Micro Final

If the MU/P ratio for good X is less than the MU/P ratio for good Y, this means that

an individual is receiving more utility per dollar from good Y than good X.

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)

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

Consumer equilibrium exists when the

marginal rate of substitution equals the slope of the budget constraint. slope of the indifference curve equals the slope of the budget constraint.

Attempts to determine "what is" are part of __________ economics.

positive

The absence of value judgments is the essence of

positive economics.

Here are three things you could do if you do not attend your economics class: watch television with some friends (you value this at $25), read a good novel (you value this at $13), or go in to work (you could earn $20 during the economics class). The opportunity cost of going to your economics class is

$25, because this is the highest valued alternative forfeited.

Which of the following statements is false?

Positive and normative economics both address what should be.

Suppose you are consuming a particular good and you could somehow give back the last unit you consumed. What would happen to total and marginal utility (assuming that the marginal utility of the unit given back is positive)?

Total utility would decrease but marginal utility would increase.

A person is said to be in consumer equilibrium if she

equates marginal utilities per dollar spent.

If Smith will give up three units of Y to get one additional unit of X, then

his indifference curve is downward sloping.

Prior to attending college, Marvin is offered a lucrative four-year contract as an actor in a daytime soap opera. Assuming that acting and attending college are Marvin's preferred alternatives and that he must choose between the two, his opportunity cost of attending college after receiving the offer ________________, making him ____________ likely to attend college than before he received the offer.

increases; less

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

marginal utility is constant.

Countries tend to specialize in the production of goods in which they have a comparative advantage because

people want to make a profit.

Opportunity cost is the value of

the best (or most highly valued) forfeited alternative.

Marginal utility is

the extra satisfaction derived from consuming an additional unit of a good. the change in total satisfaction as an additional unit of a good is consumed.

Amy's opportunity cost of going to the movies is

the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies.