Multiple choice problems on utility maximization and market structure
1) Joan is deciding where to spend her spring break. If she goes to Cancun, Mexico, the trip will give her 9,000 utils of satisfaction and will cost her $300. If, instead, she travels to Florida, the trip will given her 5,000 utils of pleasure and will cost her only $200. Joan will most likely do best:
a) going to Mexico because her total cost will be lowest.
b) going to Florida because her total cost will be lowest.
c) going to Mexico because her pleasure per dollar will be greatest.
d) going to Florida because her pleasure per dollar will be greatest.
2) In choosing between two products, a rational consumer will choose which product which gives her:
a) the greatest total utility per dollar.
b) the least marginal utility per dollar.
c) the least total utility per dollar.
d) the greatest marginal utility per dollar.
3) In the long run:
a) inputs can no longer be increased.
b) output is at its maximum attainable level.
c) the company can vary all of its inputs.
d) no diminishing returns are experienced.
4) If fixed costs are $460 and variable costs are $980 at output level 12, average total costs would be:
a) $80.
b) $100.
c) $120.
d) $200.
5) Which of the subsequent provides the best evidence which economies of scale exist?
a) The per-unit costs on Excel Publishing Organization's manuals fell subsequent a large order from the government.
b) Alpha-Beta Inc. raised its price 10% subsequent a 5% increase in production costs.
c) Widget Manufacturing doubled its production by opening a new plant which was identical to its old plant.
d) The XYZ Co. increased production 25% subsequent a 30% increase in all inputs.
6) Which of the subsequent is not an explanation for diseconomies of scale?
a) Less team spirit.
b) Increased specialization.
c) Lower output per unit of input.
d) Increased monitoring costs.
7) The demand curve facing an individual capable to producer in a purely competitive market is:
a) Down sloping to the right.
b) Up sloping to the right.
c) Perfectly inelastic
d) Perfectly elastic
8) Refer to the subsequent:
|
Quantity
|
Total Cost
|
Total Revenue
|
|
1
|
10
|
15
|
|
2
|
20
|
30
|
|
3
|
35
|
45
|
|
4
|
50
|
60
|
The profit-maximizing condition takes place at:
a) 1 unit of output.
b) 2 units of output.
c) 3 units of output.
d) 4 units of output.
9)
|
Quantity
|
Price
|
TR
|
MR
|
TC
|
MC
|
|
0
|
$52
|
0
|
|
|
|
|
1
|
50
|
50
|
50
|
36
|
26
|
|
2
|
96
|
96
|
46
|
70
|
34
|
|
3
|
138
|
138
|
42
|
112
|
42
|
|
4
|
176
|
176
|
38
|
162
|
50
|
|
5
|
210
|
210
|
34
|
220
|
58
|
A profit-maximizing monopolist would capable to produce:
a) 1
b) 3
c) 4
d) 5
10) The demand curve for a monopolist is:
a) perfectly elastic
b) not relevant since the monopolist has control over price
c) the same as the market demand curve
d) perfectly inelastic