Consumer Choice
If Marginal Utility is decreasing, is it positive, negative, or ambiguous?
What is negative?
Suppose that the total production of a firm that uses 10 workers is 3 computers. If the same firm uses 12 workers, the total production is 15 computers. What is the marginal product of the 12th worker (measured in computers)?
What is 6 computers?
In a perfectly competitive market:
A) There are just a few firms
B) Firms can determine what price to charge
C) Firms are price takers
D) Firms offer differentiated products
What is answer C?
One defining characteristic of pure monopoly is that the
A) monopoly is a price taker.
B) monopoly uses advertising.
C) monopoly produces a product with no close substitutes.
D) entry into the industry is relatively easy, but exit is difficult.
What is answer C?
Entry barriers
A) never exist.
B) are lower in monopolistically competitive markets than in monopoly markets.
C) are higher in monopolistically competitive markets than in monopoly markets.
D) Are always the same regardless of the type of market.
What is answer B?
When diminishing marginal utility starts happening, as a person consumes more and more of a given good
A) total utility must decrease.
B) total utility either decreases or it increases at a diminishing rate.
C) marginal utility will increase.
D) total utility must be negative.
What is answer A?
Fixed costs of production in the short run
A) cannot be reduced by producing less output.
B) can be reduced by producing less output.
C) are low in proportion to variable costs in the short run.
D) increase as the firm produces more output.
What is answer A?
If the price of wheat is $580, what is the profit maximizing quantity?
What is 10 units?
A pure monopoly can sell 20 toys per day for $8 each. To sell 21 toys
per day, the price must be cut to $7. The marginal revenue of the 21st
toy is
A) −$10.
B) −$13.
C) $7.
D) $21.
What is answer B?
Which of the following is a characteristic of monopolistic competition?
A) standardized product
B) a relatively small number of firms
C) absence of nonprice competition
D) relatively easy entry
What is answer D?
If the marginal utility of the first ice cream cone for Bob is 1 and the marginal utility for the second ice cream cone for Bob is 1. What is the total utility for Bob when he eats two ice cream cone? (assume zero ice cream cones gives him total utility of zero)
What is 2 utility?
What is the total cost of producing 10 units?
What is $190?
What are the total costs if the firm produces at 25 units?
Refer to Diagram 3
What is $20,000?
What are the total costs of this monopoly producing?
What is $50?
Strategic interaction (mutual interdependence) is present in this type of economy:
Oligopoly
Sharon purchases two products, X and Y, with a given fixed budget. The marginal utility she receives from the last unit of X she consumes is 60 utils, and the marginal utility she receives from the last unit of Y she consumes is 30 utils. The price of X is $2.00, and the price of Y is $1.00. Is Sharon maximizing her utility? And if not, what should she buy more/less of?
What is she's maximizing her utility?
What are the total fixed costs of producing 10 units?
Refer to Diagram 2
What is $110?
Should the firm produce more, less, the same, or shut down if the market price is at $800?
Refer to Diagram 3
What is the same?
What is the quantity to
sell and price per unit that
this monopolist will
choose to maximize profits?
Refer to Diagram 4
What is 5 units and $15?
In which market model does mutual interdependence (strategic
interaction) exist?
What is an Oligopoly?
What is the total utility obtained from
consuming 3 donuts and 5 cups of coffee?
Refer to Diagram 1
What is 328 utils?
What is the profit of producing 10 units?
Refer to Diagram 2
What is -$90?
Should the firm produce more, less, the same, or shut down if they are producing at a price of $500?
Refer to Diagram 3
What is shutting down?
What are the profits the monopoly makes?
Refer to Diagram 4
What is $25?
If the graphs represent the demand faced by a firm (firm demand). What is the order of the graphs, from the one that offers most control over price to the least
control over price?
Refer to Diagram 5
What is A, B, and C?