Practise microeconomic analysis using utility, budget lines, efficiency, costs, revenues, market structures and firm objectives.
Which statement about the concept of utility is correct?
Diminishing marginal utility means that producers become less efficient the more they produce.
If marginal utility is above average utility, average utility must be rising.
The equi-marginal principle says that a consumer gets equal total satisfaction from each item purchased.
Total utility continually rises as the level of consumption rises.
The diagram shows indifference curves and a budget line T .
Which combination of X and Y gives the consumer maximum satisfaction?
The diagram shows a production possibility curve (LM) for an economy producing agricultural goods and manufacturing goods.
What can be concluded from the diagram?
The economy must be allocatively efficient at point R.
The economy is Pareto efficient at point T.
The economy is productively efficient at point S .
The opportunity cost is constant as we move from L to M.
In recent years, the fuel cost of operating a jet aircraft has declined. Over the same period, improved design has led to much quieter aircraft.
How would this affect the marginal private cost (MPC) and the marginal external cost (MEC) of air travel?
a downward shift of both the MPC and the MEC curves
a downward shift of the MPC curve and a movement left along the MEC curve
a movement left along both the MPC and the MEC curves
a movement left along the MPC curve and a downward shift of the MEC curve