Question 1

Are there ever exceptions to the law of demand?

Accepted Answer

When consumers associate quality with hi

Question 2

Consumer's surplus is the difference between the worth of a commodity to the consumer and the price the consumer pays for the commodity.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following observations is not true of a budget line?

Accepted Answer

A) It indicates what choices are available to the consumer. 
B) It is a curve of constant expenditure. 
C) Its slope reports the market terms on which the consumer can trade one good for another. 
D) It helps examine the consumer's preferences. 
A) It indicates what choices are available to the consumer. 
B) It is a curve of constant expenditure. 
C) Its slope reports the market terms on which the consumer can trade one good for another. 
D) It helps examine the consumer's preferences.

Question 4

A consumer cannot gain consumer's surplus if she purchases more than one unit of a good.

Accepted Answer

A) True 
 B)False

Question 5

Consumer's surplus is what one consumer is willing to pay for a commodity over what another consumer is willing to pay for the same commodity.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following factors is always present in consumer decision making?

Accepted Answer

A) Taxes 
B) High prices 
C) Scarcity 
D) Changing consumer tastes 
E) Cost-of-living adjustments to income 
A) Taxes 
B) High prices 
C) Scarcity 
D) Changing consumer tastes 
E) Cost-of-living adjustments to income

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Figure 5-16 
  
-​ In Figure 5-16, a decrease in the price of apples will

Accepted Answer

A) shift Adam's budget constraint out. 
B) make Adam's budget constraint steeper. 
C) shift Adam's indifference curves out. 
D) make Adam's budget constraint flatter. 
A) shift Adam's budget constraint out. 
B) make Adam's budget constraint steeper. 
C) shift Adam's indifference curves out. 
D) make Adam's budget constraint flatter.

Question 9

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 10

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 11

A decrease in the price of one good results in a parallel shift in the budget line.

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

According to the "law" of demand, we would expect

Accepted Answer

A) the demand curve to be negatively sloped. 
B) the demand curve to be positively sloped. 
C) the total quantity demanded by the market to move in the same direction as price. 
D) marginal utility to increase as quantity demanded increases. 
A) the demand curve to be negatively sloped. 
B) the demand curve to be positively sloped. 
C) the total quantity demanded by the market to move in the same direction as price. 
D) marginal utility to increase as quantity demanded increases.

Question 14

In Figure 5-2, consumer's surplus is measured by the area

Accepted Answer

A) ABC. 
B) OBCD. 
C) OACD. 
D) DCE. 
A) ABC. 
B) OBCD. 
C) OACD. 
D) DCE.

Question 15

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 16

The real cost of a decision is the opportunity cost measured in the commodities forgone.

Accepted Answer

A) True 
 B)False

Question 17

A change in consumer preferences will shift the budget line.

Accepted Answer

A) True 
 B)False

Question 18

If I use 1,000 gallons of water a month at a price of $.01 a gallon, is my consumer's surplus likely to be large or small? Explain.

Accepted Answer

The 1,000th gallon will yield no consume

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Figure 5-17
 
In Figure 5-17, which of the marked points would an economist use to help him construct a single demand curve for X?

Accepted Answer

A) A and B 
B) C and D 
C) A and C 
D) A and D 
A) A and B 
B) C and D 
C) A and C 
D) A and D

Exam 5: Consumer Choice: Individual and Market Demand

Are there ever exceptions to the law of demand?

Consumer's surplus is the difference between the worth of a commodity to the consumer and the price the consumer pays for the commodity.

Which of the following observations is not true of a budget line?

A consumer cannot gain consumer's surplus if she purchases more than one unit of a good.

Consumer's surplus is what one consumer is willing to pay for a commodity over what another consumer is willing to pay for the same commodity.

Which of the following factors is always present in consumer decision making?

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

Figure 5-16 -​ In Figure 5-16, a decrease in the price of apples will

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

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

A decrease in the price of one good results in a parallel shift in the budget line.

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

According to the "law" of demand, we would expect

In Figure 5-2, consumer's surplus is measured by the area

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

The real cost of a decision is the opportunity cost measured in the commodities forgone.

A change in consumer preferences will shift the budget line.

If I use 1,000 gallons of water a month at a price of $.01 a gallon, is my consumer's surplus likely to be large or small? Explain.

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

Figure 5-17 In Figure 5-17, which of the marked points would an economist use to help him construct a single demand curve for X?

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

Figure 5-16 - In Figure 5-16, a decrease in the price of apples will