Question 1

Consumer's surplus

Accepted Answer

A) is the gap between total willingness to pay and the total market value of a good. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve. 
A) is the gap between total willingness to pay and the total market value of a good. 
B) guarantees that the market value of a good in money is equal to the total economic value of the good. 
C) is always negative because of diminishing marginal utility. 
D) is the total area under a consumer's demand curve.

Question 2

As a rule, as a consumer acquires more and more of a good, the marginal utility declines.

Accepted Answer

A) True 
 B)False

Question 3

An increase in income produces a parallel, outward shift in the budget line.

Accepted Answer

A) True 
 B)False

Question 4

Figure 5-13  
-According to Figure 5-13, if the price of good X falls, the optimal combination will move

Accepted Answer

A) from U1 to a point on a higher indifference curve, such as U3. 
B) from U2 to a point on a higher indifference curve, such as U3 
C) from U1 to a point on a higher indifference curve, such as U3 
D) from U2 to a point on a higher indifference curve, such as U1. 
A) from U1 to a point on a higher indifference curve, such as U3. 
B) from U2 to a point on a higher indifference curve, such as U3 
C) from U1 to a point on a higher indifference curve, such as U3 
D) from U2 to a point on a higher indifference curve, such as U1.

Question 5

Elaine values the utility of her first cup of coffee at $1; a second cup, $.75; and a third cup, $.50.If Elaine drinks three cups of coffee for breakfast, her total utility is equal to

Accepted Answer

A) $.50, the value of her last cup of coffee. 
B) $1.00, the value of her first cup of coffee. 
C) marginal utility. 
D) $2.25. 
E) $1.50. 
A) $.50, the value of her last cup of coffee. 
B) $1.00, the value of her first cup of coffee. 
C) marginal utility. 
D) $2.25. 
E) $1.50.

Question 6

Net utility is

Accepted Answer

A) equal to total utility from the quantity acquired of a good minus the utility lost by having to pay for it. 
B) equal to the sum of the marginal utilities. 
C) equal to an optimal number easily calculated by the consumer. 
D) always greater than total utility. 
A) equal to total utility from the quantity acquired of a good minus the utility lost by having to pay for it. 
B) equal to the sum of the marginal utilities. 
C) equal to an optimal number easily calculated by the consumer. 
D) always greater than total utility.

Question 7

-Figure 5-5 shows a consumer budget line for French fries and hamburgers.If the household has $20 to spend, the price of hamburgers is

Accepted Answer

A) $1. 
B) $2. 
C) $4. 
D) $2.50. 
A) $1. 
B) $2. 
C) $4. 
D) $2.50.

Question 8

If a good has "snob appeal," consumers may purchase less when the price falls.

Accepted Answer

A) True 
 B)False

Question 9

Given the demand curve in Figure 5-24, explain how consumer's surplus is calculated.

Accepted Answer

The area under the demand curve above ma

Question 10

If a consumer is purchasing a good and her net marginal utility is positive,

Accepted Answer

A) she should continue to consume at this level. 
B) she should purchase more units, so long as the net marginal utility is greater than zero. 
C) she should check to see what the price is. 
D) she should buy more units until her net marginal utility turns negative. 
A) she should continue to consume at this level. 
B) she should purchase more units, so long as the net marginal utility is greater than zero. 
C) she should check to see what the price is. 
D) she should buy more units until her net marginal utility turns negative.

Question 11

Consumers should purchase a good up to the point where MU = P.

Accepted Answer

A) True 
 B)False

Question 12

Because of diminishing marginal utility, you

Accepted Answer

A) should never buy more than one unit of a good, since additional units decrease your total utility. 
B) have to consider the effect of additional units on your total utility when you make purchases. 
C) wind up paying for units that you receive no benefit from. 
D) always want to increase your consumption of a good until the marginal utility you get is zero. 
A) should never buy more than one unit of a good, since additional units decrease your total utility. 
B) have to consider the effect of additional units on your total utility when you make purchases. 
C) wind up paying for units that you receive no benefit from. 
D) always want to increase your consumption of a good until the marginal utility you get is zero.

Question 13

Total utility will be at its maximum when

Accepted Answer

A) marginal utility is negative. 
B) marginal utility is positive. 
C) marginal utility is maximized. 
D) marginal utility is zero. 
A) marginal utility is negative. 
B) marginal utility is positive. 
C) marginal utility is maximized. 
D) marginal utility is zero.

Question 14

If the marginal net utility of beer is a positive number, the consumer should buy more beer in order to maximize utility.

Accepted Answer

A) True 
 B)False

Question 15

If a commodity is inexpensive and its total utility is great,

Accepted Answer

A) it is an inferior good. 
B) it is plentiful. 
C) its marginal utility is high. 
D) the ratio of price to marginal utility is very high. 
A) it is an inferior good. 
B) it is plentiful. 
C) its marginal utility is high. 
D) the ratio of price to marginal utility is very high.

Question 16

The slope of an indifference curve represents the maximum amount of one commodity that a consumer is willing to give up in exchange for one more unit of another commodity.

Accepted Answer

A) True 
 B)False

Question 17

In general, as a consumer acquires more and more of a good, the marginal utility remains constant.

Accepted Answer

A) True 
 B)False

Question 18

A change in the price of one good results in a rotation of the budget line, so that it is steeper or flatter.

Accepted Answer

A) True 
 B)False

Question 19

If marginal utility is a positive number,

Accepted Answer

A) the more you purchase, the more total utility you get. 
B) the more you purchase, the less total utility you get. 
C) utility is not affected by more purchases. 
D) then you are as well off as possible. 
A) the more you purchase, the more total utility you get. 
B) the more you purchase, the less total utility you get. 
C) utility is not affected by more purchases. 
D) then you are as well off as possible.

Question 20

Table 5-1   ​
​
-Table 5-1 gives information on George's total utility from consuming milkshakes and sandwiches.If George's income this week is $15, milkshakes are $3 each, and sandwiches $2, he will maximize his utility if he buys

Accepted Answer

A) three milkshakes and two sandwiches. 
B) three milkshakes and three sandwiches. 
C) no milkshakes and as many sandwiches as possible. 
D) two milkshakes and three sandwiches. 
A) three milkshakes and two sandwiches. 
B) three milkshakes and three sandwiches. 
C) no milkshakes and as many sandwiches as possible. 
D) two milkshakes and three sandwiches.

Exam 5: Consumer Choice: Individual and Market Demand

Consumer's surplus

As a rule, as a consumer acquires more and more of a good, the marginal utility declines.

An increase in income produces a parallel, outward shift in the budget line.

Figure 5-13 -According to Figure 5-13, if the price of good X falls, the optimal combination will move

Elaine values the utility of her first cup of coffee at $1; a second cup, $.75; and a third cup, $.50.If Elaine drinks three cups of coffee for breakfast, her total utility is equal to

Net utility is

-Figure 5-5 shows a consumer budget line for French fries and hamburgers.If the household has $20 to spend, the price of hamburgers is

If a good has "snob appeal," consumers may purchase less when the price falls.

Given the demand curve in Figure 5-24, explain how consumer's surplus is calculated.

If a consumer is purchasing a good and her net marginal utility is positive,

Consumers should purchase a good up to the point where MU = P.

Because of diminishing marginal utility, you

Total utility will be at its maximum when

If the marginal net utility of beer is a positive number, the consumer should buy more beer in order to maximize utility.

If a commodity is inexpensive and its total utility is great,

The slope of an indifference curve represents the maximum amount of one commodity that a consumer is willing to give up in exchange for one more unit of another commodity.

In general, as a consumer acquires more and more of a good, the marginal utility remains constant.

A change in the price of one good results in a rotation of the budget line, so that it is steeper or flatter.

If marginal utility is a positive number,

Table 5-1 ​ ​ -Table 5-1 gives information on George's total utility from consuming milkshakes and sandwiches.If George's income this week is $15, milkshakes are $3 each, and sandwiches $2, he will maximize his utility if he buys

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

Filters

Table 5-1 -Table 5-1 gives information on George's total utility from consuming milkshakes and sandwiches.If George's income this week is $15, milkshakes are $3 each, and sandwiches $2, he will maximize his utility if he buys