Question 1

Figure 5-19
  
-In Figure 5-19, the consumer experiences at point C

Accepted Answer

A) greater total utility than at point D. 
B) greater total utility than at point E. 
C) less total utility than at point D. 
D) total utility equal to that experienced at point D. 
A) greater total utility than at point D. 
B) greater total utility than at point E. 
C) less total utility than at point D. 
D) total utility equal to that experienced at point D.

Question 2

Figure 5-14
  
-Martha initially buys the combination of pens and pencils shown as A in Figure 5-14.After the prices of both goods change, she buys combination B.It must be true that

Accepted Answer

A) Martha prefers A to B. 
B) Martha prefers B to A. 
C) Martha is indifferent between A and B. 
D) Martha's preferences between A and B cannot be determined from the information given. 
A) Martha prefers A to B. 
B) Martha prefers B to A. 
C) Martha is indifferent between A and B. 
D) Martha's preferences between A and B cannot be determined from the information given.

Question 3

The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper fowl." In the language of economists, this means

Accepted Answer

A) chicken is an inferior good. 
B) chicken has a negative substitution effect. 
C) chicken has a positive substitution effect. 
D) people's tastes change during recessions. 
E) chicken has a positive income effect. 
A) chicken is an inferior good. 
B) chicken has a negative substitution effect. 
C) chicken has a positive substitution effect. 
D) people's tastes change during recessions. 
E) chicken has a positive income effect.

Question 4

When using the terms "total utility" or "marginal utility" we assume: ​

Accepted Answer

A) ​the consumer will exchange one commodity for another 
B) ​the consumer will part with money for the commodity 
C) ​the consumer has declined to purchase the commodity 
D) ​a and b are correct 
A) ​the consumer will exchange one commodity for another 
B) ​the consumer will part with money for the commodity 
C) ​the consumer has declined to purchase the commodity 
D) ​a and b are correct

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-5
  
-Figure 5-5 shows a consumer budget line for French fries and hamburgers.The household allocates a budget for these two goods..If the price of an order of french fries is $2, how much income is allocated to fries and burgers combined?

Accepted Answer

A) $2 
B) $4 
C) $20 
D) $40 
A) $2 
B) $4 
C) $20 
D) $40

Question 7

Tom is buying a quantity of wheat at which the marginal utility (in dollars) exceeds price.He should

Accepted Answer

A) reduce wheat consumption, thus raising P to the level at which MU = P. 
B) reduce wheat consumption, thus raising MU to the level at which MU = P. 
C) increase wheat consumption, thus raising P to the level at which MU = P. 
D) increase wheat consumption, thus lowering MU to the level at which MU = P. 
A) reduce wheat consumption, thus raising P to the level at which MU = P. 
B) reduce wheat consumption, thus raising MU to the level at which MU = P. 
C) increase wheat consumption, thus raising P to the level at which MU = P. 
D) increase wheat consumption, thus lowering MU to the level at which MU = P.

Question 8

A change in the price of a good will shift the indifference curves.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Modern economists measure how much utility Fred gets from a hot dog by

Accepted Answer

A) asking Fred how many utils he gets from its consumption. 
B) examining the price of the hamburger Fred chose not to buy. 
C) asking Fred how much of some other good he would give up to get the hot dog.The "other good" can be any good except money. 
D) asking Fred how much of some other good he would give up to get the hot dog.The "other good" can be any good, including money. 
A) asking Fred how many utils he gets from its consumption. 
B) examining the price of the hamburger Fred chose not to buy. 
C) asking Fred how much of some other good he would give up to get the hot dog.The "other good" can be any good except money. 
D) asking Fred how much of some other good he would give up to get the hot dog.The "other good" can be any good, including money.

Question 11

Quantity demanded is not only affected by price but by variables such as income and the prices of other goods.

Accepted Answer

A) True 
 B)False

Question 12

A change in consumer preferences will shift the budget line.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

Figure 5-18
  
-In Figure 5-18, point D for the consumer

Accepted Answer

A) will be chosen because total utility is larger there than at point C. 
B) would not be chosen because it is less desirable than point C. 
C) is unattainable, given the consumer's budget. 
D) has total utility equal to point C. 
A) will be chosen because total utility is larger there than at point C. 
B) would not be chosen because it is less desirable than point C. 
C) is unattainable, given the consumer's budget. 
D) has total utility equal to point C.

Question 16

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 17

The law of diminishing marginal utility holds that at some point consumption of additional units of a commodity adds less to total utility.

Accepted Answer

A) True 
 B)False

Question 18

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 marginal 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 19

Alice has $10 to spend on wine and cheese.If wine is $2.50 a glass and cheese $2, draw the corresponding budget line.Then draw three indifference curves, one showing the amount of wine and cheese Alice would choose, one showing less preferred combinations of wine and cheese, and the last showing preferred but unaffordable combinations.

Accepted Answer

See Figure

Question 20

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

Exam 5: Consumer Choice: Individual and Market Demand

Figure 5-19 -In Figure 5-19, the consumer experiences at point C

Figure 5-14 -Martha initially buys the combination of pens and pencils shown as A in Figure 5-14.After the prices of both goods change, she buys combination B.It must be true that

The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper fowl." In the language of economists, this means

When using the terms "total utility" or "marginal utility" we assume: ​

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

Figure 5-5 -Figure 5-5 shows a consumer budget line for French fries and hamburgers.The household allocates a budget for these two goods..If the price of an order of french fries is $2, how much income is allocated to fries and burgers combined?

Tom is buying a quantity of wheat at which the marginal utility (in dollars) exceeds price.He should

A change in the price of a good will shift the indifference curves.

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

Modern economists measure how much utility Fred gets from a hot dog by

Quantity demanded is not only affected by price but by variables such as income and the prices of other goods.

A change in consumer preferences will shift the budget line.

Consumer's surplus

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

Figure 5-18 -In Figure 5-18, point D for the consumer

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

The law of diminishing marginal utility holds that at some point consumption of additional units of a commodity adds less to total utility.

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 marginal utility is equal to

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.

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

When using the terms "total utility" or "marginal utility" we assume: