1. Due to the law of diminishing marginal utility, _____.
a. the marginal utility curve is upward sloping
b. when marginal utility becomes positive, total utility declines
c. when marginal utility becomes negative, total utility increases
d. marginal utility is zero when total utility is zero
e. the first unit of a product offers more satisfaction than the last unit of the same product
2. True or False. If a product has an elastic demand, it means that consumers are relatively insensitive to a change in the price of the product.
3. If one were to plot the data with utility on the vertical axis and quantity of the good on the horizontal axis:
a. the total utility curve would begin to decline after the second unit of the good.
b. the marginal utility curve would intersect the horizontal axis at the second unit of the good.
c. the total utility curve would rise from the first unit to the fifth unit.
d. the marginal utility curve would intersect the horizontal axis at the third unit of the good.
e. the marginal utility curve would begin to decline after the third unit of the good.
4. If the average variable cost of a firm is falling, then the:
a. marginal cost must be falling.
b. average fixed cost must be rising.
c. marginal cost lies below the average variable cost.
d. marginal cost must be rising.
e. marginal cost lies above the average variable cost.
5. According to economic theory, the difference between the long run and the short run is:
a. the ability for a firm to vary all resources
b. about two years
c. about two months
d. not relevant for executive decision-makers
e. strictly theoretical so that in practice there is no difference between them
1. Due to the law of diminishing marginal utility, _____.
a. the marginal utility curve is upward sloping
b. when marginal utility becomes positive, total utility declines
c. when marginal utility becomes negative, total utility increases
d. marginal utility is zero when total utility is zero
e. the first unit of a product offers more satisfaction than the last unit of the same product
2. True or False. If a product has an elastic demand, it means that consumers are relatively insensitive to a change in the price of the product.
3. If one were to plot the data with utility on the vertical axis and quantity of the good on the horizontal axis:
a. the total utility curve would begin to decline after the second unit of the good.
b. the marginal utility curve would intersect the horizontal axis at the second unit of the good.
c. the total utility curve would rise from the first unit to the fifth unit.
d. the marginal utility curve would intersect the horizontal axis at the third unit of the good.
e. the marginal utility curve would begin to decline after the third unit of the good.
4. If the average variable cost of a firm is falling, then the:
a. marginal cost must be falling.
b. average fixed cost must be rising.
c. marginal cost lies below the average variable cost.
d. marginal cost must be rising.
e. marginal cost lies above the average variable cost.
5. According to economic theory, the difference between the long run and the short run is:
a. the ability for a firm to vary all resources
b. about two years
c. about two months
d. not relevant for executive decision-makers
e. strictly theoretical so that in practice there is no difference between them
