Question

 

6. Which of the following is correct regarding total utility.

A. Its slope is the ratio of the change in quantity of the good/the change in total utility.

B Its slope is the ratio of the change in total utility/the change in marginal utility.

C Its slope is the ratio of the change in marginal utility/ the change in quantity of the good.

D Its slope is the ratio of the change in total utility/ the change in the quantity of the good.

7. Which of the following is true regarding the demand curve.

A. When there is diminishing marginal utility price falls along the demand curve.

B When there is diminishing marginal utility price advances along the demand curve.

C When there is diminishing marginal utility price is higher along the demand curve.

D When there is diminishing marginal utility price rises along the demand curve.

8. Which of the following is correct regarding exhaustible resources in the long run.

A The demand curve is downward sloping but the supply curve is perfectly elastic.

B The demand curve is upward sloping but the supply curve is perfectly elastic.

C The demand curve is upward sloping but the supply curve is perfectly inelastic

D The demand curve is downward sloping but the supply curve is perfectly inelastic.

9. Which of the following is true regarding the demand curve.

A The demand curve is derived from the total utility function.

BThe demand curve is derived from the increasing marginal utility function.

CThe demand curve is derived from the marginal utility function.

DThe demand curve is derived from the constant utility function.

10. Which of the following is true in the short run?

A. The average fixed cost curve slopes downward as more output is produced and then becomes vertical.

B. The average fixed cost curve slopes downward as more output is produced and then becomes flat.

C. The average fixed cost curve slopes downward as more output is produced and then becomes diagonal.

D. The average fixed cost curve slopes upward as more output is produced and then becomes flat.

Answer 1

Ans 6: D (The slope of total utility is the marginal utility, the formula for slope is given in option D)

Ans 7: A (As we consume more, marginal utility declines, and on the demand curve, we purchase more of a good at lower price)

Ans 8: D (the demand curve is downward sloping indicating an inverse relation between price and demand whereas the supply curve is perfectly inelastic as the resources are exhaustible and fixed in amount).

Ans 9: C (the demand curve is derived from marginal utility curve, as we consume more, MU falls).

Ans 10: B (The average fixed cost declines and becomes flat because average fixed cost is the ratio of total fixed cost to output produced, the total fixed cost remains constant, but the output produced rises. Hence, AFC declines and after a certain level, it becomes flat).