1) Suppose that ms. Spencer is presently spending all her budget purchasing 10 units of A and 8 units of B at prices of $2 and $4 respectively. The marginal utility of the last units of A and B are 16 and 24 respectively. These data suggest that Ms. Spencer:

a) has preference that are at odds with the principle (or law) of the diminishing marginal utility

b) considers A and B to be conplementatary

c) should buy less A and B

d) should buy less B and more A

2) Marginal Utility:

a) is equal to the total is equal to the total utility divided by the number of units consumed

b) is equal to the total utility if the demand curve is linear

c) increases as more of a product is consumed

d) diminishes as more of a product is consumed

3) The law of deminishing returns result in:

a) an eventually rising marginal product

b) a total output curve that eventually increases at a decreasing rate

c) an eventually falling marginal cost curve

d) a toatal outpt curve that eventually rises indefinitely

4) All other things being equal, if the fixed cost of a frim increases, which of the following will happen?

a) Marginal cost and average variable cost will both rise

b) Average fixed cost and average variable cost will would rise

c) Average fixed cost and average toal cost would rise

d) Average fixed cost would rise, but marginal cost would fall