Micro Ch 6-7

The typical pattern revealed in a budget constraint model shows that as the quantity consumed rises,

total utility rises, but marginal utility falls.

If a paper mill shuts down its operations for three months so that it produces nothing, its _____________________ will be reduced to zero.

variable costs

The marginal utility of two goods changes _______________________.

with the quantities consumed

_______________________ include all of the costs of production that increase with the quantity produced.

Variable costs

In economics, a firm that faces no competitors is referred to as ____________________.

a monopoly

In the U.S., the amount in savings contributed to IRAs rose from $239 billion in 1992 to $3,667 billion by 2005, while overall savings actually dropped from low to lower. Evidence suggests that, in the economy as a whole, increased savings in these retirement account:

are being offset by negative savings or less saavings in other kinds of accounts.

______________________ help to explain why every economy, as it develops, has an increasing proportion of its population living in urban areas.

Agglomeration factors

_________________ include all spending on labor, machinery, tools, and supplies purchased from other firms.

Total costs

An inferior good is a product:

for which demand decreases as income increases.

When economists attempt to predict the spending patterns of U.S. households, they will typically view the __________________ as a primary determining factor that influences the individual consumption choices that each will make.

income level of each household

Saving money is a (n) ____________________, because it involves less consumption in the present, but the ability to consume more in the future.

intertemporal choice

When Marietta chooses to only purchase a combination of goods that lie within her budget line, she:

is maximizing utility.

The economies-of-scale curve is a long-run average cost curve, because

it allows all factors of production to change.

The term _____________________ refers to the additional utility provided by one additional unit of consumption.

marginal utility

Approximately what portion of annual consumption is typically spent by American households on shelter?

one-third

Owen operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Owen requires to operate his business. Which is it?

physical space for the gallery

Which of the following occurs simultaneously with an income effect?

substitution effect

In order to determine the average variable cost, the firm's variable costs are divided by _______________.

the quantity of output

The _______________________ curve will always lie below the curve for average total cost because average cost includes ___________________________ in the numerator of the calculation.

average variable cost; fixed costs

Marginal utility can:

be positive, negative, or zero

The ________________________ of all firms can be broken down into some common underlying patterns.

cost structure

The most common pattern for marginal utility is _________________.

diminishing marginal utility

The term _______________________ describes a situation where the quantity of output rises, but the average cost of production falls.

economies of scale

The marginal curve is generally ______________________, because diminishing marginal returns implies that additional units are _____________________ .

upward sloping; more costly to produce