Microeconomics Questions week 3
WEEK THREE QUESTIONS:
38) What is Utility? "The utility of a consumer is a measure of the satisfaction the consumer derives from consumption of goods and services" (p. 270) 39) What is the Law of Diminishing Marginal Utility? "According to the principle of diminishing marginal utility, each successive unit of a good or service consumed adds less to total utility than the previous unit." (p.272) In other words the more one consumes the more they will be satisfied until they reach a point where consuming add nothing to their satisfaction.
40) What is optimal consumption combination? A consumption bundle "is the collection of all goods and services consumed by that individual" (p. 270). The optimal consumption combination is "the consumption bundle that maximizes the consumers's total utility given his or her budget constraint." (p. 275) 41) Define a Production Function. A production function is "the relationship between the quantity of inputs a firm uses and the quantity of outputs it produces." (p. G-7) 42) What is Marginal Product of an input? Marginal product of an input is the output produced with one more unit of input. 43) What is Marginal Revenue Product of an input? Marginal revenue is "the change in total revenue generated by an additional unit of output." (p. 350) It is used to examine effects of various inputs, such as labor, on production. 44) When a firm’s profit is maximized? (Profit Maximizing Rule). A firm's profit is maximized when the price and output level return's the greatest profit. 45) How demand for an input is determined? Demand for an input is determined based on the demand for output. 46) What is the optimal combination or mix of inputs? (Least Cost Combination). The optimal combination is one that has the minimum inputs and the maximum output at minimal cost.
47) What is Marginal Productivity of an input? Marginal product of an input is the output produced with one more unit
38) What is Utility? "The utility of a consumer is a measure of the satisfaction the consumer derives from consumption of goods and services" (p. 270) 39) What is the Law of Diminishing Marginal Utility? "According to the principle of diminishing marginal utility, each successive unit of a good or service consumed adds less to total utility than the previous unit." (p.272) In other words the more one consumes the more they will be satisfied until they reach a point where consuming add nothing to their satisfaction.
40) What is optimal consumption combination? A consumption bundle "is the collection of all goods and services consumed by that individual" (p. 270). The optimal consumption combination is "the consumption bundle that maximizes the consumers's total utility given his or her budget constraint." (p. 275) 41) Define a Production Function. A production function is "the relationship between the quantity of inputs a firm uses and the quantity of outputs it produces." (p. G-7) 42) What is Marginal Product of an input? Marginal product of an input is the output produced with one more unit of input. 43) What is Marginal Revenue Product of an input? Marginal revenue is "the change in total revenue generated by an additional unit of output." (p. 350) It is used to examine effects of various inputs, such as labor, on production. 44) When a firm’s profit is maximized? (Profit Maximizing Rule). A firm's profit is maximized when the price and output level return's the greatest profit. 45) How demand for an input is determined? Demand for an input is determined based on the demand for output. 46) What is the optimal combination or mix of inputs? (Least Cost Combination). The optimal combination is one that has the minimum inputs and the maximum output at minimal cost.
47) What is Marginal Productivity of an input? Marginal product of an input is the output produced with one more unit