Question 1

2.5pts

A person is in consumer equilibrium, and then the price rises for one of the goods she purchases. If she wants to restore herself to consumer equilibrium, she will (most likely)

Group of answer choices

buy less of the good whose price has risen and more of the relatively lower priced goods.

try to decrease the marginal utility she receives from the good whose price has risen.

try to increase the marginal utility she receives from the goods whose prices did not rise.

buy more of both the good whose price has risen and of the goods whose prices have not risen.

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Question 2

2.5pts

If, as a person consumes additional units of a good, total utility rises by a constant amount, it follows that

Group of answer choices

marginal utility is rising.

marginal utility is falling.

total utility and marginal utility are equal.

marginal utility is constant.

marginal utility is negative.

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Question 3

2.5pts

Given two goods, X and Y, and their prices, PXand PYa consumer will maximize total utility by allocating expenditures such that

Group of answer choices

MUX/PY= MUY/PX.

PY/MUX= PX/MUY.

MUX/PX= MUY/PY.

MUX= PX= MUY= PY= MU$.

MUX= MUY= PX= PY= MU$.

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Question 4

2.5pts

If a person is receiving greater marginal utility per dollar from consuming one good than another, it follows that he or she is

Group of answer choices

maximizing disutility.

not maximizing utility.

maximizing utility.

There is not enough information to answer the question.

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Question 5

2.5pts

A positively sloped long run average cost implies:

Group of answer choices

economies of scale.

constant returns to scale.

diseconomies of scale.

diminishing marginal returns to a factor.

increasing returns to scale.

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Question 6

2.5pts

If the average variable cost of a firm is falling, then the:

Group of answer choices

average fixed cost must be rising.

marginal cost must be falling.

marginal cost must be rising.

marginal cost lies below the average variable cost.

marginal cost lies above the average variable cost.

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Question 7

2.5pts

In the long run,

Group of answer choices

some resources are variable and some resources are fixed.

all the resources can be varied.

all resources are fixed.

at least one resource is fixed.

there are no explicit costs.

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Question 8

2.5pts

A firm's marginal cost equals the:

Group of answer choices

ratio of total cost to total quantity.

slope of the demand curve under perfect competition.

change in total cost divided by the change in total output.

slope of the supply curve.

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Question 9

2.5pts

"As I add more workers to the factory line, the additional output produced by each additional worker seems to decline. Eventually, the workers just get in each others' way."

This statement by a factory supervisor refers to the law of:

Group of answer choices

comparative advantage.

demand.

supply.

increasing returns to scale.

diminishing marginal returns.

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Question 10

2.5pts

If labor is the only variable input, an increase in the quantity of labor:

Group of answer choices

does not have any effect on the quantity of output.

causes the output to increase initially at a diminishing rate and then at an increasing rate.

causes the output to increase at a constant rate till the last worker is hired.

causes the output to increase initially at an increasing rate and then at a decreasing rate.

causes the output to decrease at a constant rate till the last worker is hired.

Question 15

2.5pts

Suppose that at a given level of output, a perfectly competitive firm charges a price of $14 and has average total costs of $10. If its economic profit is $20,000, then it must be producing:

Group of answer choices

40,000 units of output.

20,000 units of output.

30,000 units of output.

10,000 units of output.

5,000 units of output.

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Question 16

2.5pts

Suppose that ABC Industries, a perfectly competitive firm, currently produces 500 units of imitation ham spread for a total cost of $1,500. The marginal cost of the 500thunit is $20, and the marginal revenue of the 500thunit is $15. To maximize profits, Cheapo Industries should:

Group of answer choices

continue to produce 500 units.

produce more than 500 units but less than 1500 units.

produce less than 500 units.

produce more than 1500 units.

stop producing at 500 units.

Question 21

2pts

The law of diminishing marginal utility

Group of answer choices

allows us to make interpersonal utility comparisons.

tells us that an additional dollar is worth less to a millionaire than to a poor person.

tells us that an additional dollar of income is worth less than the preceding dollar of income.

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Question 22

2pts

Suppose that a consumer purchases a combination of X and Y such that MUX/PX= 15 utils per dollar and MUY/PY= 10 utils per dollar. To maximize utility, the consumer should buy

Group of answer choices

less of X and more of Y.

more of X and less of Y.

more of both X and Y.

less of both X and Y.

neither X nor Y.

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Question 23

2pts

Which of the following statements is true?

Group of answer choices

If a consumer is in equilibrium, it does not necessarily follow that he or she is also achieving the greatest total utility.

If a consumer is in equilibrium, it necessarily follows that he or she is also achieving the greatest total utility.

If a consumer is attaining the greatest marginal utility, then it necessarily follows that he or she is also achieving the greatest total utility.

If a consumer is attaining the greatest total utility, then it necessarily follows that he or she is also achieving the greatest marginal utility.

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Question 24

2pts

Suppose that the total utility from consuming one unit of good Z is 220 utils, the total utility from consuming two units of good Z is 320 utils, and the total utility from consuming three units of good Z is 400 utils.The marginal utility received from consuming the third unit of good Z is

Group of answer choices

313.33 utils.

80 utils.

100 utils.

50 utils.

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Question 25

2pts

Which of the following statements is true?

Group of answer choices

If marginal utility is constant, then total utility for two units of a good is equal to the marginal utility of the second unit of the good.

The marginal and total utility of a good are the same for the first unit of the good.

Total utility will rise if marginal utility is negative.

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Question 26

2pts

To an economist,utilityrefers to the

Group of answer choices

usefulness of a good or service.

satisfaction that results from the consumption of a good.

relative scarcity of a good.

rate of decline in the demand curve.

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Question 27

2pts

With expansion in the level of output, total fixed cost:

Group of answer choices

declines but remains positive.

increases.

falls to zero.

remains constant.

becomes negative.