Econmoics Test 3

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The ability of a good or service to satisfy wants is called:

Utility

Total utility may be determined by

summing the marginal utilities of each unit consumed.

Refer to the above data. The value for W is:

20.

Refer to the above data. The value for X is:

15

Refer to the above data. The value for Y is:

45.

Refer to the above data. The value for Z is:

-5.

Marginal utility becomes negative beginning with the:

fourth unit.

The above data illustrate the:

law of diminishing marginal utility.

You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal utility of the event is:

negative.

Marginal utility can be:

positive, negative, or zero.

The law of diminishing marginal utility states that:

beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.

. If the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing

4 units of J and 5 units of K.

What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively?

276 utils

If the consumer's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4 respectively, she would maximize her satisfaction by

2 units of J and 3 units of K.

Ben is exhausting his money income consuming products A and B in such quantities that MUa/Pa = 5 and MUb/Pb = 8. Ben should purchase:

more of B and less of A.

Diminishing marginal utility explains why

demand curves are downsloping.

What quantities of X and Y should be purchased to maximize utility?

. 2 of X and 5 of Y

What level of total utility will the utility-maximizing consumer realize?

96 utils

If the price of X decreases to $2, then the utility-maximizing combination of the two products is:

4 of X and 5 of Y.

Which of the following represents the demand schedule for X?

B

Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?

depreciation charges on company-owned equipment

Costs to an economist

. may or may not involve monetary outlays.

To the economist, total cost includes:

. explicit and implicit costs, including a normal profit.

Which of the following definitions is correct?

. Economic profit = accounting profit - implicit costs.

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:

$200,000 and its economic profits were zero

The basic characteristic of the short run is that:

. the firm does not have sufficient time to change the size of its plant.

To economists, the main difference between the short run and the long run is that:

in the long run all resources are variable, while in the short run at least one resource is fixed.

The law of diminishing returns indicates that:

as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is not correct?

AP continues to rise so long as TP is rising.

Which of the following best expresses the law of diminishing returns?

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra output will decline

The total variable cost of producing 5 units is:

$37.

The average total cost of producing 3 units of output is:

$16.

. The average fixed cost of producing 3 units of output is

$8.

The marginal cost of producing the sixth unit of output is:

$8.

The profit-maximizing output for this firm:

is 5.

Economies and diseconomies of scale explain:

why the firm's long-run average total cost curve is U-shaped.

. The above diagram shows the short-run average total cost curves for five different plant sizes of a firm. The shape of each individual curve reflects:

. increasing returns, followed by diminishing returns.

As the firm in the above diagram expands from plant size #1 to plant size #3, it experiences:

economies of scale.

As the firm in the above diagram expands from plant size #3 to plant size #5, it experiences:

diseconomies of scale.

. The above diagram shows the short-run average total cost curves for five different plant sizes of a firm. In the long run the firm should produce output 0x with a plant of size:

. #2.

1 Which Best demonstrates the Law of Diminishing Marginal Utility.

C

2 Refer to the graph above what's the marginal utility for the unit 4.

44

3 Refer to the table above the addition of which units has the greatest marginal utility.

Sixth

4 Refer to the above table at which consumption level for this product does diminishing marginal utility.

7 units

5 Refer to the above table if the consumer can only buy product x how will the consumer and will be total utility

5x and 120

6 Refer the above diagram if consumers buy product X and Product Y How much will the consumer buy of each to maximize utility

and 4y

7 Refer to the above to the above diagram when the consumer purchases the utility maximizing producing X and Product Y total utility will be

156

8 Refer to the above table suppose that consumers income increase from $20 to $30 what would be the utility maximizing combination of products X and Y

5x and 5y

9 John Brook quite his job where he earned 15000 per year to become a graduate student in economics. At the university he attended he spent 2000 on books 1000 on cough medicine and earned 12000 as an economics professor what were John economics cost while he attended college

18000

10 Suppose that you could prepare your own tax return in 15 hours you could hire a tax specialist to prepare it for 2 hours. You value your time at $11 per hour. The specialist will charge 55 a hour. Opportunity cost of preparing your own Tax is

165

11 For the Nation Depicted in the Table below the opportunity cost of moving from combination A to Combination B

114 unit

12 The Total variable cost of producing 5 units is

63

13 Average total cost of producing 3 units output is

.67

14 Refer to the above table the average fixed cost of producing 3 units of output is

3.33

15 Refer to the above table the marginal cost of producing the sixth unit of the outputs

C2

1. The ability of a good or service to satisfy wants is called:

utility.

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