At some point during a meal each bite provides less satisfaction. This can be explained by:

the law of diminishing marginal utility

If demand is price-elastic, then

The elasticity number E is greater than 1.

If marginal utility is negative, then

Total utility will decrease with additional consumption.

The add'l utility from consuming one more unit of a good.

The determinants of demand are

Income, tastes, expectations, and other goods.

Marginal physical product is the

Δ in total output with one add'l unit of the variable input

A production function:

Max. qty. of a good attainable from diff. combos of inputs

A successful advertising campaign will

Increase the demand for the advertised good.

Elasticity of supply looks at

How responsive sellers are to a change in price.

When demand is inelastic

%Δ in price is greater than the %Δ in quantity demanded.

Labor productivity will increase in response to:

An increase in the amount of capital per worker

Judy goes to the gas station and buys 10 gallons of gas no matter what the price per gallon.

Her price elasticity of demand is perfectly inelastic.

Other things being equal, if the price of good X increases and the demand for good Y increases:

goods X and Y are substitute goods

For product XYZ, elasticity is 3.5, which means that quantity demanded will increase by

3.5 percent for each 1 percent decrease in price.

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Micro. Part 2 Test Review

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Questions 30

Answers

1
At some point during a meal each bite provides less satisfaction. This can be explained by:
a shift in the demand curve
the law of diminishing marginal utility
the law of increasing opportunity cost
the law of demand
2
Costs of production that do not change with the rate of output are:
Marginal costs
Nonexistent
Fixed costs
Variable costs
3
If demand is price-elastic, then
The elasticity number E is 0.
The elasticity number E is greater than 1.
The elasticity number E is equal to 1.
The elasticity number E is less than 1.
4
If the price of Good X falls and total revenue rises, then:
demand for Good X is inelastic
demand for Good X is unitary elastic
demand for Good X is elastic
the price elasticity of demand for Good is equal to 1
5
When consumers buy goods at the equilibrium price but were willing to pay more
Marginal utility.
The law of demand.
Consumer surplus.
Maximum price.
6
Higher prices will increase total revenue if
The price elasticity of demand is zero.
Demand is elastic.
Demand is unitary elastic.
Demand is inelastic.
7
The difference between total revenue and total cost is
Marginal cost
Average variable cost
Profit
Fixed cost
8
If marginal utility is negative, then
The good or service being consumed is an inferior good.
Total utility will increase with additional consumption.
Total utility will decrease with additional consumption.
Total utility is at a minimum.
9
In the short run, when a firm produces zero output, variable cost equals:
Fixed cost
Marginal cost
Zero
Total cost
10
Marginal utility is
Always negative or zero.
The diminishing nature of total utility.
The add'l utility from consuming one more unit of a good.
The total utility of consuming a certain amount of a good.
11
A demand curve that is completely (perfectly) elastic is:
upward sloping
horizontal
downward sloping
vertical
12
The determinants of demand are
Income, tastes, imports, and other goods.
Imports, exports, expectations, and other goods.
Income, tastes, exports, and age.
Income, tastes, expectations, and other goods.
13
Which of the following would most likely have a price elasticity coefficient less than 1?
New Cars.
Televisions.
Coffee.
Fresh fish.
14
As the production rate is increased, average fixed costs:
Are constant
Increase
First fall, then rise
Decline
15
Marginal physical product is the
Δ in total output with one add'l unit of the variable input
Number of units of output obtained from all units of input.
Δ in total input with one add'l unit of the fixed input
Additional cost of an additional unit of output.
16
A production function:
The least-cost method of producing a given level of output
Shows the cost of producing any level of output
Max. qty. of a good attainable from diff. combos of inputs
Ability to produce combos of goods, using all resources
17
A successful advertising campaign will
Reduce the perceived utility of the good.
Increase the price elasticity of demand for the adv. good.
Increase the demand for the advertised good.
Cause the qty. supplied of the advertised good to increase.
18
Implicit costs:
Are used by accountants
Include the value of all resources used to produce a good
Include only payments to labor
Are opportunity costs
19
If income rises by 10% and the quantity sold of a vehicle falls by 7%, then this vehicle is:
a normal good
a substandard good
an inferior good
an irregular good
20
Elasticity of supply looks at
How much quantity demanded changes with a change in price.
How producers respond to a change in quantity demanded.
How responsive sellers are to a change in price.
How sellers respond to a change in consumer's incomes.
21
Maximum utility is achieved when
Marginal utility is zero.
Total utility equals marginal utility.
Total revenue is the greatest.
The price elasticity of demand is 1.0.
22
When demand is inelastic
%Δ in quantity demanded is greater than the %Δ in price.
The product in demand has many substitute goods.
Buyers are very sensitive to changes in price.
%Δ in price is greater than the %Δ in quantity demanded.
23
A way for sellers to find and charge the maximum amount buyers are willing to pay.
Price discrimination.
The law of supply.
Elasticity.
The law of demand.
24
When income falls, the demand for an inferior goods
Has a smaller change than the income change.
Decreases.
Stays the same.
Increases.
25
Labor productivity will increase in response to:
An increase in the amount of capital per worker
All of these answers are correct.
Higher resource costs
Lower wages
26
Judy goes to the gas station and buys 10 gallons of gas no matter what the price per gallon.
Her price elasticity of demand is perfectly elastic.
Her price elasticity of demand is unitary elastic.
Her price elasticity of demand is perfectly inelastic.
Her price elasticity of demand is relative elastic.
27
Other things being equal, if the price of good X increases and the demand for good Y increases:
goods X and Y are inferior goods
goods X and Y are substitute goods
goods X and Y are complementary goods
goods X and Y are normal goods
28
For product XYZ, elasticity is 3.5, which means that quantity demanded will increase by
1 percent for each 3.5 percent decrease in price.
1 unit for each $3.50 decrease in price.
3.5 percent for each 1 percent decrease in price.
1 unit for each $3.50 decrease in price.
29
Which of the following is equivalent to ATC?
Total cost times the quantity produced
FC + VC
AFC + AVC
Change in output divided by change in total cost
30
If goods X and Y are complementary goods, an increase in the price of X will,
decrease the demand for Y
not change the demand for Y
increase the demand for Y
increase the demand for X

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