6: Consumer Behavior And Business Costs

Question 1

Comsumers optimal purchase rule is to buy and consume the quanity at which?

Answer 1

Difference between total utility and total expenditure is maxed, MU is equal to price, and consumer surplus is maxed

Question 2

Consumer surplus is

Answer 2

Diff between max amount consumers are willing to pay and total amount they actually pay, diff between TU and TE, graph under D curve but above price line

Question 3

Business firms marginal cost is

Answer 3

Additional cost to produce on more unit of output and increase TVC with producing one more

Question 4

If marginal is greater than average what will happen to average?

Answer 4

Increase

Question 5

As quanity increases average fixed cost

Answer 5

Decreases

Question 6

Average total cost is equal to

Answer 6

Total cost divided by the quanity of output and AFC plus AVC

Question 7

Total fixed cost is represently graphically by

Answer 7

A horizontal line

Question 8

Each curve reaches min when

Answer 8

It intersects MC curve

Question 9

Marginal cost is

Answer 9

Change in TC or TVC from producing one more