Question 1

A negative network externality is caused by the:

Accepted Answer

A) bandwagon effect. 
B) snob effect. 
C) herd effect. 
D) fad effect. 
A) bandwagon effect. 
B) snob effect. 
C) herd effect. 
D) fad effect.

Question 2

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5.If the price of hamburgers was $2 each,what was the total benefit enjoyed by these consumers?

Accepted Answer

A) $39 
B) $45 
C) $55 
D) $71 
A) $39 
B) $45 
C) $55 
D) $71

Question 3

A consumer currently purchases a good at a price such that her net benefit is positive.Her preference then changes and she now values the good more than before. If the market price remains unchanged,which of the following statements about her consumer surplus would be true?

Accepted Answer

A) Her consumer surplus would also remain the same. 
B) Her consumer surplus would decrease. 
C) Her consumer surplus would increase. 
D) Her consumer surplus could increase or decrease depending on her demand elasticity. 
A) Her consumer surplus would also remain the same. 
B) Her consumer surplus would decrease. 
C) Her consumer surplus would increase. 
D) Her consumer surplus could increase or decrease depending on her demand elasticity.

Question 4

Troy likes attending Major League Baseball games and going to concerts.Following a 10% increase in the price of tickets to Major League Baseball (MLB)games,Troy's attendance at these games fell by 10%.If tickets to MLB games are on the horizontal axis and tickets to concerts on the vertical axis,using the information above,we can conclude that Troy's price-consumption curve between tickets to MLB games and tickets to concerts is:

Accepted Answer

A) positively sloped. 
B) negatively sloped. 
C) horizontal. 
D) U-shaped. 
A) positively sloped. 
B) negatively sloped. 
C) horizontal. 
D) U-shaped.

Question 5

Assume that the market demand curve for a good is constructed from a hundred identical individual demand curves.Using the same scale on the graph,the slope of the market demand curve will be _____ and its price elasticity _____ that of the individual demand curves.

Accepted Answer

A) steeper;equal to 
B) steeper;more than 
C) flatter;equal to 
D) flatter;more than 
A) steeper;equal to 
B) steeper;more than 
C) flatter;equal to 
D) flatter;more than

Question 6

If the price-consumption curve is upward sloping,then demand elasticity:

Accepted Answer

A) may be greater than 1.0. 
B) must be less than 1.0. 
C) equals 1.0 
D) must be between 0.5 and 1.5. 
A) may be greater than 1.0. 
B) must be less than 1.0. 
C) equals 1.0 
D) must be between 0.5 and 1.5.

Question 7

Mariana has a preference for exquisite handcrafted jade ornaments imported from Japan.She displays her possessions at social gatherings and feels proud when her friends compliment her on the same.When approached by her friends for the source of these ornaments she indirectly refuses to reveal it by diverting the conversation to other things.She feels that once her friends start purchasing similar ornaments the exclusivity of her collection will be lost.Explain Mariana's behavior within the context of the demand theory.

Accepted Answer

Mariana's behavior can be explained in t

Question 8

Assume that as the price of good X rises,the demand for good Z shifts outward.On the basis of this information we can conclude that:

Accepted Answer

A) good Z is inferior. 
B) goods X and Z are complements. 
C) goods X and Z are substitutes. 
D) good X is an input used in the production of Z. 
A) good Z is inferior. 
B) goods X and Z are complements. 
C) goods X and Z are substitutes. 
D) good X is an input used in the production of Z.

Question 9

In an effort to deter alcohol consumption by youths,raising the legal age for alcohol consumption causes a _____ the demand curve for alcohol,while raising the federal per unit tax on alcohol would cause a _____ the demand curve.

Accepted Answer

A) movement along;leftward shift of 
B) rightward shift of;movement along 
C) leftward shift of;movement along 
D) movement along;rightward shift of 
A) movement along;leftward shift of 
B) rightward shift of;movement along 
C) leftward shift of;movement along 
D) movement along;rightward shift of

Question 10

If an individual's demand curve for apples is a downward sloping straight line,the price consumption curve will be:

Accepted Answer

A) downward sloping. 
B) horizontal. 
C) u-shaped. 
D) upward sloping. 
A) downward sloping. 
B) horizontal. 
C) u-shaped. 
D) upward sloping.

Question 11

Which of the following is true of inferior goods?

Accepted Answer

A) They are typically cheaper compared to other goods. 
B) They usually do not have complements. 
C) They are narrowly defined goods facing higher-quality substitutes. 
D) They are broadly defined goods facing higher-quality substitutes. 
A) They are typically cheaper compared to other goods. 
B) They usually do not have complements. 
C) They are narrowly defined goods facing higher-quality substitutes. 
D) They are broadly defined goods facing higher-quality substitutes.

Question 12

Suppose hamburgers are on the horizontal axis and all other goods on the vertical axis.John noticed that since the price of hamburgers has increased,the total amount he spends on hamburgers each month increased.Given this information we can conclude that John's price-consumption curve for hamburgers and all other goods is:

Accepted Answer

A) positively sloped. 
B) negatively sloped. 
C) horizontal. 
D) U-shaped. 
A) positively sloped. 
B) negatively sloped. 
C) horizontal. 
D) U-shaped.

Question 13

If the price-consumption curve is U-shaped then the demand for the commodity is:

Accepted Answer

A) perfectly inelastic. 
B) relatively inelastic. 
C) elastic at high prices and inelastic at low prices. 
D) inelastic at high prices and elastic at low prices. 
A) perfectly inelastic. 
B) relatively inelastic. 
C) elastic at high prices and inelastic at low prices. 
D) inelastic at high prices and elastic at low prices.

Question 14

Suppose the total benefit eight people enjoyed from consuming one cookie each was $8 + $6 + $6 + $5 + $4 + $3 + $3 +$1.If the price of a cookie was $1,what was the consumer surplus in this market?

Accepted Answer

A) $8 
B) $28 
C) $36 
D) $37 
A) $8 
B) $28 
C) $36 
D) $37

Question 15

Assume that the quantity of film is plotted on the horizontal axis and all other goods plotted on the vertical axis.For the range in which the price-consumption curve is upward sloping,the price elasticity of demand for film:

Accepted Answer

A) is elastic. 
B) is inelastic. 
C) is unit-elastic. 
D) cannot be determined without additional information. 
A) is elastic. 
B) is inelastic. 
C) is unit-elastic. 
D) cannot be determined without additional information.

Question 16

For two goods which are perfect complements,the substitution effect of a price decrease is:

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) one. 
A) positive. 
B) negative. 
C) zero. 
D) one.

Question 17

Which of the following statements provides the best example of consumer surplus?

Accepted Answer

A) "Drinking that bottle of soda increased my happiness by $10." 
B) "John gave me $5 for the watermelon even though it cost me only $2." 
C) "I paid $20 for this shirt for which I would have paid up to $40." 
D) "I refuse to pay $30 for their steak dinner;it's highly overpriced." 
A) "Drinking that bottle of soda increased my happiness by $10." 
B) "John gave me $5 for the watermelon even though it cost me only $2." 
C) "I paid $20 for this shirt for which I would have paid up to $40." 
D) "I refuse to pay $30 for their steak dinner;it's highly overpriced."

Question 18

The exponents of a Cobb-Douglas utility function,U = C$\alpha$M$\alpha$-1,represent:

Accepted Answer

A) the share of income devoted to that good. 
B) the rate at which a consumer can trade one good for the other. 
C) the quantity of each good that is demanded. 
D) the amount of utility each good provides. 
A) the share of income devoted to that good. 
B) the rate at which a consumer can trade one good for the other. 
C) the quantity of each good that is demanded. 
D) the amount of utility each good provides.

Question 19

Suppose the government levies a tax on sugar at the rate of $0.50 per pound.Then the government returns the tax revenues to a family in the form of a cash grant equivalent to the average tax paid per family.If the family's cash refund just equals the total amount of tax they paid on sugar,which of the following statements would be true?

Accepted Answer

A) The family would consume less sugar and be better off. 
B) The family would consume the same amount of sugar and be worse off. 
C) The family would consume less sugar and be worse off. 
D) The family would consume less sugar but their well-being would remain unchanged. 
A) The family would consume less sugar and be better off. 
B) The family would consume the same amount of sugar and be worse off. 
C) The family would consume less sugar and be worse off. 
D) The family would consume less sugar but their well-being would remain unchanged.

Question 20

In the country of Aldeine,the market demand for Good A is derived from the individual demand curves of five consumers who consider A to be a Giffen good.Determine the shape of the market demand curve for A.How it is different from the market demand curve for normal goods.

Accepted Answer

The individual demand curves of consumer

A negative network externality is caused by the:

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5.If the price of hamburgers was $2 each,what was the total benefit enjoyed by these consumers?

A consumer currently purchases a good at a price such that her net benefit is positive.Her preference then changes and she now values the good more than before. If the market price remains unchanged,which of the following statements about her consumer surplus would be true?

Assume that the market demand curve for a good is constructed from a hundred identical individual demand curves.Using the same scale on the graph,the slope of the market demand curve will be _ and its price elasticity _ that of the individual demand curves.

If the price-consumption curve is upward sloping,then demand elasticity:

Assume that as the price of good X rises,the demand for good Z shifts outward.On the basis of this information we can conclude that:

In an effort to deter alcohol consumption by youths,raising the legal age for alcohol consumption causes a _ the demand curve for alcohol,while raising the federal per unit tax on alcohol would cause a _ the demand curve.

If an individual's demand curve for apples is a downward sloping straight line,the price consumption curve will be:

Which of the following is true of inferior goods?

If the price-consumption curve is U-shaped then the demand for the commodity is:

Suppose the total benefit eight people enjoyed from consuming one cookie each was $8 + $6 + $6 + $5 + $4 + $3 + $3 +$1.If the price of a cookie was $1,what was the consumer surplus in this market?

Assume that the quantity of film is plotted on the horizontal axis and all other goods plotted on the vertical axis.For the range in which the price-consumption curve is upward sloping,the price elasticity of demand for film:

For two goods which are perfect complements,the substitution effect of a price decrease is:

Which of the following statements provides the best example of consumer surplus?

The exponents of a Cobb-Douglas utility function,U = C^$\alpha$M^$\alpha$^-1,represent:

In the country of Aldeine,the market demand for Good A is derived from the individual demand curves of five consumers who consider A to be a Giffen good.Determine the shape of the market demand curve for A.How it is different from the market demand curve for normal goods.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 4: Individual and Market Demand

A negative network externality is caused by the:

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5.If the price of hamburgers was $2 each,what was the total benefit enjoyed by these consumers?

A consumer currently purchases a good at a price such that her net benefit is positive.Her preference then changes and she now values the good more than before. If the market price remains unchanged,which of the following statements about her consumer surplus would be true?

Assume that the market demand curve for a good is constructed from a hundred identical individual demand curves.Using the same scale on the graph,the slope of the market demand curve will be _____ and its price elasticity _____ that of the individual demand curves.

If the price-consumption curve is upward sloping,then demand elasticity:

Assume that as the price of good X rises,the demand for good Z shifts outward.On the basis of this information we can conclude that:

In an effort to deter alcohol consumption by youths,raising the legal age for alcohol consumption causes a _____ the demand curve for alcohol,while raising the federal per unit tax on alcohol would cause a _____ the demand curve.

If an individual's demand curve for apples is a downward sloping straight line,the price consumption curve will be:

Which of the following is true of inferior goods?

If the price-consumption curve is U-shaped then the demand for the commodity is:

Suppose the total benefit eight people enjoyed from consuming one cookie each was $8 + $6 + $6 + $5 + $4 + $3 + $3 +$1.If the price of a cookie was $1,what was the consumer surplus in this market?

Assume that the quantity of film is plotted on the horizontal axis and all other goods plotted on the vertical axis.For the range in which the price-consumption curve is upward sloping,the price elasticity of demand for film:

For two goods which are perfect complements,the substitution effect of a price decrease is:

Which of the following statements provides the best example of consumer surplus?

The exponents of a Cobb-Douglas utility function,U = C α\alphaα M α\alphaα -1,represent:

In the country of Aldeine,the market demand for Good A is derived from the individual demand curves of five consumers who consider A to be a Giffen good.Determine the shape of the market demand curve for A.How it is different from the market demand curve for normal goods.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Assume that the market demand curve for a good is constructed from a hundred identical individual demand curves.Using the same scale on the graph,the slope of the market demand curve will be _ and its price elasticity _ that of the individual demand curves.

In an effort to deter alcohol consumption by youths,raising the legal age for alcohol consumption causes a _ the demand curve for alcohol,while raising the federal per unit tax on alcohol would cause a _ the demand curve.

The exponents of a Cobb-Douglas utility function,U = C^$\alpha$M^$\alpha$^-1,represent: