question
As marginal utility declines but remains positive, then
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total utility continues to increase but at a decreasing rate.
question
A consumer has spent all of his funds on hamburgers and movies. The price of a hamburger is $1 and the price of a movie is $5. The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40. This consumer has
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not maximized utility. To maximize utility, he should cut back on hamburgers and buy more movies
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Other things being equal, when the money price of a good increases, its relative price
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increases
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The time frame in which all factors of production can vary is
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the long run.
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Marginal product and average product are measured in
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units of production.
question
At Phil's Hot Dog Stand, we found the following:
4 laborers produced 66 hot dogs
5 laborers produced 76 hot dogs
6 laborers produced 85 hot dogs
7 laborers produced 88 hot dogs
What was the marginal physical product of the seventh laborer?
4 laborers produced 66 hot dogs
5 laborers produced 76 hot dogs
6 laborers produced 85 hot dogs
7 laborers produced 88 hot dogs
What was the marginal physical product of the seventh laborer?
answer
3 hot dogs
question
In a map showing short-run cost functions, one curve begins at the origin and rises as output expands. It is called the
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the total variable cost curve.
question
When the average physical product is falling
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average variable costs are rising
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Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is
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facing constant returns to scale.
question
Which of the following is NOT a characteristic of perfect competition?
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Each firm determines the market price of its product.
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The vertical distance between the horizontal axis and any point on a perfect competitor's demand curve measures
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product price, marginal revenue, and average revenue.
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The perfectly competitive, profit-maximizing rate of production
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occurs at the point at which marginal revenue is equal to marginal cost.
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A firm is currently producing at the rate of output at which total revenues just cover its total variable costs. If demand falls, the firm should
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shut down.
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The opportunity cost to society of producing one more unit of the good is
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marginal cost.
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A perfectly competitive firm will not earn an economic profit in the long run, because
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there are no barriers to entry into the industry.
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When a firm experiences declining long-run average total costs as it produces more output, there are
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economies of scale.
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A natural monopoly
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usually arises when there are large economies of scale.
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To sell more units, a monopolist
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moves down its demand curve to a lower price that will increase quantity demand.
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Suppose a monopolist's costs and revenues are as follows: ATC = $50.00; MC = $45.00; MR = $40.00; P = $55.00. The firm should
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decrease output and increase price.
question
A monopolist engages in price discrimination
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by charging a lower price to consumers whose demand is more elastic.
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Economists criticize monopolies because monopolies
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restrict output and raise prices compared to a competitive situation.
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