ECO/365T: Principles Of Microeconomics - Week 3

A company currently producing 10 air conditioners each day has daily total costs of $1,500. Producing an additional air conditioner will increases costs by $250 daily. What are the total daily costs for the firm if they produce the 11th air conditioner? Multiple choice question. $1,500 $1,250 $1,750 $250

$1,750 Reason: The total cost of the firm will be $1,750 if the firm produces the 11th11th air conditioner. We calculate this by adding the marginal cost of the 11th11th unit to the total cost of producing 10 units.

Barney decides to quit his job as a corporate accountant, which pays $18,000 a month, and goes into business for himself as a certified public accountant. He runs his business from his converted garage apartment, which he could rent out for $325 a month if he wasn't using it as a home office. He must purchase office supplies worth $80 a month, and his monthly electricity bill has increased by $30 now that he is working out of his home office. After six months of working from home, Barney has earned an average of $20,000 per month. Instructions: Enter your answers as a whole number. a. What are Barney's average monthly accounting profits? $ b. What are Barney's average monthly economic profits? $

$19,890 $1,565

Suppose that when the price of gasoline is $3.50 per gallon, the total amount of gasoline supplied in the United States is 8 million barrels per day. Also suppose that when the price of gas decreases to $3 per gallon, the total amount of gasoline supplied is 6 million barrels per day. Based on these numbers and using the simple formula, the price elasticity of supply for gasoline is: Multiple choice question. 1.75. 1.85. 0.54. 0.50.

1.75.

Suppose marginal utility is decreasing when more units are consumed. Which of the following statements is true? Multiple choice question. As long as marginal utility is positive total utility will increase when another unit is consumed. As long as marginal utility is zero total utility will increase when another unit is consumed. Total utility will increase when another unit is consumed. As long as marginal utility is greater than total utility total utility will increase when another unit is consumed.

As long as marginal utility is positive total utility will increase when another unit is consumed.

Consumers seek to maximize _____________ (satisfaction/total revenue) based on their preferences, limited incomes, and the prices of the goods and services available to them. (Choose your answer from the options given in the brackets.)

Blank 1: satisfaction or utility

The supply of product X is elastic if Multiple Choice a 5% increase in price generates a 7% increase in quantity supplied.an 8% increase in price generates an 8% increase in quantity supplied. a 10% decrease in price does not affect quantity supplied. a 7% decrease in price generates a 5% decrease in quantity supplied.

a 5% increase in price generates a 7% increase in quantity supplied.

Total cost divided by the amount of output produced is equal to: Multiple choice question. average variable cost. marginal cost. average fixed cost. average total cost.

average total cost.

The absolute value of the price elasticity of demand for a downward-sloping linear demand curve Multiple Choice decreases as price decreases. increases as price decreases. is zero at all prices. is unitary at all prices.

decreases as price decreases.

Total revenue minus the explicit and implicit costs of production is ______________ profit. (Use one word to answer.)

economic

Systematically thinking about the benefits associated with the consumption of goods and services can: Multiple choice question. ensure market equilibrium. reduce the need for regulation. eliminate shortages and surpluses. help consumers make better decisions.

help consumers make better decisions.

If Es = 0.25, the supply is: Multiple choice question. unit-elastic. elastic. inelastic.

inelastic.

If the absolute value of the price elasticity of demand for a good is .75, the demand for that good is described as Multiple Choice normal. elastic. inferior. inelastic.

inelastic.

When we discuss consumer behavior, we assume that consumers do their best with the _____________ they have available.

information, resources, or income

The cost associated with an additional unit of output is called (marginal/average) cost. (Choose your answer from the options given in the brackets.)

marginal

Price elasticity of supply is a ______________ number because of the law of supply.

positive

Total revenue equals: Multiple choice question. price times quantity. output times quantity. cost times output. price times cost.

price times quantity.

Total revenue is equal to: Multiple choice question. profit plus cost. price times quantity. output minus cost. fixed cost plus output.

price times quantity.

Even though the price per ounce of popcorn is much lower for the largest size at a movie theater not everyone buys the large bucket of popcorn because: Multiple choice question. the extra utility from the extra popcorn is less than the extra cost to the buyer. the extra utility from the extra popcorn is more than the extra cost to the buyer. the total utility from the extra popcorn is less than the extra cost to the buyer. the total utility from the extra popcorn is more than the extra cost to the buyer.

the extra utility from the extra popcorn is less than the extra cost to the buyer.

Along the elastic range of the demand curve,: Multiple choice question. the percentage change in quantity demanded is less than the percentage change in price. the percentage change in quantity demanded equals the percentage change in price. the percentage change in quantity demanded is greater than the percentage change in price.

the percentage change in quantity demanded is greater than the percentage change in price.

The total satisfaction or happiness received from the consumption of a good service or combination of goods and services refers to the ______________ utility; whereas the additional satisfaction or happiness received from the consumption of an additional unit of a good or service refers to the ______________ utility. (Instruction: Provide one word for the blank.)

Blank 1: total Blank 2: marginal

The difference between total utility and marginal utility is that marginal utility is the: Multiple choice question. added satisfaction of consuming another unit of the good whereas total utility is the cumulative marginal utilities of all units consumed. added units of the good whereas total utility is the cumulative units consumed. cumulative marginal utilities of all units consumed whereas total utility is the added satisfaction of consuming another unit of the good. added cost of consuming another unit of the good whereas total utility is the cumulative cost of all units consumed.

added satisfaction of consuming another unit of the good whereas total utility is the cumulative marginal utilities of all units consumed.

Total fixed cost divided by the amount of output produced is equal to: Multiple choice question. average total cost. average variable cost. marginal cost. average fixed cost.

average fixed cost

The marginal cost curve is: Multiple choice question. increasing for all levels of output. decreasing for low levels of output, then begins increasing. increasing for low levels of output, then begins decreasing. decreasing for all levels of output.

decreasing for low levels of output, then begins increasing. Reason: The marginal cost curve begins by decreasing, but eventually diminishing marginal returns causes the marginal cost to increase for higher levels of output.

The law of diminishing marginal utility helps explain one of the fundamentals behind the law of __________ .

demand

Total revenue minus the total _____________ costs of production is accounting profit.

explicit or accounting

Costs that do not change with the amount of output produced are__________ costs

fixed

Total revenue minus the total _____ and total _____ costs of production is economic profit. Multiple choice question. implicit; explicit explicit; accounting implicit; modified explicit; modified

implicit; explicit

You are the sales manager for a software company and have been informed that the absolute value of the price elasticity of demand for your most popular software is less than 1. To increase total revenues from that product, you should Multiple Choice increase the price of the software. decrease the price of the software. hold the price of the software constant. increase the supply of the software.

increase the price of the software.

Diminishing marginal utility means total utility is: Multiple choice question. increasing at a decreasing rate as long as marginal utility is positive. unchanged. decreasing at a decreasing rate as long as marginal utility is positive. decreasing at an increasing rate as long as marginal utility is positive.

increasing at a decreasing rate as long as marginal utility is positive.

A price elasticity of supply that is calculated as 0.61 would be considered ______________ .

inelastic

Costs that do not change with the amount of _____________ produced are fixed costs.

output or product

Marginal utility may be decreasing when more units are consumed but as long as marginal utility is ____________ total utility will increase when another unit is consumed. (Choose between positive or negative.)

positive

Consumers seek to maximize satisfaction based on: Multiple choice question. the prices of related goods and services. preferences, budget, and the prices of the goods and services purchased. the total number of buyers and sellers in the market. the production possibility frontier.

preferences, budget, and the prices of the goods and services purchased.

______________ elasticity of supply is a measure of how responsive the quantity supplied is to a change in price.

price

In economics, utility refers to the: Multiple choice question. services received from electric and other providers. economic value received from the consumption of goods and services. satisfaction or happiness received from the consumption of goods and services. usefulness of a product such as a washing machine.

satisfaction or happiness received from the consumption of goods and services.

The process of obtaining the greatest level of overall satisfaction or happiness from consuming goods and services subject to consumers' preferences incomes and prices is known as: Multiple choice question. cost-benefit analysis. utility maximization. systematic decision making. consumer sovereignty.

utility maximization.

Costs that change with the amount of output produced are (variable/fixed) costs.

variable

Costs that change with the amount of output produced are _____ costs. Multiple choice question. variable supply fixed rigid

variable

Costs that change with the amount of output produced are __________ costs.

variable

Multiple Choice Question The table below shows the production cost information for Raincoat, Inc. Raincoat, Inc. Production Cost RaincoatsTotal CostMarginal Cost0$50.00-1$55.00$5.002$57.50$2.503?$5.00 What is the total cost of production associated with the 3rd3rd raincoat? Multiple choice question. $5.00 $62.50 $60.00 $2.50

$62.50 Reason: The total cost of production is calculated by adding the marginal cost of producing the 3rd3rd coat to the total cost of producing the 2nd2nd. The total cost of producing 3 coats is $62.50 ($5.00 + $57.50).

If average variable cost is $74 and total fixed cost is $100 at 5 units of output, then average total cost at this output level is Multiple Choice $91. $94. $97. $100.

$94

Suppose the price elasticity of supply for lumber is 2.4. If the price of lumber increases by 20%, how much would the quantity supplied of lumber change? Multiple choice question. 0.48% 48% 0.12% 12%

48% Reason: ES = (% change in QS of lumber)(% change in P of lumber)ES = % change in QS of lumber% change in P of lumber 2.4 = (% change in QS of lumber)20% = 48%

A price elasticity of demand of -1.25 means that if price decreases by 10% the quantity demanded will________________ by ______________ %. (Please do not add the % sign. It is already there in the probe.) (Enter one word in the first blank and a number in the second blank.)

Blank 1: increase, rise, or increases Blank 2: 12.5 or 12.50

Total revenue minus the explicit and implicit costs of production is _____ profit. Multiple choice question. economic normal interior accounting

economic

Total revenue minus the explicit and implicit costs of production is _____________ profit. (Use one word to answer.)

economic

Suppose the price elasticity of supply for gasoline is 0.8. If the price of gasoline increases by 20%, the percentage change in the quantity of gasoline supplied is _______________ %. (Only enter the number; the % sign has been provided for you.)

Blank 1: 16% or 16

The difference between total utility and marginal utility is that marginal utility is the: Multiple choice question. added satisfaction of consuming another unit of the good whereas total utility is the cumulative marginal utilities of all units consumed. cumulative marginal utilities of all units consumed whereas total utility is the added satisfaction of consuming another unit of the good. added units of the good whereas total utility is the cumulative units consumed. added cost of consuming another unit of the good whereas total utility is the cumulative cost of all units consumed.

added satisfaction of consuming another unit of the good whereas total utility is the cumulative marginal utilities of all units consumed.

In the _____________ (one word) range of the demand curve, the percentage change in quantity demanded is greater than the percentage change in price.

elastic

If Es = 1.25, the supply is: Multiple choice question. inelastic. elastic. unit-elastic.

elastic.

If Es = 1.25, the supply is: Multiple choice question. unit-elastic. elastic. inelastic.

elastic.

The average total cost curve is: Multiple choice question. greater than the average variable cost curve for low levels of output, but less for higher output levels. greater than the average variable cost curve for all levels of output. less than the average variable cost curve for all levels of output. less than the average variable cost curve for low levels of output, but greater for higher output levels.

greater than the average variable cost curve for all levels of output.

The average total cost curve is: Multiple choice question. less than the average variable cost curve for low levels of output, but greater for higher output levels. greater than the average variable cost curve for low levels of output, but less for higher output levels. greater than the average variable cost curve for all levels of output. less than the average variable cost curve for all levels of output.

greater than the average variable cost curve for all levels of output. Reason: The average total cost is the sum of the average variable cost and the average fixed cost. The average total cost curve will always be greater than the average variable cost by the amount of average fixed cost.

Use the following table to answer the next question. Output - Total Cost 0 -$10 1 - 20 2 - 28 3 - 38 4 - 53 5 - 73 6 - 98 The total fixed cost of production is Multiple Choice $10. $20. $98. $0.

$10

Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000. The firm earns an accounting profit of ________ and an economic profit of ________. Multiple Choice $500,000; $200,000 $500,000; $1,700,000 $1,700,000; $200,000 $1,700,000; $500,000

$500,000; $200,000

Using absolute values in the elastic range of the demand curve,: Multiple choice question. % change in quantity demanded > % change in price. % change in quantity demanded = % change in price. % change in quantity demanded < % change in price.

% change in quantity demanded > % change in price.

The formula for price elasticity of supply is: Multiple choice question. % change in price/% change in quantity supplied. change in quantity supplied/change in price. change in price/change in quantity supplied. % change in quantity supplied/% change in price.

% change in quantity supplied/% change in price.

When the product price rises from $150 to $200, the quantity demanded falls from 1,000 to 800 units. Using the simple standard (non-midpoint) formula, the price elasticity of demand in this range is: Multiple choice question. -4.00. -0.60. -1.67. -0.25.

-0.60.

When the product price falls from $40 to $30, the quantity demanded rises from 500 to 600 units. Using the simple formula the price elasticity of demand in this range is: Multiple choice question. -0.25. -0.80. -0.3. -1.25.

-0.80.

When the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The price elasticity of demand is _____. Multiple choice question. 0.23 -2.6 -1.5 9.2

-1.5

When the product price falls from $90 to $80, the quantity demanded rises from 600 to 700 units. The price elasticity of demand is _____. Multiple choice question. 0.23 9.2 -1.5 -2.6

-1.5

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price elasticity of demand for this product is Multiple Choice -1.5. -0.15. -0.67. -67.

-1.5.

Suppose that when the price of gasoline is $3 per gallon, the total amount of gasoline supplied in the United States is 8 million barrels per day. Also suppose that when the price of gas decreases to $2.25 per gallon, the total amount of gasoline supplied is 7 million barrels per day. Based on these numbers and using the simple formula the percentage change in quantity supplied is:

-12.5%.

Suppose that when the price of gasoline is $3 per gallon, the total amount of gasoline supplied in the United States is 8 million barrels per day. Also suppose that when the price of gas decreases to $2.25 per gallon, the total amount of gasoline supplied is 7 million barrels per day. Based on these numbers and using the simple formula the percentage change in quantity supplied is: Multiple choice question. -13.3%. -1.43%. -33.33%. -12.5%.

-12.5%.

Suppose you are given the following demand data for a product. Price - Quantity Demanded $10 - 30 9 - 40 8 - 50 7 - 60 6 - 70 Using the regular percentage change formula, what is the price elasticity of demand when price decreases from $9 to $7? rev: 05_14_2018 Multiple Choice -2.25 -1.5 -1.75 -1

-2.25

When the product price falls from $80 to $60, the quantity demanded rises from 500 to 800 units. Using the simple formula the price elasticity of demand in this range is: Multiple choice question. -15. -2.40. -0.067. -0.62.

-2.40.

Suppose that when the price of gasoline is $3.50 per gallon, the total amount of gasoline supplied in the United States is 10 million barrels per day. Also suppose that when the price of gas decreases to $3 per gallon, the total amount of gasoline supplied is 8 million barrels per day. Based on these numbers and using the simple formula, the percentage change in quantity supplied is: Multiple choice question. -20%. -25%. -15%. -22%.

-20%.

Use the following graph to answer the question below. An increasing line from the origin, labeled S is drawn with data point (6, 2) labeled A and data point (12, 4) labeled B. Using the regular percentage change formula, what is the price elasticity of supply when moving from point A to point B? Multiple Choice 1 3 2 1/3

1

Below is a list of assumptions about decision making. 1. Consumers are rational. 2. Consumers are selfish. 3. Consumers have limited incomes. 4. Consumers have limited wants. 5. Consumers can rank preferences. 6. Consumers acknowledge prices. What do economists assume when evaluating the utility-maximizing decision-making process? Multiple choice question. 1, 2, 3, and 5 1, 3, 5, and 6 1, 2, 4, and 6 1, 3, 4, and 5

1, 3, 5, and 6 Reason: When examining decision making, we assume consumers are rational, have limited income, rank preferences, and acknowledge prices. It is not assumed that consumers are selfish, but rather self-interested. We tend to believe consumers have virtually unlimited wants, but only limited income to make the purchase. 1, 2, 4, and 6

Suppose that when the price of gasoline is $4 per gallon, the total amount of gasoline supplied in the United States is 12 million barrels per day. Also suppose that when the price of gas decreases to $3 per gallon, the total amount of gasoline supplied is 8 million barrels per day. Based on these numbers and using the simple formula, the price elasticity of supply for gasoline is: Multiple choice question. 0.71. 1.33. 1.4. 0.67.

1.33.

Suppose a snowboard manufacturer increases its output by 1 snowboard per day. As a result, the total cost of producing snowboards each day rises from $100 to $110. The marginal cost of producing an extra snowboard is $____________. (Only enter number; the $ sign has been provide for you.)

10

Marcel leases a garage. He must pay $500 every week for his lease regardless of how many cars he fixes. The number of cars he fixes each week depends on how many mechanics he hires. The table below summarizes his cost information. Fill in the missing values for total fixed cost, total variable cost, and total cost in the table below. Instructions: Enter your answers as a whole number. Marcel's Production Costs OutputTotal Fixed Cost (dollars)Total Variable Cost (dollars)Total Cost (dollars)0$500$0$50030500500401,000501,500602,500703,000

1000 500 1500 500 2000 500 2000 500 2500

Alex is consuming candy bars that cost $1 each. When he purchases the 5th5th candy bar his total utility increases from 6 utils to 8 utils. What is the marginal utility of the 5th candy bar? Multiple choice question. 14 utils 1 util 2 utils 8 utils

2 utils Reason: The marginal utility is calculated as the change in total utility (8 utils - 6 utils) divided by the change in quantity (5 candy bars - 4 candy bars). For this example, the marginal utility is 2 utils (2 utils / 1 candy bars).

The tables below provide Sam's total utility for coffee and tea. Instructions: Enter your answers as a whole number. a. Fill in the missing values for marginal utility. Coffee and Sam's Utility Cups of CoffeeTotal Utility (utils)Marginal Utility (utils)00—120235347455561666 Tea and Sam's Utility Cups of TeaTotal Utility (utils)Marginal Utility (utils)00—112220326430533635 b. What is Sam's total utility if he consumes 4 cups of coffee and 3 cups of tea? utils c. Suppose Sam consumes an additional cup of tea. By how much would Sam's utility increase? utils

20 15 12 8 6 5 12 8 6 4 3 2 81 3

The table below represents how Marco feels about chocolate candy bars. a. Fill in the missing values for total utility and marginal utility. Instructions: Enter your answers as a whole number. Chocolate Candy Bars and Marco's Utility Chocolate Candy BarsTotal Utility (utils)Marginal Utility (utils)00—125217354456646-1 Suppose Marco currently has two candy bars. You tell Marco you will give him either a soda, which gives him 22 utils of happiness or two additional candy bars. b. Which is he likely to prefer? (Click to select) A soda Two extra candy bars

25 42 12 62 8 65 A soda

The table below shows the monthly cost of producing vintage model cars for collectors for quantities 0, 100, 250, and 500. Instructions: Enter your answers as a whole number. a. Complete the table by filling in the average fixed cost, average variable cost, and average total cost. Vintage Model Car Production Costs OutputTotal Fixed Cost (dollars)Total Variable Cost (dollars)Total Cost (dollars)Average Fixed Cost (dollars)Average Variable Cost (dollars)Average Total Cost (dollars)0$2,500$0$2,500———1002,5007003,2002502,5001,5004,0005002,5004,0006,500 b. Graph the average fixed cost, average variable cost, and average total cost curves from the data in the table. Instructions: Use the tools provided "Avg. Fixed Cost," "Avg. Var. Cost," and "Avg. Total Cost" to plot each line point by point (3 points for each curve; 9 points total).

25 7 32 10 6 16 5 8 13

The table below shows Crystal's total cost of producing different quantities of tie-dyed t-shirts for a local arts festival. Instructions: Enter your answers as a whole number. a. Complete the marginal cost column in the table. Tie-Dyed T-Shirt Production Costs OutputTotal Cost (dollars)Marginal Cost (dollars)0$15—118$ 220321424529636 b. Graph the marginal cost curve for producing tie-dyed t-shirts. Instructions: Use the tool provided "Marginal Cost" to plot the line point by point (6 points total). Plot from 1 to 6 units of output. c. What is the total cost of producing 5 tie-dyed t-shirts? $ d. What is the marginal cost of producing the 5th tie-dyed t-shirt? $

3 2 1 3 5 7 29 5

The table below depicts the total utility when consuming cups of coffee. Cups of Coffee (cups)Total Utility (utils) 0 0 1 4 2 7 3 8 What is the marginal utility of the second cup of coffee? Multiple choice question. 3 utils 11 utils 4 utils 7 utils

3 utils Reason: The marginal utility is calculated as the change in total utility (7 utils - 4 utils) divided by the change in quantity (2 cups - 1 cup). For this example, the marginal utility is 3 utils (3 utils / 1 cup).

The table below shows Crystal's total cost of producing different quantities of tie-dyed t-shirts for a local arts festival. Instructions: Enter your answers as a whole number. a. Complete the marginal cost column in the table. Tie-Dyed T-Shirt Production Costs OutputTotal Cost (dollars)Marginal Cost (dollars)0$20—124$ 227329433539647 b. What is the total cost of producing 5 tie-dyed t-shirts? $ c. What is the marginal cost of producing the 5th tie-dyed t-shirt? $

4 3 2 4 6 8 39 6

The table below shows the monthly cost of producing vintage model cars for collectors for quantities 0, 100, 200, and 500. Complete the table by filling in the average fixed cost, average variable cost, and average total cost. Instructions: Round your answers to 2 decimal places. Vintage Model Car Production Costs OutputTotal Fixed Cost (dollars)Total Variable Cost (dollars)Total Cost (dollars)Average Fixed Cost (dollars)Average Variable Cost (dollars)Average Total Cost (dollars)0$2,500$0$2,500———1002,5007003,2002002,5001,2003,7005002,5004,2506,750

AFC: 25 12.5 5 AVC: 7 6 8.5 ATC: 32 18.5 13.5

Suppose a snowboard manufacturer increases it output by 1 snowboard per day. As a result, the total cost of producing snowboards each day rises from $120 to $145. The marginal cost of producing an extra snowboard is $____________. (Only enter number; the $ sign has been provide for you.)

Blank 1: 25 or 25.0

A price elasticity of supply of 0.50 means that if the price decreases by 1%, the quantity supplied will __________ by ____________ %. (Only enter the number; the % sign has been provided for you.)

Blank 1: decrease, fall, or drop Blank 2: .5, .50, 0.5, or 0.50

A price elasticity of supply of 1.25 means that if price decreases by 1%, the quantity supplied will ___________ by __________ %. (Only enter the number; the % sign has been provided for you.)

Blank 1: fall, drop, or decrease Blank 2: 1.25

Total cost equals total _______________ cost plus total _________________ cost. (Remember enter only one word per blank.)

Blank 1: fixed Blank 2: variable

The marginal utility associated with eating one sub sandwich is 5 utils. The marginal utility of a second sandwich is 3 utils. In this case total utility _____________ (increases/decreases) with the consumption of the second sandwich.

Blank 1: increases or increase

Not every decision consumers make will turn out to be perfect because consumers can never have all the ____________ they might need to make the perfect decision.

Blank 1: information, knowledge, data, factors, info, or details

The law of diminishing marginal utility states that the ___________ (total/marginal) utility associated with the consumption of a good or service becomes ___________ (less/more) with each additional unit that is consumed in a given time period. (Choose your answer from the options given in the brackets.)

Blank 1: marginal Blank 2: less or smaller

The total satisfaction or happiness received from the consumption of a good or service or a combination of goods and services is known as ___________ utility; whereas the additional satisfaction or happiness received from the consumption of an additional unit of a good or service is known as _____________ utility. (Enter one word in each blank.)

Blank 1: total Blank 2: marginal

The _____________ associated with the consumption of goods and services is measured in 'utils' by economists. (Remember to use just one word for the blank.)

Blank 1: utility

By always selecting the best option after considering all benefits and costs, you will increase your total ____________ . (Enter only one word in the blank.)

Blank 1: utility or satisfaction

Which of the following is not one of the four assumptions about utility maximization? Multiple choice question. Consumers behave rationally. Consumers have limited incomes. Consumers are homogeneous. Consumers can rank their preferences.

Consumers are homogeneous.

What are the appropriate labels for Curves N and M in the nearby graph? Multiple choice question. Curve N is total cost and Curve M is total fixed cost. Curve N is total cost and Curve M is total variable cost. Curve N is total variable cost and Curve M is total fixed cost. Curve N is total variable cost and Curve M is total cost.

Curve N is total cost and Curve M is total variable cost. Reason: The total cost curve lies above the total variable cost curve by the amount of the fixed cost. Since Curve N lies above Curve M by the same amount for all levels of output, it is the total cost, while the upward sloping Curve M is the total variable cost. Curve L is fixed at the same cost for all output, it is the fixed cost curve.

Use the following graph of demand curves to answer the next question. The vertical axis lists P1 and P2. Five decreasing curves intersect each other at the same point and are labeled D1 through D5, from left to right. The point of intersection connects to the vertical axis at P1 and a point at the curve D5 (above the point of intersection) connects to the vertical axis at P2. Which demand curve is relatively most elastic between P1 and P2? Multiple Choice D1 D2 D3 D4

D1

Which of the following statements about the intersection of the average variable cost and marginal cost curves is true? multiple choice 1The intersection occurs at the minimum of the marginal cost curve.The intersection occurs at the minimum of the average total cost curve.The intersection occurs at the minimum of the average variable cost curve. Correct b. Which of the following statements about the intersection of the average total cost and marginal cost curves is true? multiple choice 2The intersection occurs at the minimum of the marginal cost curve.The intersection occurs at the minimum of the average total cost curve. CorrectThe intersection occurs at the minimum of the average variable cost curve. c. If the level of output is greater than the point at which the marginal cost curve and the average variable cost curves intersect, it must be the case that multiple choice 3average variable cost is constant.average variable cost is decreasing.average variable cost is increasing. Correct d. If the level of output is less than the point at which the marginal cost curve and the average total cost curves intersect, it must be the case that multiple choice 4average total cost is constant.average total cost is decreasing. Correctaverage total cost is increasing.

Explanation a. The average variable cost and marginal cost curves intersect at the point at which the average variable cost is at its minimum. b. The average total cost and marginal cost curves intersect at the point at which the average total cost is at its minimum. c. If output is greater than the level at which average variable cost and marginal cost intersect, it must be the case that average variable cost is increasing. Adding an additional unit of output drives up the cost of production (since the marginal cost is greater than the average cost). This causes the average variable cost to increase. d. If output is less than the level at which average total cost and marginal cost intersect, it must be the case that average total cost is decreasing. Adding an additional unit of output decreases the cost of production (since the marginal cost is less than the average cost). This causes the average total cost to decrease.

Select all that apply Which of the following is true? Multiple select question. Price elasticity of demand and slope are the same along a linear demand curve. Price elasticity of demand and slope are the same along a non-linear demand curve. Price elasticity of demand and slope are not always the same along a non-linear demand curve. Price elasticity of demand and slope are not always the same along a linear demand curve.

Price elasticity of demand and slope are not always the same along a non-linear demand curve. Price elasticity of demand and slope are not always the same along a linear demand curve.

Dave bought a pizza which was divided into five slices. After eating the third slice he couldn't eat the fourth slice. Applying the law of diminishing marginal utility to this scenario which of the following statements is true? Multiple choice question. The marginal utility derived from the fourth slice is more than the marginal utility derived from the third slice. The marginal utility derived from the third slice is more than the marginal utility derived from the second slice. The marginal utility derived from the fourth slice is equal to the marginal utility derived from the third slice. The marginal utility derived from the fourth slice is less than the marginal utility derived from the third slice.

The marginal utility derived from the fourth slice is less than the marginal utility derived from the third slice.

Which best expresses the law of diminishing marginal utility? Multiple Choice The more a product is consumed, the smaller the total utility received from the product. The more a product is consumed, the smaller the marginal utility received from the product. The more a product is consumed, the greater the total utility received from the product. The less a product is consumed, the smaller the marginal utility received from the product.

The more a product is consumed, the smaller the marginal utility received from the product.

__________ cost equals total fixed cost plus total variable cost. (Answer in one word)

Total

______________ cost equals total fixed cost plus total variable cost. (Answer in one word)

Total

Total revenue minus the explicit cost of production is _____ profit. Multiple choice question. accounting economic total consumer

accounting

Marginal utility is the: Multiple choice question. total satisfaction or happiness received from the consumption of an additional unit of a good or service. usual satisfaction or happiness received from the consumption of an additional unit of a good or service. dollar value of the satisfaction or happiness received from the consumption of an additional unit of a good or service. additional satisfaction or happiness received from the consumption of an additional unit of a good or service.

additional satisfaction or happiness received from the consumption of an additional unit of a good or service.

The fixed cost per unit is equal to: Multiple choice question. average fixed cost. average variable cost. marginal cost. average total cost.

average fixed cost.

Total fixed cost divided by the amount of output produced is equal to: Multiple choice question. average fixed cost. average variable cost. average total cost. marginal cost.

average fixed cost.

Total cost divided by the amount of output produced is equal to: Multiple choice question. marginal cost. average variable cost. average total cost. average fixed cost.

average total cost.

Total cost per unit is equal to: Multiple choice question. average total cost. average fixed cost. marginal cost. average variable cost.

average total cost.

Total cost per unit is equal to: Multiple choice question. average variable cost. marginal cost. average fixed cost. average total cost.

average total cost.

Total variable cost divided by the amount of output produced is equal to: Multiple choice question. average variable cost. average fixed cost. average total cost. marginal cost.

average variable cost.

Total variable cost divided by the amount of output produced is equal to: Multiple choice question. average variable cost. average fixed cost. marginal cost. average total cost.

average variable cost.

Variable cost per unit of output produced is: Multiple choice question. marginal cost. average variable cost. average total cost. average fixed cost.

average variable cost.

The decision-making process followed by consumers to maximize utility assumes that Multiple Choice consumers behave rationally, attempting to maximize their satisfaction. consumers have unlimited incomes. consumers do not know how much marginal utility they obtain from consuming additional units of various products. consumers are unable to rank their preferences.

consumers behave rationally, attempting to maximize their satisfaction.

Total revenue minus the explicit and implicit costs of production is _____ profit. Multiple choice question. interior economic normal accounting

economic

For quantities occurring before the marginal cost curve and average total cost curve intersect, the average total cost curve will be:

decreasing. Reason: For quantities before the intersection point, ATC will decrease. At the intersection of MC and ATC, ATC will be at its minimum. For quantities beyond the intersection ATC will increase.

For quantities occurring before the marginal cost curve and average total cost curve intersect, the average total cost curve will be: Multiple choice question. negative. decreasing. at its minimum. increasing.

decreasing. Reason: For quantities before the intersection point, ATC will decrease. At the intersection of MC and ATC, ATC will be at its minimum. For quantities beyond the intersection ATC will increase.

If you derive less and less additional utility from the consumption of additional units of a good or service you will be able and willing to consume more units only if they become ________________ expensive than the previous units.

less

Sean is spending the day at the water park. He paid to enter the park and can use any water ride an unlimited number of times throughout the day. His favorite ride is the Twisty River. a. Sean's marginal utility of riding the Twisty River the first time is 50 utils. Sean's marginal utility of riding the Twisty River the second time is likely multiple choice 1greater than 50 utils.less than 50 utils.equal to 50 utils. b. If Sean's total utility begins to decrease after his fifth ride on the Twisty River, we can conclude multiple choice 2Sean's marginal utility is starting to increase.Sean's marginal utility has become negative.Sean has maximized his marginal utility. c. Suppose instead of an entrance fee that Sean must pay each time he rides the Twisty River. Compared to the entrance fee, Sean will likely ride the Twisty River multiple choice 3fewer times.more times.the same number of times.

less than 50 utils Sean's marginal utility become negative fewer times

The additional satisfaction or happiness received from the consumption of an additional unit of a good or service is the ____________ utility of the good or service. (Enter one word in the blank.)

marginal

The extra or additional cost associated with the production of an additional unit of output is the ___________ cost.

marginal

The extra or additional cost associated with the production of an additional unit of output is the _______________ cost.

marginal

The marginal cost curve shows the relationship between: Multiple choice question. total cost and marginal cost. marginal cost and number of workers. marginal cost and output. output and number of workers.

marginal cost and output. Reason: The marginal cost curve is graphed as the relationship between marginal cost and output.

When examining the cost curves for a firm, the minimum average variable cost occurs at the output level where:

marginal cost equals average variable cost. Reason: The minimum AVC occurs at the intersection of the MC and AVC curves. If MC is greater than AVC, AVC is increasing. If MC is less than AVC, AVC is decreasing.

The law of diminishing marginal utility states that the: Multiple choice question. total utility associated with the consumption of a good or service becomes smaller with each extra unit that is consumed in a given time period. marginal utility associated with the consumption of a good or service becomes smaller with each extra unit that is consumed in a given time period. marginal utility associated with the consumption of a good or service becomes larger with each extra unit that is consumed in a given time period.

marginal utility associated with the consumption of a good or service becomes smaller with each extra unit that is consumed in a given time period.

Utility maximization is the process of obtaining the greatest level of: Multiple choice question. overall satisfaction or happiness from consuming goods and services, subject to consumers' preferences, incomes, and prices. marginal satisfaction or happiness from consuming goods and services, subject to consumers' preferences, incomes, and prices. goods for the least amount of money. overall satisfaction or happiness from consuming goods and services, subject to the marketing of the good.

overall satisfaction or happiness from consuming goods and services, subject to consumers' preferences, incomes, and prices.

Because a direct relationship exists between price and quantity supplied,: Multiple choice question. all elasticities are negative. price elasticity of supply is positive. price elasticity of supply cannot be calculated. price elasticity of supply can never be zero.

price elasticity of supply is positive.

Total ______________ equals price times quantity. (Use one word for the blank.)

revenue

The table below shows the utility schedule for a consumer of candy bars. Candy Bars Consumed Total Utility001529312414515615713 Marginal utility becomes negative with the consumption of the Multiple Choice second candy bar. fifth candy bar. sixth candy bar. seventh candy bar.

seventh candy bar.