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ECON 101 Lecture Notes - Lecture 27: Marginalism, Marginal Utility, Marginal Cost

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skywildebeest541
22 Dec 2020
School
GCC
Department
Economics
Course
ECON 101
Professor
Maier

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Document Summary

Decreasing marginal cost: when marginal cost falls as the number of units produced. Making how much decisions: the role of marginal analysis. How much is a decision at the margin. To make good how much decisions requires weighing the additional costs and benefits of each increase. Marginal analysis: comparing the benefit of doing a little bit more of some activity with the cost of doing a little bit more of that activity. Marginal benefit: the benefit of doing a little bit more of an activity. Marginal cost: cost of doing a little bit more of something. Marginal cost curve: shows how the cost of producing one more unit depends on the quantity that has already been produced. Increasing marginal cost: when each additional unit costs more to produce than the previous one. Constant marginal cost: occurs when the cost of producing an additional unit is the same as the cost of producing the previous unit.

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Related Questions

Marginal benefit is the gain you receive for doing anything "one more time." If you owned, say, a cake shop, and you could sell an unlimited number of cakes for $15 apiece, then your marginal benefit for each additional cake you produced would be $15. In the real world, though, you'll always reach a limit on how much you can sell at a given price. If your market is saturated, you might have to drop your price to sell another.

If the marginal benefit is greater than marginal cost, a rational choice involves:

Group of answer choices
Less of the activity
No more of the activity
More of the activity
More or less, depending on the benefits of other activities

1. the marginal cost curve is

A. Downward sloping to reflect the bowed out PPF.

B. Downward sloping as marginal benefits increase.

C. Upward sloping because marginal cost falls as more of a good or service is produced.

D. Upward sloping to reflect the increasing opportunity cost of producing one more unit.

E. U-shaped to reflect the bowed out PPF.

2. Allocative efficiency occurs

A. Anywhere inside or on the production possibilities frontier.

B. When the total cost of production is minimized

C. At all points on the production possibilities frontier.

D. At only one point on the production possibilities frontier.

E. At the points where the production possibilities frontier crosses the horizontal or vertical axis.

3. Auditors working for a large accounting firm are often away from the office. When they are in the office, they are allowed to use any desk that is available. Which method is used to allocate desks?

A. lottery

B. first-come, first-served

C. Command

D. Contest

E. Sharing equally


4. The marginal cost of a good or service

A. Can be calculated from the marginal benefit of that good or service.

B. decreases as more of the good or service is produced.

C. Can be derived from the production possibilities frontier.

D. Graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.

E. None of the above answers is correct.

5. The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

A. Marginal benefit.

B. Total benefit.

C. Marginal cost

D. Total cost.

E. Price.

1) A farm can produce 1,000 bushels of wheat per year with 2workersand 1,300 bushels of wheat per year with 3 workers. Themarginalproduct of the third worker is:
a) 100 bushels
b) 300 bushels
c) 1,300 bushels
d) 2,300 bushels

2) At 47 units of labor, a firm finds that average product oflaborequals 39.6 and marginal product of labor equals 32.9. Wecanconclude that the average product curve at 47 units oflaboris:
a) upward-sloping
b) horizontal
c) vertical
d) downward-sloping

3) At 76 units of labor, a firm finds that average product oflaborequals 39.6 and marginal product of labor equals 42.9. Wecanconclude that the average product curve is 76 units oflaboris:
a) upward-sloping
b) downward-sloping
c) vertical
d) horizontal

4) The change in total output resulting from a 1-unit increaseinthe quantity of a factor of production used, holding thequantitiesof all other factors of production constant, is:
a) average cost
b) average product
c) marginal cost
d) marginal product

5) If a consumer purchases a combination of commodities a and bsuchthat MUa/Pa=40 and MUb/Pb=60, to maximize utility, theconsumershould buy:
a) less of both a and b
b) less of a and more of b
c) more of both a and b
d) more of a an less of b

6) If the marginal benefit received from a good is equal tothemarginal cost of production, then:
a) society's well-being cannot be improved bychangingproduction
b) society's well-being can be improved if productiondecreases
c) society's well-being can be improved if productionincreases
d) the market is producing too much of the good

7) If the marginal benefit received from a good is less thanthemarginal cost of production, then:
a) society's well-being can be improved if productionincreases
b) society's well-being can be improved if productiondecreases
c) society's well-being cannot be improved bychangingproduction
d) the market is producing too little of the good

8) If the marginal benefit received from a good is greater thanthemarginal cost of production, then:
a) society's well-being can be improved if productionincreases
b) society's well-being can be improved if productiondecreases
c) society's well-being cannot be improved bychangingproduction
d) the market is producing too much of the good

9) If an activity generates external costs, thedecisionmakersgenerating the activity will:
a) be faced with its full cost
b) be faced with no costs
c) not be faced with its full costs
d) be faced with excessive costs