Quiz #2 microeconomics

Suppose that your current consumption of two goods, A and B, MUa/Pa=25 and MUb/Pb=20. In order to maximize your utility you should

purchase more of A and less of B

If a firm spends $400 to produce 20 unites of output and spends $880 to produce 40 units, then between 20 and 40 units of output the marginal cost of production is

$24

According to economists, the satisfaction people get from their consumption activities is called

Utility

For two goods, A and B, the rational spending rule is expressed as

(MUa/Pa)=(MUb/Pb)

Laura's total utility from consuming 8, 9 and 10 bonbons is 35, 42 and 45, respectively. Her marginal utility from the 9th bonbon is

7

It is impossible for total utility to be __ when marginal utility is __

Decreasing; positive

The most important challenge facing a firm in a perfectly competitive market is deciding

How much to produce

A variable factor of production

Is variable in both the short run and the long run

The additional utility gained from consuming an additional unit of a good is called

Marginal utility

The primary objective of most private firms is to

Maximize profit

If a consumer buys two goods, the rational spending rule requires that the

Ratio of marginal utility to price be equal for the two goods

Consumer surplus measures

The difference between the most a buyer would be wiling to pay for a product and the price actually paid

The tendency for consumers to purchase more of a good or service as its price falls is captured by

The law of demand

The tendency for marginal utility to decline as consumption increases beyond some point is called

The law of diminishing marginal utility

Which of the following is most likely to be a fixed factor of production at a pizza restaurant

The size of the seating area

If marginal utility is positive, then as consumption increases

Total utility will increase