Erhardt ECON 1001 Final Exam |
Study Questions and correct detailed
Answers | 2026 Updates | 100% correct
Total utility - ANSWER- -the total satisfaction a consumer derives from consumption it could
refer to either the total utility of consuming a particular good or the total utility from all
consumption
Marginal utility - ANSWER- -the change in total utility derived from a one unit chang in
consumption of a good
Law of diminishing marginal utility - ANSWER- -the more the more of a good a person
consumes per period the smaller the increase in total utility from consuming one more unit
(o.t.c)
Consumer equilibrium - ANSWER- -the condition in which an individual consumers budget is
spent and the last dollar spent on each good yields the same marginal utility therefore utility is
maximized
Marginal valuation - ANSWER- -the dollar value of the marginal utility derived from
consuming each additional unit of a good
Consumer surplus - ANSWER- -the difference between the maximum amount that a
consumer is willing to pay for a given quantity of a good and what the consumer actually pays
Indifference curve - ANSWER- -shows all combinations of goods that provide the consumer
with the same utility the consumer finds all combinations on a curve equally preferred
,Marginal rate of substitution - ANSWER- -the number of "A" you are willing to give up to get
more "B" neither gaining nor losing utility in the process
The law of diminishing rate of substitution - ANSWER- -as your consumption of "A" increases
the amount of "B" you are willing to give up to get another "A" declines
Indifference map - ANSWER- -A graphical representation of consumers taste each curve
reflects a different level of utility
Explicit cost - ANSWER- -opportunity cost of resources employed by a firm that takes the
form of cash payments
Implicit costs - ANSWER- -a firms' opportunity cost of using its own resources or those
provided by its owners without a corresponding cash payment
Accounting profit - ANSWER- -a firms' total revenue minus its explicit costs
Economic profit - ANSWER- -a firms' total revenue minus its explicit and implicit costs
Normal profit - ANSWER- -the accounting profit earns when all resources earn their
opportunity costs
Variable resources - ANSWER- -any resource that can be varied in the short run (3 months) to
increase or decrease production (labor)
Fixed resource - ANSWER- -any resource that cannot be varied in the short run (capital)
Short run - ANSWER- -a period during which one of the firms' resources is fixed
, Long run - ANSWER- -a period during which all resources under the firms' control are variable
Total product - ANSWER- -the total output produced by a firm
Production function - ANSWER- -the relationship between the amount of resources
employed and a firms' total product
Marginal production - ANSWER- -the change in total product that occurs when the use of a
particular resource increases by one unit all other resources constant
Increasing marginal returns - ANSWER- -the product of a variable resource increases as each
additional unit of that resource is employed
Law of diminishing marginal returns - ANSWER- -: as more of a variable resource is added to a
given amount of a fixed resource marginal product eventually declines and could become
negative
Fixed cost - ANSWER- -any production cost that is independent of the firms' rate of output
Variable cost - ANSWER- -any production cost that changes as the rate of output changes
Total cost - ANSWER- -the sum of fixed cost and variable cost or TC=FC+VC
Average variable cost - ANSWER- -variable cost divided by output or AVC=VC/q
Study Questions and correct detailed
Answers | 2026 Updates | 100% correct
Total utility - ANSWER- -the total satisfaction a consumer derives from consumption it could
refer to either the total utility of consuming a particular good or the total utility from all
consumption
Marginal utility - ANSWER- -the change in total utility derived from a one unit chang in
consumption of a good
Law of diminishing marginal utility - ANSWER- -the more the more of a good a person
consumes per period the smaller the increase in total utility from consuming one more unit
(o.t.c)
Consumer equilibrium - ANSWER- -the condition in which an individual consumers budget is
spent and the last dollar spent on each good yields the same marginal utility therefore utility is
maximized
Marginal valuation - ANSWER- -the dollar value of the marginal utility derived from
consuming each additional unit of a good
Consumer surplus - ANSWER- -the difference between the maximum amount that a
consumer is willing to pay for a given quantity of a good and what the consumer actually pays
Indifference curve - ANSWER- -shows all combinations of goods that provide the consumer
with the same utility the consumer finds all combinations on a curve equally preferred
,Marginal rate of substitution - ANSWER- -the number of "A" you are willing to give up to get
more "B" neither gaining nor losing utility in the process
The law of diminishing rate of substitution - ANSWER- -as your consumption of "A" increases
the amount of "B" you are willing to give up to get another "A" declines
Indifference map - ANSWER- -A graphical representation of consumers taste each curve
reflects a different level of utility
Explicit cost - ANSWER- -opportunity cost of resources employed by a firm that takes the
form of cash payments
Implicit costs - ANSWER- -a firms' opportunity cost of using its own resources or those
provided by its owners without a corresponding cash payment
Accounting profit - ANSWER- -a firms' total revenue minus its explicit costs
Economic profit - ANSWER- -a firms' total revenue minus its explicit and implicit costs
Normal profit - ANSWER- -the accounting profit earns when all resources earn their
opportunity costs
Variable resources - ANSWER- -any resource that can be varied in the short run (3 months) to
increase or decrease production (labor)
Fixed resource - ANSWER- -any resource that cannot be varied in the short run (capital)
Short run - ANSWER- -a period during which one of the firms' resources is fixed
, Long run - ANSWER- -a period during which all resources under the firms' control are variable
Total product - ANSWER- -the total output produced by a firm
Production function - ANSWER- -the relationship between the amount of resources
employed and a firms' total product
Marginal production - ANSWER- -the change in total product that occurs when the use of a
particular resource increases by one unit all other resources constant
Increasing marginal returns - ANSWER- -the product of a variable resource increases as each
additional unit of that resource is employed
Law of diminishing marginal returns - ANSWER- -: as more of a variable resource is added to a
given amount of a fixed resource marginal product eventually declines and could become
negative
Fixed cost - ANSWER- -any production cost that is independent of the firms' rate of output
Variable cost - ANSWER- -any production cost that changes as the rate of output changes
Total cost - ANSWER- -the sum of fixed cost and variable cost or TC=FC+VC
Average variable cost - ANSWER- -variable cost divided by output or AVC=VC/q
