Question

The table given below records the total utility derived from the consumption of avocados. Table 1 Number of Avocados Total Utility (Utils) 1 2 84 88 88 3 5 79 1. According to Table 1. marginal utility a. increases from the first unit to the third unit and then declines b. decreases from the third unit to the fifth unit only c. increases from the first unit to the third unit and decreases from the third unit to the fifth unit d. decreases from the first unit to the fifth unit 2. At all levels of production beyond the point where the marginal cost curve crosses the average variable cost curve, average variable cost a. falls. b. remains unaffected. c. rises. d. All of the above are possible, it depends on the shape of the marginal cost curve. ) 3. The model of perfect competition best applies to markets with:( a. a few firms selling identical products. b. a few firms selling differentiated products. c. many firms selling identical products, d. many firms selling differentiated products. e significant barriers to entry and exit. 4. Mr. Max is about to purchase 6 units of good A and 5 units of good B. The price of both A and B is $3. Mr. Max has only $33 to spend. If the marginal utility of the sixth unit of A is 18 and the marginal utility of the fifth unit of B is 15, then to maximize his utility: a. he should not buy anything. b. he should buy more of A and less of B. c. he should buy less of A and more of B. d. he should buy A and B in the quantities indicated.

Answer 1

a) "A"

It increases from the first unit to the third unit and then declines in the market.

b) "C"

It will rise as the marginal cost is above the average variable cost. it will add more to the production cost.

c )"C"

Many firm in the market selling identical products in the market.

d) "C"

He should be buying more of B and less of A.