Reference no: EM133629860

Questions

1. According the law of diminishing returns:

a. Marginal utility falls as more units of a product are consumed

b. The marginal product of a variable factor eventually falls as more units of it are added to a fixed factor

c. The marginal product eventually increases as more units of a variable factor are added to a fixed factor

d. The total product falls as more units of a variable factor are added to a fixed factor

2. The demand curve for a good assumes constant the following:

a. Income, tastes, and the price of other goods

b. Tastes, and the price of other goods

c. Income and tastes

d. Income, tastes, and the price of the good

3. With respect to a good X, a reduction in the prices of other goods leads to

a. a biased expansion of the production possibilities frontier

b. a decrease in the supply of X

c. it can not be determined

d. an increase in the supply of X

4. When there are negative externalities, the price should be adjusted so that it is equal to

a. the amount of the externality

b. zero

c. excludes external costs

d. includes external costs

5. The production possibility frontier shows:

a. Maximum combinations of two outputs that an economy can produce given its resources

b. Maximum combinations of two outputs that an economy can produce, given its available resources and technology

c. Combinations of two outputs that an economy can produce given its available resources and technology

d. Maximum combinations of two outputs that an economy can produce, given its available inputs

6. The average variable cost curve:

a. Converges with the average total cost as output increases

b. Equals the total costs divided by the output

c. Is derived from the average fixed costs

d. Equals revenue minus profits