Suppose you go out with your friend for coffee and donuts at the local donut store. The first donut you eat tastes incredibly good. The second one also tastes pretty good. The third donut seems just okay. With the fourth donut you are turning somewhat green. The fifth donut makes you sick. Your friend, an economist, describes your experience as the principle of:
a. utility maximization.
b. irrationality in consumer behavior.
c. instant gratification.
d. differing tastes and preferences.
e. diminishing marginal utility.
QUESTION 2The sum of AVC and AFC equals:
a. total variable cost.
b. economic profit.
c. accounting profit.
d. average total cost.
QUESTION 3All of the following will shift the demand curve for capital, except:
a. future expectations about the demand for the good produced by a firm.
b. technological changes.
c. the price of capital.
d. the entry of new firms into the market.
e. the change in the interest rate.
QUESTION 4_____ is a measure of the total satisfaction derived from consuming a quantity of some good or service.
a. Disutility
b. Diminishing marginal utility
c. Total utility
d. Marginal utility
e. Ordinal utility
QUESTION 5As quantity increases, which of the following must be true if average total costs are rising?
a. Marginal cost must be greater than average total cost.
b. Marginal cost must be less than average total cost.
c. Average fixed cost must be increasing.
d. Average fixed cost must be less than average variable cost.
QUESTION 6When the rate of interest rises, the resulting change in the demand for capital is shown graphically by:
a. a movement down along the demand curve.
b. a rightward shift of the demand curve.
c. a leftward shift of the demand curve.
d. a movement up along the demand curve.
e. an outward rotation of the demand curve.