Question 1

Consumer's surplus is a measure of how much

Accepted Answer

A) less than his income a consumer spends on goods. 
B) more utility a consumer receives from his purchases than he has to pay for them. 
C) a consumer's marginal utility differs from his total utility. 
D) a change in price induces a consumer to substitute other goods. 
A) less than his income a consumer spends on goods. 
B) more utility a consumer receives from his purchases than he has to pay for them. 
C) a consumer's marginal utility differs from his total utility. 
D) a change in price induces a consumer to substitute other goods. B

Question 2

As a general rule, consumers have

Accepted Answer

A) limited income. 
B) unlimited desires for goods. 
C) many choices of goods facing them. 
D) All of the responses are correct. 
A) limited income. 
B) unlimited desires for goods. 
C) many choices of goods facing them. 
D) All of the responses are correct. D

Question 3

Total utility always decreases when additional amounts of a commodity are consumed.

Accepted Answer

A) True 
 B)False  False

Question 4

The law of demand holds that as prices of goods decrease, people are willing to buy more.

Accepted Answer

A) True 
 B)False

Question 5

For a ____, if incomes rise and prices do not change, quantity demanded will increase.

Accepted Answer

A) normal good 
B) inferior good 
C) Giffen good 
D) substitute good 
A) normal good 
B) inferior good 
C) Giffen good 
D) substitute good

Question 6

Marginal utility is

Accepted Answer

A) the difference in price between one store and another. 
B) the difference in value between "some" of a thing and "none" of a thing. 
C) the difference between any two successive total utility figures. 
D) acquired only with the first few units of a good or service. 
E) utility that is barely satisfactory. 
A) the difference in price between one store and another. 
B) the difference in value between "some" of a thing and "none" of a thing. 
C) the difference between any two successive total utility figures. 
D) acquired only with the first few units of a good or service. 
E) utility that is barely satisfactory.

Question 7

Figure 5-3  
-Suppose that the market price rises from $3 to $5.What is the change in market demand?

Accepted Answer

A) 80 
B) 30 
C) 50 
D) 110 
A) 80 
B) 30 
C) 50 
D) 110

Question 8

An increase in a family's income will cause its budget line to

Accepted Answer

A) become steeper. 
B) become flatter (less steep). 
C) move closer to the origin. 
D) move away from the origin. 
E) become more convex toward the origin. 
A) become steeper. 
B) become flatter (less steep). 
C) move closer to the origin. 
D) move away from the origin. 
E) become more convex toward the origin.

Question 9

When the price of a commodity falls, we can expect

Accepted Answer

A) total utility will fall. 
B) marginal utility of the last unit purchased will fall. 
C) marginal utility of the last unit purchased will rise. 
D) purchases will fall because of a change in marginal utility. 
A) total utility will fall. 
B) marginal utility of the last unit purchased will fall. 
C) marginal utility of the last unit purchased will rise. 
D) purchases will fall because of a change in marginal utility.

Question 10

Because of diminishing marginal utility, total utility always decreases when additional amounts of a commodity are consumed.

Accepted Answer

A) True 
 B)False

Question 11

Figure 5-14  
-Martha initially buys the combination of pens and pencils shown as A in Figure 5-14.After the prices of both goods change, she buys combination B.It must be true that

Accepted Answer

A) Martha prefers A to B. 
B) Martha prefers B to A. 
C) Martha is indifferent between A and B. 
D) Martha's preferences between A and B cannot be determined from the information given. 
A) Martha prefers A to B. 
B) Martha prefers B to A. 
C) Martha is indifferent between A and B. 
D) Martha's preferences between A and B cannot be determined from the information given.

Question 12

Figure 5-8  
-In Figure 5-8, the consumer is indifferent between the combinations of beer and wine coolers indicated by points

Accepted Answer

A) A, C. 
B) B, D. 
C) C, B. 
D) A, B. 
A) A, C. 
B) B, D. 
C) C, B. 
D) A, B.

Question 13

Consumer's surplus exists only for the last unit of a good that a buyer has purchased.

Accepted Answer

A) True 
 B)False

Question 14

Robert decides not to attend a showing of the newest Star Wars movie when the price of a ticket is $10.From this, we can conclude that seeing the movie is

Accepted Answer

A) worth less than 1,000 utils to Robert. 
B) worth $8 to Robert. 
C) was worth less than $10 worth of other goods for Robert. 
D) something that Robert would never do. 
A) worth less than 1,000 utils to Robert. 
B) worth $8 to Robert. 
C) was worth less than $10 worth of other goods for Robert. 
D) something that Robert would never do.

Question 15

If a household's income declines, then its budget line is

Accepted Answer

A) unaffected. 
B) going to be steeper. 
C) shift parallel, closer to the origin. 
D) shift parallel, further away from the origin. 
E) become more concave toward the origin. 
A) unaffected. 
B) going to be steeper. 
C) shift parallel, closer to the origin. 
D) shift parallel, further away from the origin. 
E) become more concave toward the origin.

Question 16

Total utility is maximized whenever

Accepted Answer

A) marginal utility is zero. 
B) marginal utility is increasing. 
C) marginal utility is decreasing. 
D) marginal utility is constant. 
A) marginal utility is zero. 
B) marginal utility is increasing. 
C) marginal utility is decreasing. 
D) marginal utility is constant.

Question 17

The demand curve can be derived from indifference curves by varying the price of the commodity in question.

Accepted Answer

A) True 
 B)False

Question 18

-In Figure 5-19, the consumer experiences at point C

Accepted Answer

A) greater total utility than at point D. 
B) greater total utility than at point E. 
C) less total utility than at point D. 
D) total utility equal to that experienced at point D. 
A) greater total utility than at point D. 
B) greater total utility than at point E. 
C) less total utility than at point D. 
D) total utility equal to that experienced at point D.

Question 19

-Figure 5-5 shows a consumer budget line for French fries and hamburgers.The household allocates a budget for these two goods.Suppose that the price of an order of French fries is $2, what is household income?

Accepted Answer

A) $1 
B) $2 
C) $5 
D) $10 
A) $1 
B) $2 
C) $5 
D) $10

Question 20

-According to Table 5-2, Robinson's total utility from having two coconuts is ____.

Accepted Answer

A) $1.87 
B) $1.66 
C) $3.88 
D) not determinable from the information in the table 
A) $1.87 
B) $1.66 
C) $3.88 
D) not determinable from the information in the table

Exam 5: Consumer Choice: Individual and Market Demand

Consumer's surplus is a measure of how much

As a general rule, consumers have

Total utility always decreases when additional amounts of a commodity are consumed.

The law of demand holds that as prices of goods decrease, people are willing to buy more.

For a ____, if incomes rise and prices do not change, quantity demanded will increase.

Marginal utility is

Figure 5-3 -Suppose that the market price rises from $3 to $5.What is the change in market demand?

An increase in a family's income will cause its budget line to

When the price of a commodity falls, we can expect

Because of diminishing marginal utility, total utility always decreases when additional amounts of a commodity are consumed.

Figure 5-14 -Martha initially buys the combination of pens and pencils shown as A in Figure 5-14.After the prices of both goods change, she buys combination B.It must be true that

Figure 5-8 -In Figure 5-8, the consumer is indifferent between the combinations of beer and wine coolers indicated by points

Consumer's surplus exists only for the last unit of a good that a buyer has purchased.

Robert decides not to attend a showing of the newest Star Wars movie when the price of a ticket is $10.From this, we can conclude that seeing the movie is

If a household's income declines, then its budget line is

Total utility is maximized whenever

The demand curve can be derived from indifference curves by varying the price of the commodity in question.

-In Figure 5-19, the consumer experiences at point C

-Figure 5-5 shows a consumer budget line for French fries and hamburgers.The household allocates a budget for these two goods.Suppose that the price of an order of French fries is $2, what is household income?

-According to Table 5-2, Robinson's total utility from having two coconuts is ____.

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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