ECONONE Test

1.

1 point

Because indifference curves have negative slopes, this implies that there is a need to sacrifice the consumption of one product in order to consume another product while maintaining the same level of total utility.

True

False

2.

1 point

The budget line has a negative slope because there is a need to decrease the consumption of product X in order to increase the consumption of product Y since the budget of the consumer is increasing.

True

False

3.

1 point

The answer to the question "Who will produce the good?" is whoever can provide the cheapest process of production.

True

False

4.

1 point

The law of diminishing marginal utility is based on the reality that the people are non-satiated in their consumption.

True

False

5.

1 point

Labor, capital, and technology are examples of raw materials in the production process.

True

False

6.

1 point

The isocost line is the relation that represents the structure of production that states how products are made and how services are sold to households in the market.

True

False

7.

1 point

The economic cost of firms is composed of the explicit cost of production and the opportunity cost.

True

False

8.

1 point

The optimal level of consumption is when the marginal utility is greater than the price of the product.

True

False

9.

1 point

In the long production run, the level of labor becomes fixed, while capital and technology vary.

True

False

10.

1 point

The marginal rate of substitution represents the quantity of a product that the consumer is willing to sacrifice in exchange for an additional unit of another good in order to attain a higher level of total utility.

True

False

11.

1 point

When AP>MP, the MP of the variable productive input increases.

True

False

12.

1 point

The imposition of tax on the producers will cause a leftward shift in the supply curve.

True

False

13.

1 point

When marginal cost is lower than the average total cost, the average total cost decreases.

True

False

14.

1 point

If beef and chicken are substitutes, an increase in the price of chicken will result in the increase in the quantity demanded for beef.

True

False

15.

1 point

If the government will impose a price ceiling in the price of pork which is lower than the equilibrium price, the price of pork will increase.

True

False

16.

1 point

The average variable cost is the ratio of the variable cost to the change in the productive input.

True

False

17.

1 point

The objective of the firm to maximize profit is realized when total revenue is greater than total cost.

True

False

18.

1 point

Consumers are rational in their preference; so in making decisions they will choose situations where they can help promote the welfare of others.

True

False

19.

1 point

When marginal utility decreases, total utility will always decrease.

True

False

20.

1 point

According to the theory of demand, a product is bought by a consumer because it is expensive.

True

False

21.

1 point

Cardinal utility can be measured using the price of the product.

True

False

22.

1 point

The marginal product of a variable input in the third stage of production is negative because the fixed input is underutilized.

True

False

23.

1 point

The isoquant is a line that shows the different combinations of two productive inputs that yield the same costs of production.

True

False

24.

1 point

Economics is a social science because it deals with the study of choosing wealth.

True

False

25.

1 point

In maximizing utility, the requirement is for the subjective substitution of products be equal to the substitution of the products in the market.

True

False