Ch. 5 & 6 - ECON 201

When the price of something we buy falls, we are better off, this is ……… effect.

• Income

• Substitute

• Inflation

• Taxes

Marginal utility is the ________ satisfaction gained by consuming ________ of a good.

• total; all units

• total; one more unit

• additional; all units

• additional; one more unit

A firm has no fixed scale of production in:

• the short run

• the long run

• the short run and in the long run

• neither the short run nor the long run

The law of diminishing marginal utility refers to

• a consumer's decrease in total satisfaction as she consumes more units of a

  good.

• a consumer's decrease in additional satisfaction as she consumes more and more units of a good.

• the idea that total utility is negative.

• the idea that marginal utility is negative

Total Utility is ………………..

• The total amount of satisfaction obtained from consumption of a good or service.

• The additional satisfaction gained by consuming one more unit of something.

• Used to compare different people's likes and dislikes.

• Relatively easy to measure.

Firms cannot enter an industry in

• the short run.

• the long run.

• the short run and in the long run.

• As long as positive profits are being earned, firms can enter the industry in both the short run and the long run

The version of the law of diminishing returns that applies to production.

• implies that as we add more workers our output decreases.

• applies only in the short run.

• is true only when all inputs are variable.

• applies in the short and long run.

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is ________, and the marginal product of the third worker is ________.

• 40 , 20

• 50 , 20

• 20 , 100

• 120 , 100

When the price of a good increases, the budget constraint does not change.

• True

• False

When marginal utility is zero, total utility is at a minimum

• True

• False