University of Kerala
In which of the following situations will total revenue increase?
A. Price elasticity of demand is 1.2, and the price of the good decreases.
B. Price elasticity of demand is 0.5, and the price of the good increases.
C. Price elasticity of demand is 3.0, and the price of the good decreases.
D. All the above.
B. if the price increases by $1, the quantity demanded will decrease by 2 units.
C. the change in quantity demanded divided by the change in price is equal to 2.
D. if the price increases by 1 percent, the quantity demanded will decrease by 2 percent.
E. if the price increases 1 unit, the quantity demanded will decrease by 2 units.
1. Which of the following defines marginal utility?
A. the change in total utility divided by the price of a product
B. the maximum amount of satisfaction from consuming a product
C. the total satisfaction received from consuming as much of the product that is available for consumption
D. the additional satisfaction received from consuming one more unit of a product
Diminishing marginal returns means that as you combine more units of a variable resource with a set of fixed resources:
a. the marginal physical product of the variable input decreases.
b. the average physical product of the fixed inputs increases at an increasing rate.
c. the marginal physical product of the variable input increases at a decreasing rate.
d. the total output decreases.
e. the marginal physical product of the variable input increases at a constant rate.
The law of diminishing returns indicates that:
(i) as extra units of a variable resource are added to a fixed resource the marginal product will decline beyond some point.
(ii) because of economies and diseconomies of scale, a competitive firm's long-run average cost curve will be U-shaped.
(iii) the demand for goods produced by purely competitive industries is downsloping.
(iv) beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.
The law of diminishing marginal returns states
A) that at some point adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline.
B) that at some point adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.
C) that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added.
D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.