Fin311

Consumer surplus…

A) is always positive.

B) for a particular unit of consumption is computed by taking the difference between quantity demand and quantity supplied.

C) for all units consumed is the area below demand and below market price over all the units consumed.

D) added to producer surplus provides a measure of the net gain to society.

E) from the production and consumption of the good.

F) all of the above

When marginal revenue is positive,

A) marginal revenue is greater than price.

B) demand is elastic.

C) increasing price will increase total revenue.

D) both b and c

E) none of the above

Which of the following would tend to INCREASE the elasticity of demand for good X?

A) a new discovery allows firms to produce X at a much lower cost.

B) the percentage of a consumer's income spent on good X increases.

C) a new product, Y, which can be used in place of X, is introduced.

D) both b and c

E) all of the above

If average product is decreasing, then marginal product…

A) must be greater than average product.

B) must be less than average product.

C) must be increasing.

D) cannot be decreasing.

E) both a and c

If a firm is producing a given level of output in an economically-efficient manner, then it must be the case that…

A) it is choosing the lowest-cost method of producing that output.

B) this output level is the most that can be produced with the given level of inputs.

C) each input is producing its maximum marginal product.

D) both a and b

E) both a and c

In the long run…

A) a firm is making the optimal input choice when the marginal rate of technical substitution is equal to the input price ratio.

B) the expansion path shows how the input marginal products change as the firm's output level changes.

C) all inputs are fixed.

D) both a and b

E) both b and c

If a firm is producing the level of output at which short–run average cost equals long–run average cost, then…

A) the firm has...