtain within his or her budget, the ______ can determine the specific combination that will yield the most utility or satisfaction.
answer
the utility maximizing rule
question
Which of the following reasons explains why marginal utilities must be put on a per-dollar-spent basis?
answer
To make the amounts of extra utility derived from differently priced goods comparable.
question
Rational consumers must compare the ______ from each product with its added cost.
answer
marginal utility
question
The formula for the marginal utility per-dollar-spent of a product is the marginal utility of the product divided by its
answer
price
question
The utility-maximizing rule requires that the marginal utility of product A divided by the price of A should be ______ the marginal utility of product B divided by the price of B.
answer
equal to
question
According the utility-maximizing rule, consumers achieve the greatest amount of satisfaction by doing which of the following?
answer
Purchasing a combination of goods or services whereby the last dollar spent on each yields the same amount of marginal utility
question
Which of the following best describes how a consumer's demand schedule or curve can be derived?
answer
By considering alternative prices at which a good or service might be sold and then determining the quantity a consumer will purchase
question
Which of the following best describes the meaning of the utility-maximizing rule?
answer
To maximize satisfaction, consumers should allocate income so that the last dollar spent on each product yields the same marginal utility.
question
An individual's demand curve for a product shows how much of the product the individual will blank at various blank.
answer
purchase,prices
question
The downward sloping demand curve illustrates the declining nature of marginal utility because ______.
answer
each point on the demand curve meets utility maximizing rule.
question
The substitution effect contributes to the blank relationship between price and quantity demanded that is found along the demand curve.
answer
inverse
question
Rational consumers must compare the ______ from each product with its added cost.
answer
marginal utility
question
The ______ is the impact that changes in the prices of goods and services have on consumers' real earnings.
answer
income
question
In comparing two products, a decrease in the price of one product ______ the marginal-utility-per-dollar spent on it, and the consumer will therefore buy ______ of it.
answer
increases,more
question
The iPad disrupted consumer equilibrium because spending shifted from alternative products with a(n) ______ marginal-utility-to-price ratio to iPads as a way to increase total utility.
answer
lower
question
Which of the following contributes to the inverse relationship between price and quantity demanded that is illustrated by a downward sloping demand curve for a normal good?
answer
substitution effect, income effect
question
Which of the following explain why the price of water per gallon is lower than the price of a diamond per carat?
answer
Water is in great supply relative to demand and thus has a very low price per gallon.
Diamonds have high marginal utility, and therefore, their price is very high per carat.
Diamonds are in small supply relative to their demand, thus their price is very high per carat.
Diamonds have high marginal utility, and therefore, their price is very high per carat.
Diamonds are in small supply relative to their demand, thus their price is very high per carat.
question
The ______ is the impact that a change in a product's price has on its relative expensiveness.
answer
substitution
question
The marginal utility (MU) of an additional unit of water consumed by a typical consumer is ______, and the MU of an additional unit of diamond purchased by a consumer is ______.
answer
low,high
question
An increase in real income caused by ______ in the price of a product will allow consumers to buy more of that product. Therefore, this income effect helps explain why the demand curve slopes ______.
answer
reduction, slopes downward
question
According to the diamond-water paradox, some "essential" goods have ______ prices than some "unimportant" goods.
answer
much lower
question
Consumers are willing to pay a much lower price for water than for diamonds because ______.
answer
the marginal utility of water is low while the marginal utility of diamonds is high
question
When people exchange a gift for a different item or for a cash refund, they are doing which of the following?
answer
Attempting to maximize their total utility
question
Which of the following offers insight into the preference for cash gifts over noncash gifts?
answer
marginal utility analysis
question
The ______ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use.
answer
economic
question
A firm's blank costs are the explicit and implicit costs of the resources it has used.
answer
economic
question
Economic costs equal explicit costs minus implicit costs.
answer
False
question
Economic costs equal implicit +explicit costs
answer
True
question
Explicit costs
answer
the monetary payments it makes to purchase resources from others. Because these costs involve an obvious cash transaction, they are called explicit costs.
question
Implicit costs
answer
are the opportunity costs of using the resources that it already owns rather than selling those resources to outsiders for cash. they are not obvious.
question
Which of the following would incur an explicit cost?
answer
Raw materials
Utility usage
Labor services
Utility usage
Labor services
question
Which of the following explains the concept of explicit costs?
answer
A firm's monetary payments made for the use of resources owned by others.
A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
question
What is economic cost?
answer
as the payment that must be made to obtain and retain the services of a resource.
question
Implicit costs are the firm's opportunity costs of using its self-owned, self-employed resources.
answer
True
question
When a firm considers its economic costs, it considers which of the following
answer
All opportunity costs of resources used
Explicit and implicit costs
Explicit and implicit costs
question
accounting profit
answer
The total revenue of a firm
question
How to calculate the accounting profit?
answer
calculate by subtracting total explicit costs from total sales revenue
question
Accounting profit is what remains after a firm has paid its _______ costs.
answer
explicit
question
A firm's monetary payments to those who supply transportation services is an example of ______
answer
explicit costs
question
A(n) ______ profit is equal to total revenue less explicit costs.
answer
accounting
question
Forgone entrepreneurial income is an example of a(n) ______.
answer
implicit cost
question
Your company's total sales revenue for the month is $150,000; the costs to produce your products are $12,000 for rent, $6,000 for utilities, and $42,000 for employee wages. What is your accounting profit?
answer
90,000
question
Subtracting implicit costs from accounting profit yields which of the following?
answer
economic costs
question
What is the formula for accounting profit?
answer
total revenue - explicit costs
question
What is the formula for economic profit?
answer
Revenue -Explicit- Implicit
question
If economic cost is $96,000 and total revenue is $120,000, what is the economic profit?
answer
24,000
question
Generally speaking, there are two types of calculable profits. Of these, accounting profit is what remains after a firm has paid its explicit costs.
answer
True
question
What is the difference between accounting profit and economic profit?
answer
Accounting profit equals total revenue less explicit costs. Economic profit equals total revenue less economic costs (explicit and implicit).
question
Which of the following are examples of implicit costs?
answer
Forgone rent
Forgone wages
Forgone wages
question
Determining normal profit involves estimating which of the following?
answer
Forgone entrepreneurial income
question
What is the total revenue if the economic profit is $24,000 and the economic costs are $96,000?
answer
120,000
question
accounting profit is the firm's total revenue less its explicit costs, whereas economic profit is the firm's total revenue less economic costs (explicit and implicit).
answer
true
question
What are the components of plant capacity?
answer
Amount of machinery and equipment
Size of the factory building
Size of the factory building
question
What does it mean to the entrepreneur when economic profit is zero?
answer
The entrepreneur is covering all explicit and implicit costs, including a normal profit.
question
Subtracting explicit and implicit costs from total revenue yields which of the following?
answer
economic profit
question
The short run refers to a period of time too brief for a firm to alter its plant capacity yet long enough to permit a change in the degree to which the fixed plant is used.
answer
true
question
Which industry requires the most time for its firms to alter plant capacity?
answer
aircraft manufacturing
question
A time period during which a firm can adjust the quantities of all the resources that it employs, including plant capacity, is known as which of the following?
answer
long run
question
A company hiring an entire shift of workers is an example of a(n) short run adjustment whereas installing new equipment is an example of a long run adjustment.
answer
True
question
Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.
answer
True
question
In the short run, if a firm wants to vary its output, what resources can it adjust?
answer
Materials
Labor
Labor
question
Which of the following are examples of a long-run adjustment period?
answer
The two days it takes a t-shirt maker to add sewing machines and silk-screen printers
The three years it takes an oil refining company to build a new plant
The three years it takes an oil refining company to build a new plant
question
In microeconomics, the long run is also known as which of the following?
answer
Variable plant period
question
What is the term for the total quantity of a specific good produced?
answer
total product
question
What does it mean to the entrepreneur when economic profit is zero?
answer
The entrepreneur is covering all explicit and implicit costs, including a normal profit.
question
Which of the following are long-run adjustments?
answer
Boeing adds a new production facility.
Boeing installs more robotic welding equipment.
Boeing installs more robotic welding equipment.
question
If the change in total product is 10 units and the change in labor input is 1, what is marginal product?
answer
10
question
What is the formula for Marginal product?
answer
Marginal product=change in total product/change in labor input
question
The short run and the long run are conceptual periods rather than calendar time periods.
answer
True
question
When total revenue earned by an entrepreneur is equal to the sum of explicit and implicit costs, then the entrepreneur earns a(n) ______.
answer
zero economic profit
question
What is average product?
answer
also called labor productivity, is output per unit of labor input
question
Formula for average product?
answer
Average product=total product/units of labor
question
If total product is 50 and the units of labor used is 10, then the average product is
answer
5
question
Which is another term for average product?
answer
Labor productivity
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
