Name Homework 2 EC 2306 Instructor Wunder Multiple Choice (4 pts each) 1. Which

Question

Name Homework 2 EC 2306 Instructor Wunder Multiple Choice (4 pts each) 1. Which of the following is an assumption used when deriving the demand curve? a. People are rational utility maximizers. b. Preferences are known. c. People have limited budgets and therefore have a 'budget constraint. d. Prices are constant. e. All of the above were assumptions used when deriving the demand curve. 2. A price change can be seen to have 2 effects, what are these? a. Substitute and Income b. Positive and Negative c. Positive and Normative d. Short run and short term e. Inductive and deductive 3. As you consume more of any particular product your (assume simple normal products not extreme cases) a. Total utility decreases and your marginal utility decreases b. Total utility decreases and your marginal utility increases c. Total utility increases and your marginal utility increases d. Total utility increases and your marginal utility decreases e. None of the above 4. An example of an explicit cost would be a. Owner's wages foregone. b. A normal rate of return. c. Opportunity cost of owner's investment in the firm. d· The cost of electricity e. All of the above

Explanation / Answer

Answers :

1. a

2. a

3. d

4. d

5. a

6. c

7. d

8. c

9. e

10. d

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