ECON 1580 GRADED QUIZ 1

ECON 1580 GRADED QUIZ 1


At bn36 bnunits bnof bnlabor, bna bnfirm bnfinds bnthat bnboth bnaverage bnproduct bnof bnlabor bnand
bnmarginal bnproduct bnof bnlabor bnequal bn42. bnWe bncan bnconclude bnthat bnthe bnaverage bnproduct
bncurve bnat bn36 bnunits bnof bnlabor bnis: bn- bnanswers--horizontal




Diminishing bnmarginal bnreturns bnfor bnthe bnfirst bnfour bnunits bnof bna bnvariable bninput bnis bnexhibited
bnby bnthe bnmarginal bnproduct bnsequence: bn- bnanswers--50, bn40, bn30, bn20




Fixed bncosts bninclude: bn- bnanswers--op bnmanagement bnsalaries



If bnthe bnslope bnof bnthe bntotal bnproduct bncurve bnis bndecreasing, bnthe bnslope bnof bnthe bntotal
bnvariable bncost bncurve bnis: bn- bnanswers--increasing




The bnmarginal bncost bncurve bnintersects bnthe bntotal bnvariable bncost bncurve bnat: bn- bnanswers--no
bnpoint; bnthe bncurves bndon't bnintersect




Average bntotal bncost bnis bnthe bnratio bnof: bn- bnanswers--total bncost bnto bnthe bnquantity bnof bnoutput



If bnmarginal bncost bnis bnequal bnto bnaverage bntotal bncost, bnthen: bn- bnanswers--average bntotal bncost
bnis bnat bnits bnminimum




(Graph) bnIn bnthis bnexhibit bn(A bnFirm's bnCost bnCurves) bnthe bncurve bnlabeled bnW bnrepresents bnthe
bnfirm's bn_______ bncurve. bn- bnanswers--average bntotal bncost




When bnan bnincrease bnin bnthe bnfirm's bnoutput bnreduces bnits bnlong-run bnaverage bncost, bnit
bnexperiences: bn- bnanswers--economies bnof bnscale




The bnslope bnof bna bnlong-run bnaverage bncost bncurve bnexhibiting bndiseconomies bnof bnscale bnis: bn-
bnanswers--positive

, Which bnof bnthe bnfollowing bnstatements bnis bnfalse?

Select bnone:

a. bnThe bnincome bneffect bnof bnnormal bngoods bncounters bnthe bnsubstitution bneffect bnso bnthe
bndemand bncurve bnis bnupsloping.

b. bnThe bnincome bneffect bnand bnthe bnsubstitution bneffect bnreinforce bneach bnother bnwhen bnthere
bnare bnprice bnchanges bnfor bna bnnormal bngood.

c. bnThe bnincome bneffect bnrepresents bnthe bndecrease bnin bnquantity bndemanded bncaused bnby bnthe
bnimplicit bnchange bnin bnincome bndue bnto bna bnfall bnin bnthe bnprice bnof bnan bninferior bngood bnbut
bnnot bnfor bna bnnormal bngood.

d. bnThe bnsubstitution bneffect bnrepresents bnthe bnchange bnin bnquantity bndemanded bnsolely bndue bnto
bna bnchange bnin bnthe bnrelative bnprice bnof bna bngood. bn- bnanswers--The bnincome bneffect bnof
bnnormal bngoods bncounters bnthe bnsubstitution bneffect bnso bnthe bndemand bncurve bnis bnupsloping




For bna/an bn_______ bngood, bnan bnincrease bnin bnincome bnwill bnlead bnto bnan bnincrease bnin
bn_______ bn. bn- bnanswers--normal; bnconsumption




Assume bnthat bnthe bntotal bnutilities bnfor bnthe bnfifth bnand bnsixth bnunits bnof bna bngood bnconsumed
bnare bn83 bnand bn97, bnrespectively. bnThe bnmarginal bnutility bnfor bnthe bnsixth bnunit bnis: bn- bnanswers--
14



(TAble) bnIn bnthis bnexhibit bn(Consumer bnEquilibrium bn1), bnassume bnthat bnthe bnprice bnof bngood bnX
bnis bn$2 bnper bnunit bnand bnthe bnprice bnof bngood bnY bnis bn$1 bnper bnunit, bnand bnyou bnconsume bn3
bnunits bnof bngood bnX bnand bn3 bnunits bnof bngood bnY. bnTo bnmaximize bnutility, bnassuming bnthat bnthe
bngoods bnare bndivisible, bnyou bnwould bnconsume: bn- bnanswers--less bnof bnX bnand bnmore bnof bnY




If bnthe bnprice bnof bnapples bnfalls bnand bnthe bnprice bnof bnoranges bnremains bnconstant:

Select bnone:

a. bnapples bnare bnnow bnrelatively bncheaper.

b. bnthe bnfall bnin bnthe bnprice bnof bnapples bnmade bnconsumers bnricher.

c. bnthe bnfall bnin bnthe bnprice bnof bnapples, bnceteris bnparibus, bnmakes bnthe bnmarginal bnutility bnof
bnapples bndivided bnby bntheir bnprice bnexceed bnthe bnmarginal bnutility bnof bnoranges bndivided bnby
bntheir bnprice.