Question 1

If indifference curves and budget lines are used to analyze consumer choice, an inferior good will

Accepted Answer

A) escape detection when income rises. 
B) be easily identified because the quantity purchased will fall as income rises. 
C) be easily identified because the quantity purchased will rise as income rises. 
D) be easily identified because it will change the slope of the budget line. 
E) escape detection because this model does not show that relationship. 
A) escape detection when income rises. 
B) be easily identified because the quantity purchased will fall as income rises. 
C) be easily identified because the quantity purchased will rise as income rises. 
D) be easily identified because it will change the slope of the budget line. 
E) escape detection because this model does not show that relationship. B

Question 2

Which of the following is characteristic of indifference curves?

Accepted Answer

A) They are negatively sloped. 
B) They never intersect. 
C) They are convex toward the origin. 
D) All of the above are correct. 
A) They are negatively sloped. 
B) They never intersect. 
C) They are convex toward the origin. 
D) All of the above are correct. D

Question 3

What are the properties of indifference curves?

Accepted Answer

a.Every point on an indifference curve farther from the origin than another indifference curve is preferable to points on the curve closer to the origin.
b.Indifference curves never intersect.
c.Indifference curves are negatively sloped.
d.Indifference curves are generally "bowed in" (convex) toward the origin.

Question 4

High price and low total utility indicate

Accepted Answer

A) low marginal utility. 
B) large quantities are sold. 
C) high marginal utility. 
D) a high price/marginal utility ratio. 
A) low marginal utility. 
B) large quantities are sold. 
C) high marginal utility. 
D) a high price/marginal utility ratio.

Question 5

Define the following terms.Give a complete and precise definition in one sentence.
a.total utility
b.marginal utility
c.consumer's surplus
d."law" of demand

Accepted Answer

a.Total utility of a good is the satisfa

Question 6

If the marginal net utility of beer is negative, the consumer should buy more beer in order to increase the total utility.

Accepted Answer

A) True 
 B)False

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

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 above are correct. 
E) None of the above are correct. 
A) limited income. 
B) unlimited desires for goods. 
C) many choices of goods facing them. 
D) All of the above are correct. 
E) None of the above are correct.

Question 9

The budget line and the indifference curve are geometric devices used to provide a closer look at consumer choice.

Accepted Answer

A) True 
 B)False

Question 10

If point A on an indifference curve lies higher (measured vertically) than point B on the same curve, Point A automatically represents higher total utility than point B.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

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 13

The market demand curve represents the total quantity demanded at each price.

Accepted Answer

A) True 
 B)False

Question 14

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 15

If income rises, most consumers will increase the quantity demanded of an inferior good.

Accepted Answer

A) True 
 B)False

Question 16

As a rule, the more of a commodity a consumer acquires, the smaller will be her total utility from that good.

Accepted Answer

A) True 
 B)False

Question 17

Figure 5-1
  
-Americans choose cola over other flavors 70 percent of the time.Analysts say this is because cola's flavor is more robust and durable.Orange soda, for example, suffers from flavor fatigue faster than cola.Also, because cola contains caffeine, people may be addicted to the stimulant.Which panel in Figure 5-1 best illustrates these facts?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 18

If marginal net utility is positive, the consumer must be buying too small a quantity to maximize total net utility.Why?

Accepted Answer

Because marginal utility exceeds price,

Question 19

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 unit of hamburger. 
C) A philatelist buying 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 unit of hamburger. 
C) A philatelist buying an additional stamp for collection. 
D) A consumer buying an additional unit of apple.

Question 20

The slope of the budget line is the amount of one commodity that a consumer must give up in order to obtain an additional unit of the other commodity.

Accepted Answer

A) True 
 B)False

Exam 5: Consumer Choice: Individual and Market Demand

If indifference curves and budget lines are used to analyze consumer choice, an inferior good will

Which of the following is characteristic of indifference curves?

What are the properties of indifference curves?

High price and low total utility indicate

Define the following terms.Give a complete and precise definition in one sentence. a.total utility b.marginal utility c.consumer's surplus d."law" of demand

If the marginal net utility of beer is negative, the consumer should buy more beer in order to increase the total utility.

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

As a general rule, consumers have

The budget line and the indifference curve are geometric devices used to provide a closer look at consumer choice.

If point A on an indifference curve lies higher (measured vertically) than point B on the same curve, Point A automatically represents higher total utility than point B.

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

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

The market demand curve represents the total quantity demanded at each price.

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

If income rises, most consumers will increase the quantity demanded of an inferior good.

As a rule, the more of a commodity a consumer acquires, the smaller will be her total utility from that good.

If marginal net utility is positive, the consumer must be buying too small a quantity to maximize total net utility.Why?

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

The slope of the budget line is the amount of one commodity that a consumer must give up in order to obtain an additional unit of the other commodity.

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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

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