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eco-2301-fall-06-review-for-exam2

eco-2301-fall-06-review-for-exam2 - Eco 2301 Fall 06 Review...

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Eco 2301 – Fall 06 Review for Exam 2 – Chapter 6, 9, and 10 Multiple choices: Choose the one alternative that best completes the statement or answer the question . 1– Economists assume that households maximize their marginal utility a) True b) False 2– Higher indifference curves mean higher levels of satisfaction a) True b) False 3– In the short–run firms are not constrained in their production choices a) True b) False 4– Substitution effect occurs when real income changes holding price constant a) True b) False 5– Which of the following formulas is NOT correct? a) AC = AVC + TFC/Q b) TVC = TC/Q c) TC = TFC + TVC d) TVC = AVC*Q 6– If marginal cost equals average total cost, average total cost will a) be maximized b) decrease c) increase d) be minimized 7– If average variable cost curve (AVC) is above the marginal cost curve (MC), then a) MC must be decreasing b) AVC must be increasing c) MC must be increasing d) MC can be either increasing or decreasing Problem: Use the following to answer questions 8–11 ------------------------------------------------------------------
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