1) If a firm earns normal profit, then it has generated revenuesa. equal to the sum of implicit and explicit costs.b. greater than total opportunity costs.c. sufficient to cover explicit costs, but not implicit costs.d. sufficient to cover implicit costs, but not explicit costs.2) The law of diminishing marginal utility states thata. the marginal utility gained by consuming equal successive units of a good will decline asthe amount consumed increases.b. the more of a particular good one consumes, the greater is the utility received from theconsumption of that good.c.the marginal utility gained by consuming equal successive units of a good will increase asthe amount consumed increases.d. the more of a particular product one sells, the less utility one receives from selling.3) The marginal rate of substitution is illustrated by thea. slope of the indifference curve.slope of the budget line.b.c.ratio of the marginal utility of the good on the vertical axis to the marginal utility of thegood on the horizontal axis.d. distance between the indifference curves4) Suppose a consumer is purchasing chocolate tablets and pizzas in quantities such that she isachieving consumer equilibrium. Then the price of chocolate decreases. The consumer will likelyher consumption of chocolate and the marginal utility of chocolate willwhile the total utility from chocolate willa. increase; increase; increaseb. increase; decrease; decreasec. increase; decrease; increased. decrease; increase; increase5) Assuming only two goods X and Y, if MUx/Px = MUY/Py, thena. the consumer is in equilibrium.b. the consumer cannot be made better off by redirecting his purchases.c. the consumer is deriving the same marginal utility per dollar for all goods.d. all of the above6) Indifference curves are downward sloping (convex to the origin) curves ifa. a person's marginal rate of substitution declines as he or she consumes more ob. a person's marginal rate of substitution increases as he or she consumes morec. the law of diminishing marginal utility holds.

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1) If a firm carns normal profit, then it has generated revenues a. equal to the sum of implicit and explicit costs. b. greater than total opportunity costs. c. sufficient to cover explicit costs, but not implicit costs. d. sufficient to cover implicit costs, but not explicit costs.

1) If a firm carns normal profit, then it has generated revenues a. equal to the sum of implicit and explicit costs. b. greater than total opportunity costs. c. sufficient to cover explicit costs, but not implicit costs. d. sufficient to cover implicit costs, but not explicit costs.

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Chapter1: Making Economics Decisions

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

1) If a firm earns normal profit, then it has generated revenues
a. equal to the sum of implicit and explicit costs.
b. greater than total opportunity costs.
c. sufficient to cover explicit costs, but not implicit costs.
d. sufficient to cover implicit costs, but not explicit costs.
2) The law of diminishing marginal utility states that
a. the marginal utility gained by consuming equal successive units of a good will decline as
the amount consumed increases.
b. the more of a particular good one consumes, the greater is the utility received from the
consumption of that good.
c.
the marginal utility gained by consuming equal successive units of a good will increase as
the amount consumed increases.
d. the more of a particular product one sells, the less utility one receives from selling.
3) The marginal rate of substitution is illustrated by the
a. slope of the indifference curve.
slope of the budget line.
b.
c.
ratio of the marginal utility of the good on the vertical axis to the marginal utility of the
good on the horizontal axis.
d. distance between the indifference curves
4) Suppose a consumer is purchasing chocolate tablets and pizzas in quantities such that she is
achieving consumer equilibrium. Then the price of chocolate decreases. The consumer will likely
her consumption of chocolate and the marginal utility of chocolate will
while the total utility from chocolate will
a. increase; increase; increase
b. increase; decrease; decrease
c. increase; decrease; increase
d. decrease; increase; increase
5) Assuming only two goods X and Y, if MUx/Px = MUY/Py, then
a. the consumer is in equilibrium.
b. the consumer cannot be made better off by redirecting his purchases.
c. the consumer is deriving the same marginal utility per dollar for all goods.
d. all of the above
6) Indifference curves are downward sloping (convex to the origin) curves if
a. a person's marginal rate of substitution declines as he or she consumes more o
b. a person's marginal rate of substitution increases as he or she consumes more
c. the law of diminishing marginal utility holds.

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