Question 1

The marginal utility of a unit of good X

Accepted Answer

A) is always greater than the total utility of X. 
B) is always less than the average utility of X. 
C) generally depends on how much X the consumer already has. 
D) is always equal to the price of X. 
A) is always greater than the total utility of X. 
B) is always less than the average utility of X. 
C) generally depends on how much X the consumer already has. 
D) is always equal to the price of X.

Question 2

The market demand curve is the horizontal summation of all individual demand curves.

Accepted Answer

A) True 
 B)False

Question 3

When the price of one product falls,

Accepted Answer

A) consumers' real income will increase. 
B) consumers will buy less of that product. 
C) consumers will not change their buying patterns. 
D) consumers' real income will decrease. 
A) consumers' real income will increase. 
B) consumers will buy less of that product. 
C) consumers will not change their buying patterns. 
D) consumers' real income will decrease.

Question 4

Figure 5-11
  
-In Figure 5-11, a consumer is initially at point A.There is a price change and she moves to B.It follows that

Accepted Answer

A) the demand for beer follows the law of demand. 
B) the demand for beer does not follow the law of demand. 
C) wine is an inferior good. 
D) the consumer is confused. 
A) the demand for beer follows the law of demand. 
B) the demand for beer does not follow the law of demand. 
C) wine is an inferior good. 
D) the consumer is confused.

Question 5

When the price of a good changes but the price of the only other good bought by a consumer stays constant, his

Accepted Answer

A) budget line shifts. 
B) indifference curves shift. 
C) budget line changes slope. 
D) indifference curves change slope. 
A) budget line shifts. 
B) indifference curves shift. 
C) budget line changes slope. 
D) indifference curves change slope.

Question 6

-Table 5-4 shows the demand schedule for concert tickets for a particular consumer.What will be this consumer's surplus if the price of tickets is $50?

Accepted Answer

A) $200 
B) $60 
C) $260 
D) $210 
A) $200 
B) $60 
C) $260 
D) $210

Question 7

Figure 5-6
  
-In Figure 5-6, a shift in the budget line from AC to AB indicates

Accepted Answer

A) the price of wine coolers has risen. 
B) income has increased. 
C) the price of beer has fallen. 
D) the price of wine coolers has fallen. 
E) All of the above are correct. 
A) the price of wine coolers has risen. 
B) income has increased. 
C) the price of beer has fallen. 
D) the price of wine coolers has fallen. 
E) All of the above are correct.

Question 8

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 9

Bob values the utility of a single scoop of Baskin-Robbins ice cream at $1.50.A double scoop gives total utility of $2.25, while a triple scoop yields $2.60.Baskin-Robbins charges $1.35 for a single, $1.95 for a double, and $2.35 for a triple.How many scoops will Bob buy?

Accepted Answer

Bob will buy a double.The first scoop ha

Question 10

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.

Question 11

Given a typical demand curve and a decline in price, the consumer who wishes to maximize total utility must increase the quantity purchased of a good to arrive at an optimal MU = P point.

Accepted Answer

A) True 
 B)False

Question 12

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m.to 9 a.m.) is negative,

Accepted Answer

A)  Juan is better off getting up at 8 a.m. 
B)  Juan is better off getting up at 9 a.m. 
C)  Juan's total utility from sleeping must be negative. 
D)  Juan's average utility from every hour he sleeps must be negative. 
A)  Juan is better off getting up at 8 a.m. 
B)  Juan is better off getting up at 9 a.m. 
C)  Juan's total utility from sleeping must be negative. 
D)  Juan's average utility from every hour he sleeps must be negative.

Question 13

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 14

Figure 5-5
  
-Figure 5-5 shows a consumer budget line for french fries and hamburgers.The price of an order fries is $2.The price of a burger is

Accepted Answer

A) $1. 
B) $2. 
C) $4. 
D) $8. 
A) $1. 
B) $2. 
C) $4. 
D) $8.

Question 15

Use the law of diminishing marginal utility to explain why Domino's and Pizza Hut allow the purchase of a second pizza for only $4 when one pays full price (around $10) for the first pizza.Why not simply charge $7 a pizza instead?

Accepted Answer

The second pizza gives less marginal uti

Question 16

Resolving Adam Smith's diamond-water puzzle involves

Accepted Answer

A) realizing that price is not directly related to total utility. 
B) knowing that at optimal purchase, price will tend to equal marginal utility. 
C) knowing that, as increasing quantities of a good are consumed, marginal utility diminishes and, conversely, consuming a small quantity of a good produces high marginal utility. 
D) All of the above are correct. 
A) realizing that price is not directly related to total utility. 
B) knowing that at optimal purchase, price will tend to equal marginal utility. 
C) knowing that, as increasing quantities of a good are consumed, marginal utility diminishes and, conversely, consuming a small quantity of a good produces high marginal utility. 
D) All of the above are correct.

Question 17

The slope of the budget line

Accepted Answer

A) always equals 1. 
B) equals income divided by price. 
C) equals the ratio of the prices. 
D) decreases as we move from left to right. 
A) always equals 1. 
B) equals income divided by price. 
C) equals the ratio of the prices. 
D) decreases as we move from left to right.

Question 18

Any point on the lowest indifference curve is preferable to a point on a higher indifference curve.

Accepted Answer

A) True 
 B)False

Question 19

Possible causes of an upward-sloping demand curve are:​

Accepted Answer

A) ​consumers judge the quality of a product based on quality 
B) ​consumers judge the quality of a product based on price 
C) ​consumers purchase a product based on snob appeal 
D) ​a and b are true 
E) ​b and c are true 
A) ​consumers judge the quality of a product based on quality 
B) ​consumers judge the quality of a product based on price 
C) ​consumers purchase a product based on snob appeal 
D) ​a and b are true 
E) ​b and c are true

Question 20

Voluntary exchange requires that there must be mutual gain.

Accepted Answer

A) True 
 B)False

Exam 5: Consumer Choice: Individual and Market Demand

The marginal utility of a unit of good X

The market demand curve is the horizontal summation of all individual demand curves.

When the price of one product falls,

Figure 5-11 -In Figure 5-11, a consumer is initially at point A.There is a price change and she moves to B.It follows that

When the price of a good changes but the price of the only other good bought by a consumer stays constant, his

-Table 5-4 shows the demand schedule for concert tickets for a particular consumer.What will be this consumer's surplus if the price of tickets is $50?

Figure 5-6 -In Figure 5-6, a shift in the budget line from AC to AB indicates

When the price of a commodity falls, we can expect

Bob values the utility of a single scoop of Baskin-Robbins ice cream at $1.50.A double scoop gives total utility of $2.25, while a triple scoop yields $2.60.Baskin-Robbins charges $1.35 for a single, $1.95 for a double, and $2.35 for a triple.How many scoops will Bob buy?

Consumer's surplus is a measure of how much

Given a typical demand curve and a decline in price, the consumer who wishes to maximize total utility must increase the quantity purchased of a good to arrive at an optimal MU = P point.

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m.to 9 a.m.) is negative,

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

Figure 5-5 -Figure 5-5 shows a consumer budget line for french fries and hamburgers.The price of an order fries is $2.The price of a burger is

Use the law of diminishing marginal utility to explain why Domino's and Pizza Hut allow the purchase of a second pizza for only $4 when one pays full price (around $10) for the first pizza.Why not simply charge $7 a pizza instead?

Resolving Adam Smith's diamond-water puzzle involves

The slope of the budget line

Any point on the lowest indifference curve is preferable to a point on a higher indifference curve.

Possible causes of an upward-sloping demand curve are:​

Voluntary exchange requires that there must be mutual gain.

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

Filters

Possible causes of an upward-sloping demand curve are: