Question

For a perfectly competitive firm, economic profit is zero when:

Question 27 options:

a)	price = minimum AVC.

b)	price = minimum ATC.

c)

MR = AFC.

d)	price = explicit cost minus implicit cost.

A util is:

Question 28 options:

a)	one unit of electricity.

b)	equal to $1.

c)	a hypothetical unit of satisfaction.

d)	a measure of income.

The income effect shows that when the price of a good:

Question 29 options:

a)	decreases, income essentially rises and quantity demanded increases.

b)	decreases, income essentially decreases and quantity demanded decreases.

c)	increases, people switch to more expensive goods.

d)	decreases, people switch from more expensive goods.

Marginal utility theory assumes that you can measure utility.

Question 30 options:

a)

False

b)

True

Answer 1

1.
b)price = minimum ATC.
A perfectly competitive firm earns zero economic profit when the P=minimum of the ATC since at this point TR=TC.
2.
c)a hypothetical unit of satisfaction.
Cardinal utility theory assumes utility can be measured in a hypothetical unit called utils.
3.
a)decreases, income essentially rises and quantity demanded increases.
4.
a)False
Marginal utility theory is the theory that an additional utility a consumer receives from the consumption of an extra unit.