Chapter Review Questions
- Which of the following best describes average total cost?
A. The relationship between marginal cost and fixed costs
B. Fixed costs divided by quantity
C. Variable costs divided by quantity
D. Marginal product divided by quantity
E. Average costs divided by fixed costs - As Diana eats donuts, which of the following statements regarding Diana’s marginal utility is correct?
A. Her marginal utility from the first donut is greater than her marginal utility from the second donut.
B. Her marginal utility from the fourth donut is greater than her marginal utility from the third candy bar.
C. Her marginal utility has nothing to do with donuts.
D. She initially experiences diminishing marginal utility with the first donut eaten and then gradually increases
her utility.
E. None of the above. - Which of the following is true regarding the long-run average total cost curve?
A. It is U shaped because of diminishing marginal utility.
B. It is U shaped because of diminishing marginal costs.
C. It is not U shaped.
D. It is U shaped because of economies of scale.
E. The long-run average total cost curve is a down-sloping curve. - Which of the following best describes pure profit?
A. The difference between variable and fixed costs
B. Total revenue minus total quantity
C. Total revenue minus implicit and explicit costs
D. The revenue generated as a result of economies of scale
E. The revenue generated as a result of quantity sold - What is the relationship between increasing quantities of a resource and declining quantities of output?
A. Increasing returns to scale
B. Economies of scale
C. Increasing marginal returns
D. Diminishing marginal returns
E. Profit - What do economists mean by total cost?
A. The total of all profits minus revenue
B. Implicit and explicit costs
C. The total of all revenue
D. The total of all quantities minus revenue
E. Revenue minus monetary costs
Part III: Microeconomics