Exam 2 Review Flashcards
The interest rate you typically earn on a deposit at a bank:
A. is the opportunity cost to you of lending money.
B. represents the price of your loan.
C. is the opportunity cost to a bank of lending money.
D. represents the risk of investing.
A
Economies of scale refers to returns that occur when:
A. An increase in the quantity of output decreases average total cost in the long run.
B. An increase in the quantity of output increases average total cost in the long run.
C. Average total cost does not depend on the quantity of output in the long run.
D. None of the above
A
The concept of diminishing marginal utility:
A. Is the principle that the additional utility gained from consuming different bundles of goods and services tend to be smaller than the utility gained from consuming just one bundle of goods and services.
B. Is the change in total utility that comes from consuming one additional unit of a good or service.
C. Explains why individuals rarely maximize their total utility.
D. Is the principle that the additional utility gained from consuming successive units of a good or service tends to be smaller than the utility gained from the previous unit.
D
Which of the following is most likely to be an implicit cost for Company X?
A. Forgone rent from the building owned and used by Company X
B. Rental payments on IBM equipment
C. Payments for raw materials purchased from Company Y
D. Transportation costs paid to a nearby trucking firm
A
The long run is characterized by:
A. The relevance of the law of diminishing returns.
B. At least one fixed input.
C. Insufficient time for firms to enter or leave the industry.
D. The ability of the firm to change its plant size.
D
