1. The financing of health care through insurace has

decrease absolute expenditures on health care
resulted in conssumers directly paying less than the full price
increased the marginal utility of health care services
made no change in health care

2. If you purchase a gift worth $25 for your sister but your ister would only pay $10for the gift then the

total utility of the gift is $10
total utility of the gift is $15
marginal utilityof the gift is $15
loss invalue of the gift is $15

3. Which is likely to be most economically efficient form of gift giving

noncash gifts from distant relatives to children
cash gifts from distant relatives to children
noncash gifts from distant relatives that require a cash return gift
cash gifts from distant relatives that require noncash return gift

4. The law if diminishing returns implies

the more you study the less you know
your undertsanding will be increased by decreasing your merginal study time
eventually the more hours you spend studing per day the less you will learn with each added hour
the more hours you spend studying per day the more you wil learn with each added hour

5. The law of diminishing returns only applies in cases where\

there is incrasing scarcity of factors of production
the price of extra units of a factor is increasing
there is at least one fixed factor of production
capital is a varianle input

6. Which statement best illustrates the law of diminishing returns

the average total cost of the last unit of a resource used is less than the average total cost of the previous resource used
the marginal product of the last unit of a resource used is less than the marginal product of the previous resource used
the adverage product of the last unit of a resource used is less than the average product of the previous resource used
the marginal cost of the last unit of a resource used is less than the marginal cost of the previous resource used

7.An output of 1,00 units per year a firm variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are

$10,000
$8,000
$6,000
$5,000

8. At an output level of 50 units per day a firm has average total costs of $60 and average variable c0sts of $35. Its total fixed costs are

$925
$1,250
$1,750
$3,000

9. At any level of output

average variable cost will exceed average total cost in the short run
marginal cost will exceed acerage variable cost by the level of average fixed cost
average variable cost will exceed average fixed cost by the level of average total cost
average total cost will exceed average variable cost by the level of average fixed cost

10. Marginal cost can be defined as the

change in fixed cost resulting from one more unit of production
difference between fixed and variable cost at any level of output
amount which one more unit of output adds to total cost
difference between price and average total cost at the profit-maximizing level output

11. The reason the marginal cost curve eventually increases as output increases for the typical firm is because

of diseconmies of scale
the minimum efficient scale
the law of diminishing returns
normal profit exceeds econmic profit

12. When marginal cost is increasing

total cost must be increasing
average total cost must be increasing
average total cost must be decreasing
average fixed costs might be increasing or decreasing

13. As output increases average fixed costs

increase
decrease
remain constant
first increase then decrease

14. the short-run marginal-cost curve evemtually rises because of

diseconomices of scale
increaasing fixed costs
diminishing marginal returns
increasing arginal productivity of the variable inputs

15. The law of diminishing returns explains

why there are diseonomies of scale
the increase in short run marginal costs
increases in wage rates as labor becomes more scarce
the decline in average fixed cost as more output is produced

16. Diseconomies of scale occur mainly because

of the law diminishing returs
firms in an industry must be relatively large in order to use the most efficient production techniques
of the inherent difficulties involved in managing and coordinating a large business enterprise
the short-run average total cost curve rises when marginal product is greater than average total cost