Question 1

The law of diminishing marginal utility helps to explain the:

Accepted Answer

A)  Upward sloping supply curve. 
B)  Equilibrium price. 
C)  Downward sloping demand curve. 
D)  Equilibrium quantity of a good in the marketplace. 
A)  Upward sloping supply curve. 
B)  Equilibrium price. 
C)  Downward sloping demand curve. 
D)  Equilibrium quantity of a good in the marketplace.

Question 2

If marginal utility is negative,then:

Accepted Answer

A)  Total utility is at a minimum. 
B)  Total utility will increase with additional consumption. 
C)  Total utility will decrease with additional consumption. 
D)  The good in question is an inferior gooD. 
A)  Total utility is at a minimum. 
B)  Total utility will increase with additional consumption. 
C)  Total utility will decrease with additional consumption. 
D)  The good in question is an inferior gooD.

Question 3

In economic theory,utility refers to the:

Accepted Answer

A)  Additional satisfaction obtained from one more unit of a good or service. 
B)  Satisfaction obtained from a good or service. 
C)  Willingness to buy specific quantities of a good or service at a particular price. 
D)  Decrease in satisfaction as more of a good or service is consumeD. 
A)  Additional satisfaction obtained from one more unit of a good or service. 
B)  Satisfaction obtained from a good or service. 
C)  Willingness to buy specific quantities of a good or service at a particular price. 
D)  Decrease in satisfaction as more of a good or service is consumeD.

Question 4

The law of demand explains why people:

Accepted Answer

A)  Crave certain goods. 
B)  Are willing to buy more of a good as price falls. 
C)  Are willing to pay more as marginal utility diminishes. 
D)  Are able to buy more of a good as supply increases. 
A)  Crave certain goods. 
B)  Are willing to buy more of a good as price falls. 
C)  Are willing to pay more as marginal utility diminishes. 
D)  Are able to buy more of a good as supply increases.

Question 5

Suppose Suzuki increases the price of a particular motorcycle model by 12 percent and as a result the quantity demanded for that model decreases by 4 percent.The price elasticity of demand for that model is:

Accepted Answer

A)  0.33. 
B)  3.0. 
C)  4.0. 
D)  12. 
A)  0.33. 
B)  3.0. 
C)  4.0. 
D)  12.

Question 6

At a point of diminishing marginal utility,marginal utility begins to decline as consumption increases.

Accepted Answer

A) True 
 B)False

Question 7

The demand for _______ is relatively inelastic.

Accepted Answer

A)  New cars 
B)  TVs 
C)  Gasoline in the short run 
D)  Airline travel 
A)  New cars 
B)  TVs 
C)  Gasoline in the short run 
D)  Airline travel

Question 8

Which of the following causes the price elasticity of demand for a good to be more inelastic?

Accepted Answer

A)  A shorter period of time to adjust to a change in price. 
B)  A higher ratio of price to consumers' income. 
C)  The availability of many substitutes. 
D)  The good is a luxury. 
A)  A shorter period of time to adjust to a change in price. 
B)  A higher ratio of price to consumers' income. 
C)  The availability of many substitutes. 
D)  The good is a luxury.

Question 9

Table 4.2 - Demand schedule for automobiles
The following is a hypothetical demand schedule for automobiles.  
-In Table 4.2,what is the total revenue from automobile sales at a price of $24,000 per auto?

Accepted Answer

A)  $12 billion per year. 
B)  $26 billion per year. 
C)  $44 billion per year. 
D)  $48 billion per year. 
A)  $12 billion per year. 
B)  $26 billion per year. 
C)  $44 billion per year. 
D)  $48 billion per year.

Question 10

Total utility is the additional satisfaction received from consuming one more unit.

Accepted Answer

A) True 
 B)False

Question 11

Market demand is the sum of individual consumer demands.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is relatively inelastic with respect to demand?

Accepted Answer

A)  A luxury good. 
B)  A good with few substitutes. 
C)  A good that is very expensive. 
D)  A good that is a complement. 
A)  A luxury good. 
B)  A good with few substitutes. 
C)  A good that is very expensive. 
D)  A good that is a complement.

Question 13

Ceteris paribus,the price elasticity of demand for a good with many substitutes is likely to be inelastic.

Accepted Answer

A) True 
 B)False

Question 14

What effect will each of the following have on the demand for hybrid automobiles?
a)The price of gasoline goes up.
b)The price of large automobiles rises.
c)Hybrid autos become more fashionable.
d)Consumers anticipate that the price of hybrids will come down in the future.
e)Consumers incomes decline and hybrids are less expensive to buy and maintain.
f)A news report claims that hybrid are unsafe.

Accepted Answer

a)Other goods;the desire for more fuel e

Question 15

Table 4.2 - Demand schedule for automobiles
The following is a hypothetical demand schedule for automobiles.  
-In Table 4.2,what is the total revenue from automobile sales at a price of $20,000 per auto?

Accepted Answer

A)  $80 billion per year. 
B)  $40 billion per year. 
C)  $24 billion per year. 
D)  $20 billion per year. 
A)  $80 billion per year. 
B)  $40 billion per year. 
C)  $24 billion per year. 
D)  $20 billion per year.

Question 16

Ceteris paribus,an increase in price will increase total revenue if the price elasticity of demand is 1.3.

Accepted Answer

A) True 
 B)False

Question 17

The demand curve is downward sloping because:

Accepted Answer

A)  Producers are willing to supply more of the good only at higher prices. 
B)  Consumers are willing to buy less of the good only at lower prices. 
C)  Producers are willing to supply more of the good only at lower prices. 
D)  Consumers are willing to buy more of the good only at lower prices. 
A)  Producers are willing to supply more of the good only at higher prices. 
B)  Consumers are willing to buy less of the good only at lower prices. 
C)  Producers are willing to supply more of the good only at lower prices. 
D)  Consumers are willing to buy more of the good only at lower prices.

Question 18

The assumption of ceteris paribus is important because it:

Accepted Answer

A)  Allows us to focus on the effects of a change in one variable at a time. 
B)  Explains the concept of diminishing marginal utility. 
C)  Determines the point where total utility is maximized. 
D)  Explains the reason for government failure. 
A)  Allows us to focus on the effects of a change in one variable at a time. 
B)  Explains the concept of diminishing marginal utility. 
C)  Determines the point where total utility is maximized. 
D)  Explains the reason for government failure.

Question 19

The response of quantity demanded to price changes is shown by:

Accepted Answer

A)  Price elasticity of demand. 
B)  The determinants of demand. 
C)  Opportunity cost. 
D)  Income elasticity of demanD. 
A)  Price elasticity of demand. 
B)  The determinants of demand. 
C)  Opportunity cost. 
D)  Income elasticity of demanD.

Question 20

Maximum total utility is achieved where:

Accepted Answer

A)  Total revenue equals zero. 
B)  The price elasticity of demand is 1.0. 
C)  Marginal utility equals zero. 
D)  Marginal revenue equals zero. 
A)  Total revenue equals zero. 
B)  The price elasticity of demand is 1.0. 
C)  Marginal utility equals zero. 
D)  Marginal revenue equals zero.

The law of diminishing marginal utility helps to explain the:

If marginal utility is negative,then:

In economic theory,utility refers to the:

The law of demand explains why people:

Suppose Suzuki increases the price of a particular motorcycle model by 12 percent and as a result the quantity demanded for that model decreases by 4 percent.The price elasticity of demand for that model is:

At a point of diminishing marginal utility,marginal utility begins to decline as consumption increases.

The demand for _______ is relatively inelastic.

Which of the following causes the price elasticity of demand for a good to be more inelastic?

Table 4.2 - Demand schedule for automobiles The following is a hypothetical demand schedule for automobiles. -In Table 4.2,what is the total revenue from automobile sales at a price of $24,000 per auto?

Total utility is the additional satisfaction received from consuming one more unit.

Market demand is the sum of individual consumer demands.

Which of the following is relatively inelastic with respect to demand?

Ceteris paribus,the price elasticity of demand for a good with many substitutes is likely to be inelastic.

Table 4.2 - Demand schedule for automobiles The following is a hypothetical demand schedule for automobiles. -In Table 4.2,what is the total revenue from automobile sales at a price of $20,000 per auto?

Ceteris paribus,an increase in price will increase total revenue if the price elasticity of demand is 1.3.

The demand curve is downward sloping because:

The assumption of ceteris paribus is important because it:

The response of quantity demanded to price changes is shown by:

Maximum total utility is achieved where:

The Challenge of Economics

The US Economy

Supply and Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 4: Consumer Demand

The law of diminishing marginal utility helps to explain the:

If marginal utility is negative,then:

In economic theory,utility refers to the:

The law of demand explains why people:

Suppose Suzuki increases the price of a particular motorcycle model by 12 percent and as a result the quantity demanded for that model decreases by 4 percent.The price elasticity of demand for that model is:

At a point of diminishing marginal utility,marginal utility begins to decline as consumption increases.

The demand for _______ is relatively inelastic.

Which of the following causes the price elasticity of demand for a good to be more inelastic?

Table 4.2 - Demand schedule for automobiles The following is a hypothetical demand schedule for automobiles. -In Table 4.2,what is the total revenue from automobile sales at a price of $24,000 per auto?

Total utility is the additional satisfaction received from consuming one more unit.

Market demand is the sum of individual consumer demands.

Which of the following is relatively inelastic with respect to demand?

Ceteris paribus,the price elasticity of demand for a good with many substitutes is likely to be inelastic.

Table 4.2 - Demand schedule for automobiles The following is a hypothetical demand schedule for automobiles. -In Table 4.2,what is the total revenue from automobile sales at a price of $20,000 per auto?

Ceteris paribus,an increase in price will increase total revenue if the price elasticity of demand is 1.3.

The demand curve is downward sloping because:

The assumption of ceteris paribus is important because it:

The response of quantity demanded to price changes is shown by:

Maximum total utility is achieved where:

The Challenge of Economics

The US Economy

Supply and Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters