Consumer Demand and Utility Quiz

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Questions and Answers

Which of the following best defines fixed costs (FC)?

  • The change in total cost when one more unit of output is produced.
  • The costs of production that do not change when the rate of output is altered. (correct)
  • The costs of production that do change when the rate of output is altered.
  • The unitary cost or cost per unit of output.

What is the formula for total cost (TC)?

  • TC = FC * VC
  • TC = FC - VC
  • TC = FC + VC (correct)
  • TC = FC / VC

What condition must be met to maximize profits in a perfect competitive market?

  • Price must equal marginal cost (P = MgC) (correct)
  • Price must be less than average total cost (P < ATC)
  • Price must equal average total cost (P = ATC)
  • Price must be greater than average total cost (P > ATC)

According to the law of diminishing marginal utility, each successive unit of a good consumed produces ______ additional utility.

<p>less (C)</p> Signup and view all the answers

Which of the following is a determinant of price elasticity of demand?

<p>Availability of substitutes (C)</p> Signup and view all the answers

What is the formula for total revenue?

<p>TR = PxQ (D)</p> Signup and view all the answers

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