10. II _ 12. 13. 14. 15. An enterprtse budget shows that the expected price of corn exceeds the average variable cost but is less than average total cost does economic theory say that the farm should do? a. Contmue to produce inde finitely. b. Exit in the long run. c. Shut down production in the short run. Utility is a measure of consumers ' a. b. c. greed satisfaction elastic Ity tastes and preferences As Sam ate potato chips: the addltional amount of pleasure he received from each successive chip, ceteris paribus, decreased. This is an example of a. diminishing marginal rate of sub stltution b. the substitution effect c. total marginal utility d diminishing marginal utility As the price of a good falls, the consumer's purchase pmver increases with the same income, is able to buy more at a given Income. This IS know-n as the a. substitution effect b. Income effe ct c. diminishing marginal product law of dem and A consumer consumes two goods: Pepsi and tacos. After the price of Pepsi increases, ceteris paribus: the consumer consumes less of BOTH products. Therefore, for this consumer the effect is greater a. b. c. effect. real income; complementary substitution; real income Income; substitution complementary; real income Joan consumes two goodsfood and clothes. As the price offood goes up, ceteris paribus,the uantity consumed of clothes goes up. Therefore, a. b. c. Page 2 AGR 308 the demand for clothes is inelastic the substitution effect is stronger than the income effect food is an Infertor good the income elasticity of demand for food is greater than I