15. When the percentage change in price is lesser than the percentage change in quantity demanded, ceteris paribus:
Demand
is unitary elastic.
Demand
is inelastic.
Demand
is elastic.
Demand
is income elastic.

16. A price increase will leave the total revenue a firm receives unchanged, ceteris paribus, only if the demand for its product is:
Elastic.
Inelastic.
Unitary
elastic.
Income
elastic.

17. If goods X and Y are complementary goods, an increase in the price of Z will, ceteris paribus:
Decrease
the demand for X.
Decrease
the demand for Y.
Increase
the demand for Y.
Not
change the demand for Y unless the goods are related.

18. Assume that Heather always maximizes her total utility given her budget constraint. Every morning for breakfast Heather has two eggs and three sausages. If the marginal utility of the last egg is 20 utils and the price of eggs is $2 each, what can we say about the marginal utility of the last sausage if the price of each sausage is $1?
It
must be equal to 40 utils.
It
must be equal to 20 utils.
It
must be equal to 10 utils.
None
of the above.

19. If goods X and Y are substitute goods, a decrease in the price of X will, ceteris paribus:
Decrease
the demand for X.
Decrease
the demand for Y.
Increase
the demand for Y.
Not
change the demand for Y.

20. Other things being equal, if the price of good X increases and as a result, the demand for good Y decreases, goods X and Y are:
Inferior
goods.
Normal
goods.
Complementary
goods.
Substitute
goods.

Calculate the values in the blank spaces in Table 1 below to answer the following questions.

21. In Table 5.1, the marginal utility of the third unit is:
5.
13.
22.
60.

22. In Table 5.1, the total utility of two units consumed is:
25.
47.
60.
65.

23. A firm’s productivity will decrease if:
There
is an increase in the firm’s capital to labor ratio.
The
firm hires more skilled workers.
The
workers are given additional training.
None
of the above.

24. The point of diminishing marginal returns occurs with each additional unit of a variable input when:
Total
output grows at a lower rate.
Marginal
physical product becomes negative.
Workers
demand higher wages.
None
of the above.

25. Diminishing returns to labor occur because of:
Inefficiency
in the production process.
The
use of inferior factors of production.
A
rising ratio of labor to capital.
All
of the above.

26. If an additional unit of labor costs $150 and has a MPP of 50 units of output, the marginal cost is:
$0.03.
$0.30.
$3.00.
$5.00.

27. As the production rate is increased, average fixed costs:
Are
constant.
First
fall, then rise (in a U-shaped curve).
Decline.
Increase.

28. When the average total cost curve is rising, then the marginal cost curve will be:
Below
the average fixed cost curve.
Falling
with greater output.
Above
the average total cost curve.
Below
the average total cost curve.