Question 1

Total utility can be thought of as the

Accepted Answer

A) total satisfaction derived from a bundle of goods. 
B) minimum amount of money a consumer is willing to spend on a bundle of goods. 
C) additional satisfaction a consumer receives from the marginal unit of a good. 
D) willingness to pay for the marginal unit of a good. 
A) total satisfaction derived from a bundle of goods. 
B) minimum amount of money a consumer is willing to spend on a bundle of goods. 
C) additional satisfaction a consumer receives from the marginal unit of a good. 
D) willingness to pay for the marginal unit of a good.

Question 2

Which of the following scenarios could be an example of increasing marginal utility?

Accepted Answer

A) A father buying three game CDs for his son. 
B) A shopkeeper selling the tenth pound of hamburger. 
C) A stamp collector purchasing an additional stamp for collection. 
D) A consumer buying an additional unit of apple. 
A) A father buying three game CDs for his son. 
B) A shopkeeper selling the tenth pound of hamburger. 
C) A stamp collector purchasing an additional stamp for collection. 
D) A consumer buying an additional unit of apple.

Question 3

The slope of the budget line is determined only by the prices of the commodities purchased.

Accepted Answer

A) True 
 B)False

Question 4

A consumer will consume the combination of goods at the crossing point of a budget line and indifference curve.

Accepted Answer

A) True 
 B)False

Question 5

Figure 5-13  
-In Figure 5-13, the consumer is better off

Accepted Answer

A) at A than at E. 
B) at B than at D. 
C) at any point on U2 than at any point on U1. 
D) All of the responses are correct. 
A) at A than at E. 
B) at B than at D. 
C) at any point on U2 than at any point on U1. 
D) All of the responses are correct.

Question 6

Figure 5-16  
-Figure 5-16 shows Adam's purchases of bananas and apples when apples cost $5 each and bananas $4 each.The information implies that Adam's income

Accepted Answer

A) must be $9. 
B) must be $20. 
C) must be $40. 
D) cannot be determined without further information. 
A) must be $9. 
B) must be $20. 
C) must be $40. 
D) cannot be determined without further information.

Question 7

Scarcity

Accepted Answer

A) necessitates choice among consumer goods. 
B) of income renders purchase decisions interdependent. 
C) affects all consumer decisions. 
D) may involve forgoing the pleasure of one good in order to enjoy another. 
E) All of the above answers are correct. 
A) necessitates choice among consumer goods. 
B) of income renders purchase decisions interdependent. 
C) affects all consumer decisions. 
D) may involve forgoing the pleasure of one good in order to enjoy another. 
E) All of the above answers are correct.

Question 8

Which of the following is not a characteristic of indifference curves?

Accepted Answer

A) They are negatively sloped. 
B) They never intersect. 
C) They are concave toward the origin. 
D) Combinations of goods that include more of both goods are preferred, on a higher indifference curve. 
A) They are negatively sloped. 
B) They never intersect. 
C) They are concave toward the origin. 
D) Combinations of goods that include more of both goods are preferred, on a higher indifference curve.

Question 9

What is a budget line? What does its slope indicate?

Accepted Answer

The budget line for a household graphica

Question 10

Economic theory has traditionally focused on optimality in decision making.

Accepted Answer

A) True 
 B)False

Question 11

Indifference curves show all combinations of commodities that are equally desirable to the consumer.

Accepted Answer

A) True 
 B)False

Question 12

When drawn correctly and preferences are consistent, indifference curves do not intersect.

Accepted Answer

A) True 
 B)False

Question 13

If total utility declines as an additional unit of a commodity is purchased,

Accepted Answer

A) marginal utility must be rising. 
B) marginal utility is negative. 
C) marginal utility is positive but falling. 
D) its price must have risen. 
E) marginal utility is zero. 
A) marginal utility must be rising. 
B) marginal utility is negative. 
C) marginal utility is positive but falling. 
D) its price must have risen. 
E) marginal utility is zero.

Question 14

Rolls-Royce may actually sell fewer cars at lower prices due to the "snob effect."

Accepted Answer

A) True 
 B)False

Question 15

The resolution of Adam Smith's diamond-water puzzle is based on the distinction between marginal and total utility.

Accepted Answer

A) True 
 B)False

Question 16

A change in the price of one good, such as staples, may affect the quantity demanded of another good, such as rubber bands.

Accepted Answer

A) True 
 B)False

Question 17

If you go to a bar tonight and have three beers before going home to study economics, will you likely receive some consumer's surplus? Explain why or why not.

Accepted Answer

The law of diminishing marginal utility

Question 18

The host at a party offers Justin a sixth beer.Justin says, "No thanks, man.The marginal utility of that fifth beer was, like, 20 cents, but the marginal utility of the sixth would be minus 10 cents." From his comments, we deduce that Justin

Accepted Answer

A) is an alcoholic. 
B) may think that a sixth beer would make him sick. 
C) is irrational. 
D) wrongly estimates the marginal utility of the fifth beer. 
A) is an alcoholic. 
B) may think that a sixth beer would make him sick. 
C) is irrational. 
D) wrongly estimates the marginal utility of the fifth beer.

Question 19

Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer.

Accepted Answer

A) True 
 B)False

Question 20

The law of diminishing marginal utility explains why

Accepted Answer

A) economists think that utility is a fallacy. 
B) consumers optimize by spending all of their income. 
C) individual demand curves have a negative slope. 
D) marginal utility rises as total utility falls. 
A) economists think that utility is a fallacy. 
B) consumers optimize by spending all of their income. 
C) individual demand curves have a negative slope. 
D) marginal utility rises as total utility falls.

Exam 5: Consumer Choice: Individual and Market Demand

Total utility can be thought of as the

Which of the following scenarios could be an example of increasing marginal utility?

The slope of the budget line is determined only by the prices of the commodities purchased.

A consumer will consume the combination of goods at the crossing point of a budget line and indifference curve.

Figure 5-13 -In Figure 5-13, the consumer is better off

Figure 5-16 -Figure 5-16 shows Adam's purchases of bananas and apples when apples cost $5 each and bananas $4 each.The information implies that Adam's income

Scarcity

Which of the following is not a characteristic of indifference curves?

What is a budget line? What does its slope indicate?

Economic theory has traditionally focused on optimality in decision making.

Indifference curves show all combinations of commodities that are equally desirable to the consumer.

When drawn correctly and preferences are consistent, indifference curves do not intersect.

If total utility declines as an additional unit of a commodity is purchased,

Rolls-Royce may actually sell fewer cars at lower prices due to the "snob effect."

The resolution of Adam Smith's diamond-water puzzle is based on the distinction between marginal and total utility.

A change in the price of one good, such as staples, may affect the quantity demanded of another good, such as rubber bands.

If you go to a bar tonight and have three beers before going home to study economics, will you likely receive some consumer's surplus? Explain why or why not.

The host at a party offers Justin a sixth beer.Justin says, "No thanks, man.The marginal utility of that fifth beer was, like, 20 cents, but the marginal utility of the sixth would be minus 10 cents." From his comments, we deduce that Justin

Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer.

The law of diminishing marginal utility explains why

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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