question
When an economist talks about utility, she is talking about
answer
the satisfaction that results from the consumption of a good.
question
After consuming the first slice you receive 14 utils of total utility, after the second you receive 22 utils of total utility, and after the third 25 utils of total utility. What is your total utility and marginal utility>\?
answer
Total Utility 25, Marginal Utility is 3 utils
question
Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72 respectively. In this situation we have_________ marginal utility, which is generally_______in the analysis of consumer choice.
answer
diminishing, assumed
question
Suppose you are consuming a particular good and you could somehow give back the last unit you consumed. What would happen total and marginal utility (assuming that the marginal utility of the unit given back is positive)?
answer
Total utility would decrease but marginal utility would increase
question
You and your roommate are eating pizza and have already consumed all but the last slice. Your roommate claims that he is hungrier than you and therefor should get the last slice of pizza. Your roommate has made
answer
An interpersonal utility comparison
question
Suppose the government provides peanut butter to everyone free of charge and everyone consumes it to the point at which he receives no additional satisfaction from another spoonful. Is this necessarily good?
answer
No, because there might be some cases where the resources used to produce peanut butter could have been better used to produce more of other products
question
Which of the following statements is true?
A)If a consumer is in equilibrium, it does not necessarily follow that he or she is also achieving the greatest total utility.
B)If a consumer is in equilibrium it necessarily follows that he or she is receiving the greatest total utility
C)If a consumer is attaining the greatest marginal utility then it necessarily follows that he or she is also achieving the greatest total utility
D)If a consumer is attaining the greatest total utility, then it necessarily follows that he or she is also achieving the greatest marginal utility
A)If a consumer is in equilibrium, it does not necessarily follow that he or she is also achieving the greatest total utility.
B)If a consumer is in equilibrium it necessarily follows that he or she is receiving the greatest total utility
C)If a consumer is attaining the greatest marginal utility then it necessarily follows that he or she is also achieving the greatest total utility
D)If a consumer is attaining the greatest total utility, then it necessarily follows that he or she is also achieving the greatest marginal utility
answer
B)If a consumer is in equilibrium it necessarily follows that he or she is receiving the greatest total utility
question
Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12 utils. How should Dan redirect his purchases so as to attain consumer equilibrium?
answer
There is not enough information to answer the question
question
Suppose a consumer is purchasing Coke and pretzels in quantities such that she is achieving consumer equilibrium. Then the price of Coke decreases. The consumer will likely_____ her consumption of Coke and the marginal utility of Coke will______ while the total utility from Coke will_____
answer
increase, decrease , increase
question
Diamonds are more expensive than water because
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They are relatively scarce and they yield higher marginal utility
question
Given that MUX/PX < MUY/PY, consumers who spend all their income on these two goods
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Can Increase total utility by buying more of Y and less of X
question
Don receives 100 utils from consuming two oranges. The utility he derives from consuming the second orange equals 30 utils. The information provided
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The marginal utility Dan receives from consuming the third orange will be less than 30 utils
question
We take one dollar from a millionaire and give it to a pauper. Assuming a diminishing marginal utility of money,
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We cannot say whether total utility will change
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In the long run
answer
All costs are variable costs
question
Which of the following statements is true?
A)Costs are always explicit, never implicit
B)Costs are always implicit, never explicit
C)George runs a stationary shop, he paid Frank 5k for the carper he installed in the shop the 5k is an implicit cost
D)An implicit cost is a cost that represents the resources used in production for which no actual monetary payment is made
A)Costs are always explicit, never implicit
B)Costs are always implicit, never explicit
C)George runs a stationary shop, he paid Frank 5k for the carper he installed in the shop the 5k is an implicit cost
D)An implicit cost is a cost that represents the resources used in production for which no actual monetary payment is made
answer
D)An implicit cost is a cost that represents the resources used in production for which no actual monetary payment is made
question
Diane has a business, Diane opened last year: Price 20$ quantity sold 25k, implicit cost 255k, explicit cost 360k. Assuming that all relevant costs and revenue are noted what was Diane's economic profit?
answer
-115k
question
Average variable cost equals
A)ATC minus AFC
B)TVC/ Change in Output
C)TVC/ Output
D)Price of the variable input times the quantity of the variable input
E)A and C
A)ATC minus AFC
B)TVC/ Change in Output
C)TVC/ Output
D)Price of the variable input times the quantity of the variable input
E)A and C
answer
E)A and C
question
There is a link between production in cost, we know this because
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What happens to MPP directs what happens to MC
question
If output rises from 175 per hour to 193 units per hour as another worker is hired and the additional worker receives 25 dollars in wagers per hour, assuming that labor is the only variable input it follows that marginal cost is?
answer
175-193=18 w/mpp 25/18=1.38
question
Which of the following statements is false?
A)If the MC is rising, the AVC curve must be rising
B)If MC is below ATC, ATC must be falling
C)IF MC is above AVC then AVC must be rising
D)IF MC is above ATC, then ATC must be rising
A)If the MC is rising, the AVC curve must be rising
B)If MC is below ATC, ATC must be falling
C)IF MC is above AVC then AVC must be rising
D)IF MC is above ATC, then ATC must be rising
answer
A)If the MC is rising, the AVC curve must be rising
question
If a firm earns a normal profit then it has generated revenues
answer
Equal to the sum of implicit and explicit costs
question
Which of the following curves is never U shaped
A)he average total cost curve
B)The average fixed cost curve
C)The marginal cost curve
D)The average variable cost curve
A)he average total cost curve
B)The average fixed cost curve
C)The marginal cost curve
D)The average variable cost curve
answer
B)The average fixed cost curve
question
The marginal cost curve passes through the______curve at its lowest point
A)AVC
B)ATC
C)AFC
D)A and B
E) a, b, c
A)AVC
B)ATC
C)AFC
D)A and B
E) a, b, c
answer
D)A and B
question
Minimum Effiecent Scale refers to the
answer
lowest output level at which average total costs are minimized
question
If the LRATC curve is falling, then
answer
economies of scale are present
question
If the "minimum efficient scale" in an industry is at 25 percent of market sales, what is the maximum number of efficient firms the economy can support in this industry?
answer
4
question
If Fiona says that drinking soda gives her utility what specifically does she mean
answer
Drinking soda is something that gives her satisfaction or pleasure
question
Suppose Will consumes 5 units of good x and receives 20 utils from the first unit, 18 from the second and 12 from the 3rd and 7 from the fourth and 1 from the fifth. The total utility will receives from consuming 5 units is
answer
56 units
question
Suppose Bob received 123 utils from consuming one banana and 159 utils from consuming two bananas what is the marginal utility fo the second banana?
answer
36 utils
question
The law of diminishing utility says that the marginal utility gained by consuming equal____units of a good will_____ as the amount consumed ______
answer
successive, decline_ decreases
question
Which of the following is false?
A)It is impossible for Total utility to rise as marginal utility falls
B)Marginal utility is the same as average utility
C)Marginal utility is greater than the total utility for the first unit of a good consumed
D) a and c
E) a, b, and c
A)It is impossible for Total utility to rise as marginal utility falls
B)Marginal utility is the same as average utility
C)Marginal utility is greater than the total utility for the first unit of a good consumed
D) a and c
E) a, b, and c
answer
E) a, b, and c
question
Suppose the marginal utility of pickles is 50 utils nd the MU of milk is 30 utils the price of pickles is 1 dollar and the price of milk is 1.25$. Given this
answer
More utility penny is gained from consuming pickles than milk
question
The price of good Y, a normal good , falls from 10$ to $8. As a result the quantity demanded of good Y rises from 125 units to 155 units. Holding real income constant what is true
A)The consumer consumes 20 more units of Y because it has become relatively cheaper, therefore this is the income effect
B)The consumer consumes 10more units of Y because she or he has more real income, therefore this is the income effect
C)The consumer consumes 20 more units of Y because it has become relatively cheaper this is the substitution effect
D)The consumer consumes 10 more unites of Y because it has become relatively more expensive there for this is the income effect
A)The consumer consumes 20 more units of Y because it has become relatively cheaper, therefore this is the income effect
B)The consumer consumes 10more units of Y because she or he has more real income, therefore this is the income effect
C)The consumer consumes 20 more units of Y because it has become relatively cheaper this is the substitution effect
D)The consumer consumes 10 more unites of Y because it has become relatively more expensive there for this is the income effect
answer
C)The consumer consumes 20 more units of Y because it has become relatively cheaper this is the substitution effect
question
T/F: The law of diminishing marginal utility says that the more of a particular good one consumes the more utility one receives from the consumption of that good
answer
False
question
We would expect the total utility of diamonds to be ______ than the total utility of water and the marginal utility of diamonds to be _____ than the marginal utility of water
answer
lower, higher
question
In order for an individual to achieve consumer equilibrium through the consumption of two goods, A and B, that individual must fufill the condition
answer
MUa/Pa=MUb/Pb
question
If the marginal utility of a good is negative the consumers
answer
should buy less of it
question
If total utility of a good is high while the price of the good is low then it is likely that the good is
answer
plentiful
question
Real income is
answer
Income adjusted for price changes
question
T/F
One makes an interpersonal utility comparison if he or she compares the utility one person receives from a good with the utility another person receives from the same good
One makes an interpersonal utility comparison if he or she compares the utility one person receives from a good with the utility another person receives from the same good
answer
True
question
That portion of change in quantity demanded of a good that is attributable to a change in its relative price is called the substitution effect
answer
True
question
Cy recently went into the business of producing and selling cardboard boxes which of the following is most likely to be a fixed cost?
A) fire insurance
B)Labor Costs
C)Paper Costs
D)Long distance telephone costs
E)b ,c, and d are equally likely to be fixed costs
A) fire insurance
B)Labor Costs
C)Paper Costs
D)Long distance telephone costs
E)b ,c, and d are equally likely to be fixed costs
answer
A) fire insurance
question
Costs do not change with output are called ______ costs
answer
fixed
question
Law of Diminishing Marginal Returns
answer
As more of a variable resource is added to a given amount of a fixed resource, marginal product eventually declines and could become negative
question
T/F
The marginal cost cure has an upward sloping portion to it because of the law of diminishing marginal returns
The marginal cost cure has an upward sloping portion to it because of the law of diminishing marginal returns
answer
True
question
Which of the following will not change a firms cost curves?
A)change in price of the good the firm produces
B)change in input prices
C)change in taxes
D)change in technology
E)b and d
A)change in price of the good the firm produces
B)change in input prices
C)change in taxes
D)change in technology
E)b and d
answer
A)change in price of the good the firm produces
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