econonmMicroeconomics Review Quiz Test 2
1. When is marginal utility equal to zero?
A. When TU is zero.
B. When MU is at its maximum.
C. When TU is at its maximum.
D. When MU is at its minimum.
The following table shows Mia's $ marginal utility for litres of soya milk:
2. Refer to the above table to answer this question. Suppose that Mia has a budget of $7 and the price of a litre of soya milk is $1, what is the maximum quantity that Mia might purchase? A. 0.
B. 4 litres.
C. 5 litres.
D. 6 litres.
E. Cannot be determined.
3. What is the correct formula for MCS (marginal consumer surplus)? A. $MU-price.
4. What is the term for the difference between the consumer's evaluation of a product and the price which is paid for it? A. Price discrimination.
B. Price elasticity of demand.
C. Consumer indifference.
D. Consumer surplus.
5. Refer to Table 5.13 to answer this question. With the consumption of what quantity is marginal utility equal to zero. A. 1.
6. You have just spent two hours studying microeconomics and this has made you very hungry. You have $10 to spend on a snack and decide to go to Taco Bell. Putting your newly acquired economics knowledge to use, you have developed the following table to assist with your purchase decision:
(a) Fill in the missing values in the table above.
(b) If you bought 6 tacos and 2 burritos are you maximizing your utility? Explain.
Below are some financial data for the Do Drop In convenience store.
The owners have put $40,000 into the business and they worked a total of 80 hours during the week. Savings accounts are currently paying 5.2% interest and the going wage rate is $8 per hour.
7. Refer to the information above to answer this question. What is the week's economic profit for the Do Drop In? A. -$320.
8. Which of the following statements about the marginal product of labour is correct? A. It may either rise or fall as more labour is used.
B. It always rises as more labour is used.
C. It always falls as more labour is used.
D. There is no relationship between marginal product and labour.
9. What causes marginal cost to increase?
A. The advantages of the division of labour.
B. The fact that ATC increases.
C. Raising marginal product.
D. The law of diminishing returns.
10. Which of the following statements regarding average fixed costs is correct? A. They are constant since fixed costs are fixed.
B. They are equal to average variable cost less average total cost. C. When graphed, they are a horizontal line.
D. When graphed, they are a straight line which comes out of the origin. E. They fall continuously as output increases.
11. Which of the following is a variable cost?
A. The leasehold cost of a building.
B. Insurance on the factory's physical plant.
C. Raw materials.
D. The cost of a marketing research report.
12. What is the sum of total variable costs and total fixed costs? A. It is equal to the sum of average product and marginal product. B. It is the sum of all marginal costs.
C. It is total cost.
D. It is AVC times the quantity of output.
13. Can a firm earn an economic loss and an accounting profit at the same time? Explain.
14. What is meant by the term economic capacity?
A. An output level where the firm is physically unable to increase output. B. The output level where average variable cost is at a minimum. C. The output level where average total cost is at a minimum. D. Total fixed costs are at a minimum.
15. Which of the following statements is correct if a firm's capacity output increases from 300 to 600 and its total costs rise from $40,000 to $78,000? A. The firm is experiencing constant returns to scale.
B. The firm is experiencing decreasing returns to scale.
C. The firm is...
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