Micro Test 3

question

The following table shows a hypothetical total utility schedule for a consumer of chocolate candy bars. USE the table to answer the following questions. This consumer begins to experience diminishing marginal utility when he consumes the

answer

third candy bar

question

Based on the table, marginal utility becomes negative with the consumption of the

answer

seventh candy bar

question

Based on the data from the table you can conclude that the

answer

total utility of 5 units is 42

question

The branch of economics that seeks to enrich the understanding of decision-making by integrating the insights of psychology and by investigating how given dollar amounts can mean different things to individuals depending on the situation, is called

answer

Behavioral economics

question

The common pattern that each marginal unit of a good consumed provides less of an addition to utility than the previous unit, is called

answer

Diminishing marginal utility

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The additional utility provided by one additional unit of consumption is called

answer

marginal utility

question

When a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price. This is known as

answer

Substitution effect

question

If the long-run average-total-cost curve for a firm is downsloping, this indicates that there

answer

are economics of scale

question

Utility as defined in this unit refers to the

answer

satisfaction or pleasure from consuming a good

question

Which of the following is true?

answer

TC= TVC + TFC

question

Samantha consumes both pizza and music downloads. The following table shows her marginal utility from these. What is her total utility from purchasing four music downloads?

answer

question

Now assume Samantha's weekly income is $12, the price of a pizza is $2, and the price of music downloads is $1. What is the utility-maximizing quantity of pizza and music downloads if she spends her entire $12?

answer

4 units of pizza and 4 units of music

question

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

answer

The quantity of output

question

In order to calculate marginal cost, changes in _______ are divided by the amount of changes in quantity.

answer

total costs

question

Direct, purchased, out-of-pocket costs paid to resource suppliers outside the firm are called

answer

explicit costs

question

Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur are known as

answer

implicit cost

question

As a general rule, utility-maximizing choices between consumption goods occur where the:

answer

price ratio and marginal utilities ratio of two goods is equal

question

If a business owner has a $100,000 accounting profit, and could have made exactly $50,000 in his next best business opportunity, he has earned

answer

$50,000 in economic profits

question

With capital fixed at one unit with 1, 2, 3 units of labor added in equal successive units, production of the output increases from 300 (1 unit of labor), to 350 (2 units of labor) to 375 (3 units of labor). Which of the following is a correct interpretation?

answer

This is short run diminishing marginal productivity

question

Marginal cost (MC) is equal to average variable cost (AVC) and average total cost (ATC) when:

answer

MC interests AVC and ATC at their minimum points

question

Which of the following statements is true regarding the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves?

answer

If MC is greater than ATC and AVC, then ATC and AVC must be increasing

question

The fixed cost of the firm is $500, and the firm's total variable cost is indicated in the following table. The average variable cost of the firm when 4 units of output are produced is:

answer

$175

question

The average total cost of the firm when 4 units of output are being sold is

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$300

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The marginal cost of the sixth unit of output is

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$800

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Which cost curves do 1, 2, 3, and 4 represent in order from 4 to 1 ?

answer

MC, ATC, AVC, AFC

question

Summing the marginal utilities of each unit consumed will determine total

answer

utility

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The price of water is substantially less than the price of diamonds because

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the marginal utility of a diamond is significantly greater than the marginal utility of a gallon of water

question

Suppose a firm produces 100,000 units a year and sells them all for $5 each. The explicit costs of production are $350,000, and the implicit costs of production are $100,000. The firm has an accounting profit of

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$150,000 and an economic profit of $50,000

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Compared to cash gifts, non-cash gifts are preferred

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less because they decrease total utility

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A firm has total fixed costs of $4,000 a year. The average variable cost is $3.00 for 2,000 units of output. At this level of output, its average total costs are

answer

$5.00

1 of 30

question

answer

third candy bar

question

Based on the table, marginal utility becomes negative with the consumption of the

answer

seventh candy bar

question

Based on the data from the table you can conclude that the

answer

total utility of 5 units is 42

question

answer

Behavioral economics

question

The common pattern that each marginal unit of a good consumed provides less of an addition to utility than the previous unit, is called

answer

Diminishing marginal utility

question

The additional utility provided by one additional unit of consumption is called

answer

marginal utility

question

When a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price. This is known as

answer

Substitution effect

question

If the long-run average-total-cost curve for a firm is downsloping, this indicates that there

answer

are economics of scale

question

Utility as defined in this unit refers to the

answer

satisfaction or pleasure from consuming a good

question

Which of the following is true?

answer

TC= TVC + TFC

question

Samantha consumes both pizza and music downloads. The following table shows her marginal utility from these. What is her total utility from purchasing four music downloads?

answer

question

answer

4 units of pizza and 4 units of music

question

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

answer

The quantity of output

question

In order to calculate marginal cost, changes in _______ are divided by the amount of changes in quantity.

answer

total costs

question

Direct, purchased, out-of-pocket costs paid to resource suppliers outside the firm are called

answer

explicit costs

question

Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur are known as

answer

implicit cost

question

As a general rule, utility-maximizing choices between consumption goods occur where the:

answer

price ratio and marginal utilities ratio of two goods is equal

question

If a business owner has a $100,000 accounting profit, and could have made exactly $50,000 in his next best business opportunity, he has earned

answer

$50,000 in economic profits

question

answer

This is short run diminishing marginal productivity

question

Marginal cost (MC) is equal to average variable cost (AVC) and average total cost (ATC) when:

answer

MC interests AVC and ATC at their minimum points

question

Which of the following statements is true regarding the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves?

answer

If MC is greater than ATC and AVC, then ATC and AVC must be increasing

question

The fixed cost of the firm is $500, and the firm's total variable cost is indicated in the following table. The average variable cost of the firm when 4 units of output are produced is:

answer

$175

question

The average total cost of the firm when 4 units of output are being sold is

answer

$300

question

The marginal cost of the sixth unit of output is

answer

$800

question

Which cost curves do 1, 2, 3, and 4 represent in order from 4 to 1 ?

answer

MC, ATC, AVC, AFC

question

Summing the marginal utilities of each unit consumed will determine total

answer

utility

question

The price of water is substantially less than the price of diamonds because

answer

the marginal utility of a diamond is significantly greater than the marginal utility of a gallon of water

question

answer

$150,000 and an economic profit of $50,000

question

Compared to cash gifts, non-cash gifts are preferred

answer

less because they decrease total utility

question

A firm has total fixed costs of $4,000 a year. The average variable cost is $3.00 for 2,000 units of output. At this level of output, its average total costs are

answer

$5.00

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Micro Test 3

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