Question

1. What is an indifference curve?

   	A.	An inverse demand curve.
   	B.	An exponential supply curve.
   	C.	A curve that shows how people don’t care about certain goods.
   	D.	A curve showing different combinations of goods that represent equally satisfying levels of consumption to an individual.

QUESTION 2

1. The following are properties of an indifference curve:

   	A.	They are bowed outward.
   	B.	Indifference curves for the same individual do not cross.
   	C.	They slope upward.
   	D.	All of the above.

QUESTION 3

1. Producing 1 unit costs $2, 2 units cost $3, 3 units cost $6, and 4 units cost $11. What is the marginal cost of the 4^th unit?

   	A.	$2.75
   	B.	$5
   	C.	$11
   	D.	$22

  

QUESTION 4

1. How do accountants calculate profit?

   	A.	Average revenue minus variable costs
   	B.	Marginal revenue minus average cost
   	C.	Total revenue minus explicit costs
   	D.	Total revenue minus explicit and implicit costs

QUESTION 5

1. How do economists calculate profit?

   	A.	Total revenue minus total monetary costs.
   	B.	Total revenue minus total costs including opportunity costs.
   	C.	Marginal revenue minus fixed costs.
   	D.	Average revenue minus average cost.

Answer 1

Answer : 1) The answer is option D.

The indifference curve is that curve which shows the combination points of two goods for individuals. At each point of indifference curve the individual get equal utility. Therefore, option D is correct.

2) The answer is option B.

Indifference curves for an individual can not intersect each other. This is the characteristic of indifference curve. The slope of indifference curve is downward. Indifference curves are bowed to inward. Therefore, option B is correct.

3) The answer is option B.

Marginal cost of 4th unit = Cost of 4 units - Cost of 3 units = 11 - 6 = $5.

Therefore, option B is correct.

4) The answer is option D.

For accountants calculation,

Profit = Total revenue - (Explicit cost + Implicit cost).

Therefore, option D is correct.

5) The answer is option B.

For economists calculation,

Profit = Total revenue - Total cost including opportunity cost.

Therefore, option B is correct.