MICROECONOMICS
1. What is meant by "utility" and how do the concepts of total utility and marginal utility relate to the another? Use these concepts to explain the principle of diminishing marginal utility and give an example.
2. Who would be categorized as a conspicuous consumer?
3. How does accounting profit differ from economic profit? Explain why accounting profit is more useful for paying your taxes while economic profit is more useful for deciding whether you should continue to stay in business. Give an example of implicit cost and an example of implicit revenue.
4. What is the law of diminishing marginal productivity? Why does it apply only to the short-run?
5. Define a firm and discuss its roles in the economy.
6. imagine that you are currently a college student working at a part time job. You work 15 hours per week as a taco specialist at TACOS! TACOS! TACOS! and earn $8 per hour. One day you realize you're tired of smelling like refried beans all the time and begin thinking about starting your own business. After doing some investigation you decide to spend 15 hours per week running a photocopy service in your dorm. You have determined the following as likely projected expenses and revenues for your first four weeks:
Revenue: $800 (8,000 copies sold at 5.10 per copy)
Costs: $400 for photocopy machine rental, $80 for paper (8,000 pages at S.01 per page)
Using this information you decide to start the business. Did you make a wise decision?
7. What are the definitions of the following cost concepts: fixed costs, variable costs and total costs?
8. What does a Lorenz curve show?
9. How does the Lorenz curve for household wealth compare with the Lorenz curve for (amity income in the U.S.?
10. Name three expenditure programs that redistribute income.