39.Ir Monique\'s marginal utility is positive but decreases as more of a commodi

Question

39.Ir Monique's marginal utility is positive but decreases as more of a commodity is consumed, her total utility A)Is increasing B) Is also decreasing C) Is constant D) May be increasing, decreasing, or constant E) Increases at the same rate 40.An indifference curve represents A) Constant quantities of one good with varying quantities of another. B) The prices and quantities of two goods that can be purchased for a given sum of money C) All combinations of two goods that give the same level of utility D) Combinations of goods whose marginal utilities are always equal E) All combinations of goods that can be purchased with a given income and constant prices. 41.The supply curve for an individual firm in a perfectly competitive industry is P-2+ 40s. If the industry consists of 100 identical what is industry supply when Palt firms, then what is industry supply when P-l4? A) 300 B) 400 C) 600 D) 800 E) None of the above 17

Explanation / Answer

39. A) Is increasing.

(If the marginal utility is positive throughout, the total utility has to be increasing, otherwise, it will turn negative)

40. C) All combinations of two goods that give the same level of utility.

(Points on the same indifference curve give the same level of utility)

41. A) 300.

[P = 2 + 4Q; 4Q = 14 – 2 = 12; Q = 12/4 = 3.

This is an individual firm’s supply. Therefore, for 100 firms, supply will be 100 x 3 = 300].

42. ‘b’ and ‘d’

43. A) Point ‘a’

44. B) 1.

(Fixed cost is $4. Average fixed cost of the 4th unit = $4/4 = $1.)

45. D) $4.80.

($22 – 17.20 = $4.80)

46. A) $15.

[($6x15) – ($5x15) = $15]

47. C) Average variable cost curve.

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