Question 1

Exhibit 6-3   In Exhibit 6-3, what is the marginal utility of the third pretzel?

Accepted Answer

A) 5 
B) 10 
C) 15 
D) -0.15 
E) 55 
A) 5 
B) 10 
C) 15 
D) -0.15 
E) 55

Question 2

Exhibit 6-4   In Exhibit 6-4, where does marginal utility first begin to diminish?

Accepted Answer

A) sometime after the first unit consumed 
B) sometime after the second unit consumed 
C) sometime after the third unit consumed 
D) sometime after the fourth unit consumed 
E) sometime after the fifth unit consumed 
A) sometime after the first unit consumed 
B) sometime after the second unit consumed 
C) sometime after the third unit consumed 
D) sometime after the fourth unit consumed 
E) sometime after the fifth unit consumed

Question 3

Exhibit 6-11   If the good in Exhibit 6-11 were free, then

Accepted Answer

A) total utility, consumer surplus, and consumer expenditure would be undefined 
B) total utility and consumer surplus would be positive, but consumer expenditure would be undefined 
C) total utility, consumer surplus, and consumer expenditure would all equal 0 
D) total utility, consumer surplus, and consumer expenditure would all be maximized 
E) total utility and consumer surplus would be valued at $36; consumer expenditure would be 0 
A) total utility, consumer surplus, and consumer expenditure would be undefined 
B) total utility and consumer surplus would be positive, but consumer expenditure would be undefined 
C) total utility, consumer surplus, and consumer expenditure would all equal 0 
D) total utility, consumer surplus, and consumer expenditure would all be maximized 
E) total utility and consumer surplus would be valued at $36; consumer expenditure would be 0

Question 4

The consumers' surplus derived from the last unit of a good purchased

Accepted Answer

A) tends to be less than 0 
B) tends to be equal to 0 
C) tends to equal the price of the good 
D) tends to be greater than the price of the good 
E) depends on the marginal utility of the first unit purchased 
A) tends to be less than 0 
B) tends to be equal to 0 
C) tends to equal the price of the good 
D) tends to be greater than the price of the good 
E) depends on the marginal utility of the first unit purchased

Question 5

Although some tastes do change over time, economists believe that tastes are relatively stable.If tastes were not mostly stable, then we

Accepted Answer

A) could not even draw a supply curve 
B) could not reasonably make the other-things-constant assumption required for demand analysis 
C) would not have any concerns about still drawing demand curves 
D) could no longer eat food 
E) would be basing economic models on real life instead of making impossible assumptions 
A) could not even draw a supply curve 
B) could not reasonably make the other-things-constant assumption required for demand analysis 
C) would not have any concerns about still drawing demand curves 
D) could no longer eat food 
E) would be basing economic models on real life instead of making impossible assumptions

Question 6

Exhibit 6-17   Consider Exhibit 6-17 which represents the market demand for DVDs.If the price of DVDs is $20 how much is consumer's surplus?

Accepted Answer

A) $0 
B) $20 
C) $40 
D) $60 
E) $80 
A) $0 
B) $20 
C) $40 
D) $60 
E) $80

Question 7

Suppose you eat at a restaurant that serves clams at a fixed price and crab legs at a price that varies based on market conditions.Each week, the marginal utility you attach to an order of crab legs is 100, and the marginal utility of an order of clams is 50.One week you have crab legs, but the next week you have clams.This means that

Accepted Answer

A) you are irrational 
B) your tastes must have changed 
C) the price of clams dropped below the price of crab legs 
D) the price of crab legs increased 
E) the price of crab legs must have increased to more than twice that of clams 
A) you are irrational 
B) your tastes must have changed 
C) the price of clams dropped below the price of crab legs 
D) the price of crab legs increased 
E) the price of crab legs must have increased to more than twice that of clams

Question 8

Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: $20, 000.The dealer says, "You're in luck; we have one on the lot for $20, 000." Which of the following statements is true?

Accepted Answer

A) Ferd will not buy the car. 
B) The car is not worth $20, 000. 
C) Ferd gets $20, 000 in consumer surplus. 
D) Ferd gets no consumer surplus. 
E) The dealer earns $20, 000 in consumer surplus. 
A) Ferd will not buy the car. 
B) The car is not worth $20, 000. 
C) Ferd gets $20, 000 in consumer surplus. 
D) Ferd gets no consumer surplus. 
E) The dealer earns $20, 000 in consumer surplus.

Question 9

"The second glass of Evian water was very good.May I have another?" Which of the following is necessarily true regarding this statement?

Accepted Answer

A) The marginal utility of the second glass is negative. 
B) The marginal utility of the second glass is less than the marginal utility of the first glass. 
C) The marginal utility of the second glass is positive. 
D) The water is free. 
E) The marginal utility of the third glass is negative. 
A) The marginal utility of the second glass is negative. 
B) The marginal utility of the second glass is less than the marginal utility of the first glass. 
C) The marginal utility of the second glass is positive. 
D) The water is free. 
E) The marginal utility of the third glass is negative.

Question 10

Exhibit 6-20   Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $45 will be:

Accepted Answer

A) 50 
B) 70 
C) 90 
D) 110 
E) 130 
A) 50 
B) 70 
C) 90 
D) 110 
E) 130

Question 11

If Joel buys ten floppy disks, which are worth a total of $30 to him, and he pays $1 a disk, how much consumer surplus does he derive?

Accepted Answer

A) $24 
B) $15 
C) $20 
D) $10 
E) $2 from each floppy disk 
A) $24 
B) $15 
C) $20 
D) $10 
E) $2 from each floppy disk

Question 12

The demand for medical care

Accepted Answer

A) decreases as income increases, indicating that medical care is an inferior good 
B) is completely insensitive to price; that is, demand is perfectly inelastic 
C) is perfectly elastic 
D) is sensitive to the time component of cost 
E) varies directly with the price of that care 
A) decreases as income increases, indicating that medical care is an inferior good 
B) is completely insensitive to price; that is, demand is perfectly inelastic 
C) is perfectly elastic 
D) is sensitive to the time component of cost 
E) varies directly with the price of that care

Question 13

Suppose Lorna will buy more sweaters if the price of sweaters rises.She is violating the

Accepted Answer

A) law of supply 
B) law of increasing costs 
C) law of large numbers 
D) law of diminishing costs 
E) law of demand 
A) law of supply 
B) law of increasing costs 
C) law of large numbers 
D) law of diminishing costs 
E) law of demand

Question 14

Exhibit 6-5   In Exhibit 6-5, the total utility of consuming five scones is

Accepted Answer

A) 82 
B) 30 
C) 34 
D) 27 
E) 2 
A) 82 
B) 30 
C) 34 
D) 27 
E) 2

Question 15

Along a consumer's demand curve, price reflects

Accepted Answer

A) the costs of production 
B) the dollar value of the total utility from the good 
C) the dollar value of the marginal utility of each additional unit of the good 
D) the maximum quantity that could be purchased, given income 
E) non-rational decision making 
A) the costs of production 
B) the dollar value of the total utility from the good 
C) the dollar value of the marginal utility of each additional unit of the good 
D) the maximum quantity that could be purchased, given income 
E) non-rational decision making

Question 16

Arthur Bach is worth $780 million dollars.He goes into an upscale men's store and buys 32 green sweaters, each costing $200.If Arthur has maximized his utility from this purchase, what is the marginal utility of the thirty-third green sweater?

Accepted Answer

A) cannot tell 
B) greater than $200 
C) less than $200 
D) 0 
E) $200 
A) cannot tell 
B) greater than $200 
C) less than $200 
D) 0 
E) $200

Question 17

Utility is determined by an individual's

Accepted Answer

A) income 
B) price 
C) relative price 
D) profit 
E) tastes and preferences 
A) income 
B) price 
C) relative price 
D) profit 
E) tastes and preferences

Question 18

Exhibit 6-6   Using Exhibit 6-6, calculate the marginal utility of the third plum consumed.

Accepted Answer

A) 4 
B) 6 
C) 24/3 
D) 9 
E) 24 
A) 4 
B) 6 
C) 24/3 
D) 9 
E) 24

Question 19

Marginal utility is a measure

Accepted Answer

A) of total utility derived from consuming a given amount of a good 
B) of the total utility gained from consuming an extra unit of a good 
C) computed by dividing total utility by the amount of a good consumed 
D) determined by production conditions in a market 
E) of the cost associated with consuming one more unit of a good 
A) of total utility derived from consuming a given amount of a good 
B) of the total utility gained from consuming an extra unit of a good 
C) computed by dividing total utility by the amount of a good consumed 
D) determined by production conditions in a market 
E) of the cost associated with consuming one more unit of a good

Question 20

A free good (price = $0)will be consumed up to the point at which its marginal utility is zero.

Accepted Answer

A) True 
 B)False

Exam 6: Consumer Choice and Demand

Exhibit 6-3 In Exhibit 6-3, what is the marginal utility of the third pretzel?

Exhibit 6-4 In Exhibit 6-4, where does marginal utility first begin to diminish?

Exhibit 6-11 If the good in Exhibit 6-11 were free, then

The consumers' surplus derived from the last unit of a good purchased

Although some tastes do change over time, economists believe that tastes are relatively stable.If tastes were not mostly stable, then we

Exhibit 6-17 Consider Exhibit 6-17 which represents the market demand for DVDs.If the price of DVDs is $20 how much is consumer's surplus?

Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: $20, 000.The dealer says, "You're in luck; we have one on the lot for $20, 000." Which of the following statements is true?

"The second glass of Evian water was very good.May I have another?" Which of the following is necessarily true regarding this statement?

Exhibit 6-20 Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $45 will be:

If Joel buys ten floppy disks, which are worth a total of $30 to him, and he pays $1 a disk, how much consumer surplus does he derive?

The demand for medical care

Suppose Lorna will buy more sweaters if the price of sweaters rises.She is violating the

Exhibit 6-5 In Exhibit 6-5, the total utility of consuming five scones is

Along a consumer's demand curve, price reflects

Arthur Bach is worth $780 million dollars.He goes into an upscale men's store and buys 32 green sweaters, each costing $200.If Arthur has maximized his utility from this purchase, what is the marginal utility of the thirty-third green sweater?

Utility is determined by an individual's

Exhibit 6-6 Using Exhibit 6-6, calculate the marginal utility of the third plum consumed.

Marginal utility is a measure

A free good (price = $0)will be consumed up to the point at which its marginal utility is zero.

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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