AP Micro Econ - Modules 15-20

Utility is a measure of

• personal satisfaction

• best use of resources

• opportunity cost

• efficiency

Maximizes total utility

• optimal consumption bundle

• tradeoff function

• production function

• budget line

Budget constraints mean that a consumer must choose a consumption bundle that

• costs no more than his or her income

• maximizes total utility

• is an optimal consumption bundle

• falls outside of the budget line

When a consumer maximizes utility in the face of a budget constraint, the marginal utility per dollar spent on each good in the consumption bundle is the same. What is this?

• optimal consumption rule

• production function

• budget line

• consumer choice theory

Generally, each successive unit of a good consumed will cause marginal utility to

• increase at an increasing rate

• decrease at a decreasing rate

• increase at a constant rate

• either increase or decrease

Assume you have two goods, X and Y. Good X costs $5 and good Y costs $10. Your income is $200. Which if the following combinations is on your budget line?

• 0 units of X and 18 units of good Y

• 0 units of good X and 20 units of good Y

• 20 units of good X and 0 units of good Y

• 10 units of good X and 12 units of good Y

The optimal consumption bundle is always represented by a point...

• inside the consumer's budget line

• outside the consumer's budget line

• on the consumer's budget line

• at the highest point on the consumer's budget line

Foregone salary is an example of what when calculating and/or defining profit?

• implicit cost

• explicit cost

• opportunity cost

• tradeoff

Total revenue minus the explicit cost and depreciation

• accounting profit

• economic profit

• implicit costs

• explicit costs

Economic profit takes into consideration what important calculation. Select the best answer.

• opportunity costs

• tradeoffs

• cash outlay

• foregone salary