Spanish IA

Practice Test Economics 01 Midterm 2 Fall 2013

Professor K.C. Fung

Multiple Choice: Choose the best answer

1. Suppose price of baguette is $1 and price of sushi is $5, then to maximize total utility, a rational consumer should consume until:

a) the marginal utility of baguette divided by the marginal utility of sushi is 1
b) the marginal utility of baguette divided by the marginal utility of sushi is 5
c) the marginal utility of baguette divided by the marginal utility of sushi is 1/5
d) none of the above

2. A perfectly competitive industry is one where

a) All producers are price takers
b) There is only one producer
c) The output produced is standardized
d) (a) and (c)

3. If an industry that is currently perfectly competitive were to become monopolized, which of the following would occur?

a) Both price and output would remain unchanged
b) Price would increase and output would decrease
c) Both price and output would decrease
d) Price would decrease and output would increase

4. The difference between the total cost of a given quantity of output and the variable cost of that output is

a) The marginal product of labor
b) The marginal cost of that output
c) The total product of labor
d) The fixed cost of that output

5. The average variable cost is at its minimum when:

a) Marginal cost is greater than the average variable cost
b) Marginal cost is smaller than the average variable cost
c) Marginal cost equals the average variable cost
d) None of the above

6. The difference between the average total cost curve and the average variable cost curve gets smaller at higher quantity of output because

a) The average variable cost is a constant
b) The average total cost is decreasing for all output levels
c) The average fixed cost is decreasing as output increases
d)