umuc-econ203-homework-3

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Chapter 6 utility definition

Question 1 1
/ 1 point

Economists are able to determine total utility by:

a)
multiplying the marginal
utility of the first unit consumed by the number of units consumed.

b)
summing up the marginal
utilities of each unit consumed.

c)
multiplying the marginal
utility of the last unit consumed by the unit price.

d)
multiplying the marginal
utility of the last unit consumed by the number of units consumed.

Question 2 1
/ 1 point

The term _____________ describes a situation where a
________________ causes a reduction in the buying power of income, even though
actual income has not changed.

a) substitution
effect; lower price

b) income
effect; higher price

c) intertemporal
budget; lower price

d) intertemporal
budget; higher price

Chapter 6 American households

Question 3 1
/ 1 point

Approximately what portion of annual consumption is
typically spent by American households on shelter?

a) one-third

b) one-fourth

c) one-half

d) one-quarter

Chapter 6 maximizing utility

Question 4 1
/ 1 point

As a general rule, utility-maximizing choices between
consumption goods occur where the:

a) rise in
income has created the greatest utility.

b) price
ratio and marginal utilities ratio of two goods is equal.

c) constraints
on budget expenditures has fallen substantially.

d) higher-income
households have the greatest satisfaction.

Question 5 1
/ 1 point

Which of the following is considered to be a tell-tale
signal that the point with the highest total utility has been found?

a) the
marginal utility per dollar is controlled by trade-offs

b) the
quantities demanded change so total utility rises

c) the
demand curves are flatter reducing quantity

d) the
marginal utility per dollar is the same for both goods

Question 6 1
/ 1 point

The most common pattern for marginal utility is
____________________.

a) a
long-term perspective theoretical model

b) a budget
constraint model

c) diminishing
marginal utility

d) substitute
consumption

Chapter 6 utility-maximizing point

Question 7 1
/ 1 point

Kim has $24 per week in her entertainment budget. She splits
her time between going to the movies and yoga classes. Each movie costs $8
while each yoga class costs $3. The total utility from each of these activities
is set out in the table below. What is Kim’s total utility maximizing point?

Movies Total Utility Yoga Classes Total Utility

0 0 0 0

1 40 1 30

2 75 2 55

3 105 3 76

4 130 4 92

5 160 5 106

6 114

7 116

8 117

a) 1 movie,
5 yoga classes

b) 2 movies,
2 yoga classes

c) 0 movies,
8 yoga classes

d) 3 movies,
0 yoga classes

Chapter 6 Utility_consumer choice

Question 8 1
/ 1 point

Saving money is a(n) ____________________, because it
involves less consumption in the present, but the ability to consume more in
the future.

a) risk
premium

b) budget
constraint

c) intertemporal
choice

d) opportunity
cost

Question 9 1
/ 1 point

Even with wage increases, the supply curve of labor is most
often inelastic for which of the following?

a) part-time
workers

b) lawyers

c) full-time
workers

d) massage
therapists

Question 10 1
/ 1 point

The _________________ budget constraint shows the tradeoff
between present and future consumption.

a) inflation

b) time-value
of money

c) utility-maximizing

d) intertemporal
choice

Chapter 6 utility maximizing choice (table)

Question 11 1
/ 1 point

Troy has a part-time job in a book store to help pay for his
college. He can work up to 30 hours each week at his job, which pays $9 per
hour. The table below shows his utility from different levels of leisure and
income. Troy currently works 20 hours per week. If he decides to work 30 hours
instead, his marginal utility gain from the additional income is ____.

Hours of Leisure Total
Utility from Leisure Income Total Utility from Income

0 0 0 0

5 18 45 30

10 34 90 54

15 48 135 72

20 56 180 81

25 60 225 87

30 62 270 90

315 92

a) 6

b) 12

c) 3

d) 9

Chapter 7 industry_structure

Question 12 1
/ 1 point

________________________ arises where many firms are
competing in a market to sell similar but differentiated products.

a) Monopolistic
competition

b) Oligopolistic
competition

c) Monogopolised
competition

d) Perfect
competition

Chapter 7 cost

Question 13 1
/ 1 point

A firm’s ___________ consist of expenditures that must be
made before production starts that typically, over the short run,
_______________ regardless of the level of production.

a) variable
costs; are constantly changing,

b) variable
costs; do not change,

c) fixed
costs; are consistently changing,

d) fixed
costs; do not change,

Chapter 7 Diminishing variable returns

Question 14 1
/ 1 point

In order to determine the average variable cost, the firm’s
variable costs are divided by _______________________.

a) the
quantity of output

b) its’ average
costs

c) diminishing
marginal costs

d) its’
fixed costs

Question 15 1
/ 1 point

In order to determine ____________, the firm’s total costs
must be divided by the quantity of its output.

a) fixed
costs

b) diminishing
marginal returns

c) variable
cost

d) average
cost

Chapter 7 economies of scale

Question 16 1
/ 1 point

The term __________________ describes a situation where the
quantity of output rises, but the average cost of production falls.

a) diseconomies
of scale

b) economies
of scale

c) diminishing
marginal returns

d) marginal
cost output

Question 17 0
/ 1 point

In microeconomics, the term _____________________ is
synonymous with economies of scale.

a) increasing
returns to scale

b) constant
returns to scale

c) diminishing
marginal returns

d) decreasing
returns to scale

Chapter 7 total revenue

Question 18 1
/ 1 point

_____________ is calculated by taking the quantity of
everything that is sold and multiplying it by the sale price.

a) Average
profit margin

b) Total
profits

c) Total
cost

d) Total
revenue

Chapter 7 Problems with tables

Question 19 1
/ 1 point

The table below sets out cost information for the production
of volley balls. Some values are missing. Which of the following statements is
correct?

Quantity Variable
Cost Fixed Cost Total Cost Average
Variable Cost ($ per unit) Marginal
Cost ($ per unit)

0 0 30 30 0 –

1 12 B 12 E

2 25 C D F

3 A 72 14 G

a) A = 42; E
= 40

b) A = 70; E
= 12

c) A = 70; E
= 40

d) A = 42, E
= 12

Question 20 1
/ 1 point

Refer to the table below.

Quantity Cost

(in dollars) Fixed
Costs

(in dollars) Total
Costs

(in dollars) Average
Total Costs

(in dollars per unit) Average
Variable Costs (in dollars per unit) Marginal
Costs

(in dollars per unit)

0 0 40 40 – – –
– – –

1 1 40 55 15 55 15

2 35 40 75 17.5 37.5 20

3 60 40 100 20 33.3 25

4 90 40 130 22.5 32.5 30

5 125 40 155 25 31 35

6 160 40 200 26.6 33.3 40

If this information were used to create a total cost graph,
the curve should

a) begin at
40 on the vertical axis and slope upward.

b) become
steeper as quantity increases.

c) become
steeper due to diminishing returns.

d) reflect
all of the above.

Chapter 7 costs of production

Question 21 1
/ 1 point

The _____________________ curve will always lie below the
curve for average cost because average cost includes _____________ in the
numerator of the calculation.

a) average
variable cost; total costs

b) marginal
cost; total costs

c) marginal
cost; fixed costs

d) average
variable cost; fixed costs

Question 22 0
/ 1 point

_____________________ help to explain why every economy, as
it develops, has an increasing proportion of its population living in urban
areas.

a) Constant
returns to scale

b) Economies
of scale

c) Diseconomies
of scale

d) Agglomeration
factors

Question 23 0
/ 1 point

A situation where the level of output, scale and average
costs are all rising is called

a) decreasing
returns to scale

b) diseconomies
of scale

c) diminishing
returns to scale

d) both a
and b are correct

Question 24 1
/ 1 point

If a comparison between average cost and price reveals
whether a firm is earning profits, then a comparison between average variable
cost and price reveals

a) that if
the market price is below average cost, then profits will be negative.

b) total
revenues are the quantity produced multiplied by the price.

c) whether
the firm is earning profit if fixed costs are left out of the calculation.

d) that if
the market price exceeds average cost, profits will be positive.

Chapter 7 questions with graph

Question 25 0
/ 1 point

The graph above illustrates the electricity market. Consider
market competition between firms where price is based on AR and select the most
appropriate answer.

a) this
market is perfectly competitive with negative profits possible in the long-run

b) this
market is imperfectly competitive with excess profits possible in the short-run

c) this
market is imperfectly competitive with excess profits possible in the long-run

d) this
market is perfectly competitive with excess profits possible in the short-run

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