The marginal rate of substitution is
A) the rate at which the consumer will give up one good to get an additional unit of another good while remaining on the same indifference curve.
B) the rate at which utility increases as the consumer increases purchases of a good, holding purchases of the other good constant.
C) the rate at which a consumer will exchange a good for income holding prices constant.
D) None of the above answers is correct.
Ques. 2Roberta spends all of her income on two items, staplers and paper clips. If the price of a stapler increases, there will be a ________ Roberta's demand curve for staplers and a ________ Roberta's demand curve for paper clips.
A) rightward shift of; leftward shift of
B) leftward shift of; movement along
C) movement along; rightward shift of
D) movement along; leftward shift of
Ques. 3The above table gives some cost data for Peter's Pickles. Peter's fixed cost is 20. His total cost of producing 6 barrels of pickles is
A) 160.
B) 180.
C) 450.
D) There is not enough information to answer the question.
Ques. 4Soran is risk averse. If her wealth rises by 100, her total utility increases by 300. If her wealth increases, her total utility will decrease
A) by more than 300.
B) by less than 300.
C) by 300.
D) by some amount that cannot be determined without more information.
Ques. 5Meredith receives a wage hike. If Meredith decides to work an extra hour
A) her reservation wage rate exceeds her value of marginal product.
B) her opportunity cost of leisure is high.
C) her substitution effect is greater than her income effect.
D) she operates on the backward-bending portion of her labor supply curve.
Ques. 6In the figure above, suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply. If the price of pecans increases
A) the curve will shift rightward.
B) the curve will shift leftward.
C) there is a movement along the curve.
D) the curve will be unaffected.
Ques. 7In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is
A) zero.
B) 8.00 per day.
C) 24.00 per day.
D) 36.00 per day.
Ques. 8The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its economic profit
A) is more than 300.
B) is 300.
C) is less than 300.
D) The premise of the question is wrong because the firm is incurring an economic loss.
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