Quiz 2 Flashcards
If we describe Lola’s total satisfaction she receives from eating a given quantity of pizza, we are referring to Lola’s
total utility
the measure of the benefit you get from consuming the next cup of coffee is your
marginal utility of coffee
the principle of diminishing marginal utility implies that the
added satisfaction is diminishing as more units are consumed
as an individual consumes more and more units of a good, at first
total utility increases, but marginal utility decreases
which of the following statements is correct
- consumers take account of their budget when they make their consumption decision.
- consumers choose the consumption level that maximizes their overall utility
at the utility maximizing equilibrium quantity for two goods, X and Y, which of the following must be true?
the marginal utility per dollar spent will be the same for each good
when you chose to buy the second cup of coffee instead of the third bagel, which of the following is necessarily correct?
the marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee
by definition, “marginal utility per dollar spent” is the
marginal utility of a good divided by the price of that good.
Bobby consumes only chocolate ice cream and vanilla ice cream. he is spending all of his income. his marginal utility of chocolate is 200 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. to maximize his utility, bobby should
buy more chocolate ice cream and less vanilla ice cream
the limit on people’s consumption choices is determined by
the prices of the goods and services the people buy and their income
the magnitude of the slope of a budget line is equal to
the price of one good divided by the price of the other good.
lizzie’s income increases, her budget line
shifts rightward and its slope does not change
a characteristic of the long run is
all inputs can be varied
which of the following is a factor of production that generally is fixed in the short run?
a factory building
which of the following is a fixed cost?
payment to hire a security worker to guard the gate to the factory around the clock
economic costs of production differ from accounting costs in that
economic costs add the opportunity costs of a firm using its own resources while accounting costs do not
which of the following is an implicit cost of production?
rent that could have been earned on a building owned and used by the firm
which of the following statements best describes the economic short run?
it is a period during which at least one of the firm’s inputs is fixed.
the relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm’s
production function
Average total cost is
total cost divided by the quantity of output produced
the marginal product of labor is defined as
the additional output that results when one more worker is hired, holding all other resources constant
the law of diminishing marginal returns states
that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.
if production displays increasing marginal returns, then
each new worker hired adds more to output than previous hires.
marginal cost is the
additional cost of producing an additional unit of output
which of the following costs will not change as output changes?
total fixed cost
which of the following statements is false?
marginal cost will equal average total cost when marginal cost is at its lowest point
long-run cost curves are u-shaped because
of economies and dis-economies of scale
if a firm decreases its plant size and finds that its long-run average costs have decreased, then
its dis-economies of scale are less.
which of the following is a reason why a firm would experience dis-economies of scale?
as the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants.
when a firm’s long-run average cost curve is horizontal for a range of output, then that range of production displays
constant returns to scale
in the long run
all of the firm’s costs are variable costs
economies of scale occur when
a firm’s long-run average total costs fall as it increases the plant size
