Microeconomics Concepts Quiz

Choose a study mode

Play Quiz

Study Flashcards

Spaced Repetition

Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Download our mobile app to listen on the go

Get App

Questions and Answers

What is the primary focus of the Cobb-Douglas Production function?

It visualizes the substitution effect in consumer choice.
It describes the relationship between consumer preferences and goods.
It explains how costs change with increased production.
It illustrates output as a function of variable inputs. (correct)

In the context of consumer equilibrium, what does the Indifference Curve represent?

A constant level of income for consumers.
A measure of total utility in consumption.
Combinations of goods that provide the same satisfaction. (correct)
The total budget constraint faced by a consumer.

What are the two main effects in Slutsky's decomposition of the price effect?

Utility effect and Satisfaction effect
Preference effect and Demand effect
Income effect and Substitution effect (correct)
Budget effect and Consumption effect

What is the law of variable proportions mainly concerned with?

<p>The effects of changing input levels on output levels. (D)</p> Signup and view all the answers

Which statement correctly describes Isoquants?

<p>They represent combinations of inputs that yield the same output. (A)</p> Signup and view all the answers

Flashcards

Indifference Curve

A curve connecting all points on a graph that represent combinations of two goods that provide the same level of satisfaction to a consumer.

IC Schedule

A table that shows different combinations of two goods that provide the same level of satisfaction (utility) to a consumer.

Consumer Equilibrium

The point where a consumer's budget line is tangent to their indifference curve, representing the optimal combination of two goods that maximizes their utility given their budget.

Slutsky's Decomposition

The change in quantity demanded of a good due to a price change, separated into two effects: the substitution effect (change in quantity demanded due to the relative price change) and the income effect (change in quantity demanded due to the resulting change in purchasing power).

Signup and view all the flashcards

Cobb-Douglas Production Function

A production function where the inputs of labor (L) and capital (K) have constant elasticities of substitution. It looks like this: Q = A * L^α * K^(1-α), where Q is output, A is a scaling factor, and α is the share of labor in output.

Signup and view all the flashcards