Assume that a consumer purchases a combination of products X and Y and MUx / Px = 75 utils per dollar and MUy / Py = 50 utils per dollar. To maximize utility without spending more dollars, the consumer should buy:
a. more of both X and Y.
b. less of Y only if the price of Y increases.
c. more of Y and less of X.
d. more of X and less of Y.
e. less of both X and Y.
QUESTION 2When economies of scale exist, an increase in the level of output will lead to:
a. a decrease in cost per unit.
b. an increase in cost per unit.
c. a decrease in total cost.
d. both a. and c. above
QUESTION 3The price of stock is determined by:
a. the demand for the good produced by the firm.
b. the number of shares of a firm's stock that is available.
c. the performance of the stock market.
d. the performance of the Federal Reserve.
e. the demand for and supply of a company's shares.
QUESTION 4When an individual is unable to alter or undo a past decision he/she incurs an opportunity cost.
Indicate whether the statement is true or false
QUESTION 5If MUx / Px = MUY / PY, then _____.
a. the consumer should purchase the same quantity of X and Y
b. the consumer should purchase less of X
c. the consumer is maximizing utility
d. the consumer should purchase more of Y
e. the consumer is minimizing utility
QUESTION 6Constant returns to scale indicate that a firm is experiencing:
a. per unit costs of production that are decreasing as the scale of output expands.
b. per unit costs of production that do not vary with the scale of output.
c. per unit costs of production that are increasing as the scale of output expands.
d. A decreasing marginal product.
QUESTION 7If the earnings report of a firm indicates higher earnings than was expected by the investors:
a. the stock prices of the firm will decline.
b. the price of the product produced by this firm will decline.
c. the price of the product produced by this firm will rise.
d. the firm will spend more on advertising.
e. the stock prices of this firm will increase.
QUESTION 8Rationality is a normative concept.
Indicate whether the statement is true or false
QUESTION 9Consumers should allocate their income so that the marginal utility associated with the:
a. first dollar spent is equal for all goods.
b. last dollar spent is equal for all goods.
c. last dollar spent is lower for high-priced items than for low-priced items.
d. first dollar spent is greater for high-priced items than for low-priced items.
e. first dollar spent is less for high-priced items than for low-priced items.
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