Question 1

The reason that you don't drink five cups of coffee at breakfast is that

Accepted Answer

A) the marginal utility of extra cups of coffee eventually diminishes 
B) most people cannot afford five cups 
C) the total utility of coffee rises as you consume more cups 
D) the price of coffee rises as you buy more cups 
E) the marginal satisfaction derived from cups of coffee remains constant 
A) the marginal utility of extra cups of coffee eventually diminishes 
B) most people cannot afford five cups 
C) the total utility of coffee rises as you consume more cups 
D) the price of coffee rises as you buy more cups 
E) the marginal satisfaction derived from cups of coffee remains constant A

Question 2

Exhibit 6-1   Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the third glass of milk is

Accepted Answer

A) 0 units of utility 
B) 5 units of utility 
C) 8 units of utility 
D) 12 units of utility 
E) 14 units of utility 
A) 0 units of utility 
B) 5 units of utility 
C) 8 units of utility 
D) 12 units of utility 
E) 14 units of utility C

Question 3

Which of the following sayings describes the concept of diminishing marginal utility?

Accepted Answer

A) time is money 
B) penny wise and pound foolish 
C) absence makes the heart grow fonder 
D) a penny saved is a penny earned 
E) a fool and his money are soon parted 
A) time is money 
B) penny wise and pound foolish 
C) absence makes the heart grow fonder 
D) a penny saved is a penny earned 
E) a fool and his money are soon parted C

Question 4

Exhibit 6-21   Refer to Exhibit 6-21.In equilibrium the consumer surplus in this market is area A +

Accepted Answer

A) True 
 B)False

Question 5

Total utility can be calculated as the

Accepted Answer

A) sum of all marginal utilities 
B) price paid for one unit of a good 
C) product of all marginal utilities 
D) total expenditure on all units of a good the consumer buys 
E) difference between the marginal utilities of the first and last units of a good 
A) sum of all marginal utilities 
B) price paid for one unit of a good 
C) product of all marginal utilities 
D) total expenditure on all units of a good the consumer buys 
E) difference between the marginal utilities of the first and last units of a good

Question 6

Basil is maximizing his utility from consuming tea and crumpets.If the marginal utility of his last cup of tea was 24 units of utility and that of his last crumpet was 6 units of utility, which of the following is true?

Accepted Answer

A) The price of tea is six times the price of crumpets. 
B) The price of crumpets is four times the price of tea. 
C) The prices of tea and crumpets are equal. 
D) The price of tea is four times the price of crumpets. 
E) The MU of the next cup of tea is less than the MU of the next crumpet. 
A) The price of tea is six times the price of crumpets. 
B) The price of crumpets is four times the price of tea. 
C) The prices of tea and crumpets are equal. 
D) The price of tea is four times the price of crumpets. 
E) The MU of the next cup of tea is less than the MU of the next crumpet.

Question 7

Exhibit 6-14   In Exhibit 6-14, consumer surplus at a price of $2 is the difference between what consumers are willing to

Accepted Answer

A) pay for a quantity of goods and what they actually pay, represented by triangle abc 
B) pay for a quantity of goods and what they actually pay, represented by triangle dcb 
C) pay for a quantity of goods and what they actually pay, represented by triangle adc 
D) receive for a good and what they actually get, represented by triangle abc 
E) receive for a good and what they actually get, represented by triangle dcb 
A) pay for a quantity of goods and what they actually pay, represented by triangle abc 
B) pay for a quantity of goods and what they actually pay, represented by triangle dcb 
C) pay for a quantity of goods and what they actually pay, represented by triangle adc 
D) receive for a good and what they actually get, represented by triangle abc 
E) receive for a good and what they actually get, represented by triangle dcb

Question 8

Suppose Jerry consumes three hamburgers at McDonald's one evening.He figured the last one was just worth the price he paid for it.If the hamburgers he buys have a price of $1, then

Accepted Answer

A) he earned no consumer surplus 
B) he would have earned consumer surplus if he had eaten one more hamburger 
C) he was irrational 
D) he may have earned consumer surplus on the first two hamburgers 
E) he earned $1 consumer surplus on the third hamburger alone 
A) he earned no consumer surplus 
B) he would have earned consumer surplus if he had eaten one more hamburger 
C) he was irrational 
D) he may have earned consumer surplus on the first two hamburgers 
E) he earned $1 consumer surplus on the third hamburger alone

Question 9

If an individual's demand is elastic and price increases, what happens to total utility (TU), marginal utility (MU), consumer surplus (CS), and total expenditure (TE)?

Accepted Answer

A) TU increases, MU decreases, CS decreases, and TE decreases 
B) TU increases, MU increases, CS increases, and TE decreases 
C) TU decreases, MU increases, CS decreases, and TE increases 
D) TU decreases, MU decreases, CS decreases, and TE decreases 
E) TU decreases, MU increases, CS decreases, and TE decreases 
A) TU increases, MU decreases, CS decreases, and TE decreases 
B) TU increases, MU increases, CS increases, and TE decreases 
C) TU decreases, MU increases, CS decreases, and TE increases 
D) TU decreases, MU decreases, CS decreases, and TE decreases 
E) TU decreases, MU increases, CS decreases, and TE decreases

Question 10

Marginal utility is defined as the

Accepted Answer

A) average amount of satisfaction gained from consuming a product 
B) total amount of satisfaction gained from consuming a product 
C) additional satisfaction gained from consuming one more unit of a product 
D) total amount of satisfaction gained from consuming a product divided by the number of units consumed 
E) total amount of satisfaction gained from consuming a product times the number of units consumed 
A) average amount of satisfaction gained from consuming a product 
B) total amount of satisfaction gained from consuming a product 
C) additional satisfaction gained from consuming one more unit of a product 
D) total amount of satisfaction gained from consuming a product divided by the number of units consumed 
E) total amount of satisfaction gained from consuming a product times the number of units consumed

Question 11

To derive a demand curve using utility analysis,

Accepted Answer

A) change a consumer's marginal utilities and note the effect of demand curve changes on market prices 
B) change a consumer's marginal utilities and note the effect of supply curve changes on market prices 
C) change a consumer's marginal utilities and note the effect of supply and demand curve changes on market prices 
D) note how the consumer's utility-maximizing consumption bundle changes in response to price changes 
E) note how the consumer's utility-maximizing consumption bundle changes in response to demand-curve shifts 
A) change a consumer's marginal utilities and note the effect of demand curve changes on market prices 
B) change a consumer's marginal utilities and note the effect of supply curve changes on market prices 
C) change a consumer's marginal utilities and note the effect of supply and demand curve changes on market prices 
D) note how the consumer's utility-maximizing consumption bundle changes in response to price changes 
E) note how the consumer's utility-maximizing consumption bundle changes in response to demand-curve shifts

Question 12

Demand curves usually slope downward because of the income and substitution effects, and because of the law of diminishing marginal utility.

Accepted Answer

A) True 
 B)False

Question 13

As price falls along a given demand curve for pretzels,

Accepted Answer

A) quantity demanded, total utility, marginal utility, and consumer surplus increase; consumer expenditure decreases 
B) quantity demanded, total utility, and consumer surplus increase; marginal utility and consumer surplus decrease 
C) quantity demanded, total utility, consumer surplus, and consumer expenditure increase; marginal utility decreases 
D) quantity demanded, total utility, and consumer surplus increase; marginal utility decreases; consumer expenditure might increase, decrease, or remain constant 
E) quantity demanded, total utility, marginal utility, consumer surplus, and consumer expenditure all increase 
A) quantity demanded, total utility, marginal utility, and consumer surplus increase; consumer expenditure decreases 
B) quantity demanded, total utility, and consumer surplus increase; marginal utility and consumer surplus decrease 
C) quantity demanded, total utility, consumer surplus, and consumer expenditure increase; marginal utility decreases 
D) quantity demanded, total utility, and consumer surplus increase; marginal utility decreases; consumer expenditure might increase, decrease, or remain constant 
E) quantity demanded, total utility, marginal utility, consumer surplus, and consumer expenditure all increase

Question 14

For any given price, the more elastic the demand for a product is, the greater will be the consumer surplus.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 6-13   When the price is P in Exhibit 6-13, the shaded area represents

Accepted Answer

A) a shortage 
B) producer surplus 
C) a price floor 
D) consumer surplus 
E) a price ceiling 
A) a shortage 
B) producer surplus 
C) a price floor 
D) consumer surplus 
E) a price ceiling

Question 16

Suppose Enid could increase her total utility by purchasing one more book and one less video rental.Which of the following is true?

Accepted Answer

A) The marginal utility of video rentals exceeds the marginal utility of books. 
B) The marginal utility of books exceeds the marginal utility of video rentals. 
C) The marginal utility of video rentals is negative. 
D) The marginal utility per dollar spent on books exceeds that of video rentals. 
E) Total utility is at a maximum. 
A) The marginal utility of video rentals exceeds the marginal utility of books. 
B) The marginal utility of books exceeds the marginal utility of video rentals. 
C) The marginal utility of video rentals is negative. 
D) The marginal utility per dollar spent on books exceeds that of video rentals. 
E) Total utility is at a maximum.

Question 17

Economists assume people's tastes are

Accepted Answer

A) determined solely by advertising 
B) relatively stable over time 
C) quite variable 
D) irrelevant to utility analysis 
E) identical 
A) determined solely by advertising 
B) relatively stable over time 
C) quite variable 
D) irrelevant to utility analysis 
E) identical

Question 18

A Medicaid experiment in California showed that a nominal fee of $1 charged for doctors' visits

Accepted Answer

A) caused beneficiaries to stop going to doctors altogether 
B) significantly reduced benefits to those covered by Medicaid without reducing the cost of the program to taxpayers 
C) reduced the cost of the program to taxpayers without creating a substantial burden for recipients 
D) increased the number of doctors' visits per month by beneficiaries 
E) drastically reduced consumer surplus in that market 
A) caused beneficiaries to stop going to doctors altogether 
B) significantly reduced benefits to those covered by Medicaid without reducing the cost of the program to taxpayers 
C) reduced the cost of the program to taxpayers without creating a substantial burden for recipients 
D) increased the number of doctors' visits per month by beneficiaries 
E) drastically reduced consumer surplus in that market

Question 19

A utility-maximizing consumer who is considering two goods, x and y, would allocate her budget in such a way that

Accepted Answer

A) MUx = MUy 
B) MUx > MUy 
C) MUx/Px > MUy/Py 
D) MUx/Px = MUy/Py 
E) MUx/Px y/Py 
A) MUx = MUy 
B) MUx > MUy 
C) MUx/Px > MUy/Py 
D) MUx/Px = MUy/Py 
E) MUx/Px y/Py

Question 20

If Dalene's marginal benefit from consuming another cookie is greater than the price of the cookie, then

Accepted Answer

A) Dalene will not purchase any more cookies 
B) the opportunity cost of the cookie is lower than the price 
C) Dalene's utility will decrease if she purchases the cookie 
D) Dalene will increase her total satisfaction by purchasing the additional cookie 
E) she has purchased too many cookies 
A) Dalene will not purchase any more cookies 
B) the opportunity cost of the cookie is lower than the price 
C) Dalene's utility will decrease if she purchases the cookie 
D) Dalene will increase her total satisfaction by purchasing the additional cookie 
E) she has purchased too many cookies

Exam 6: Consumer Choice and Demand

The reason that you don't drink five cups of coffee at breakfast is that

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the third glass of milk is

Which of the following sayings describes the concept of diminishing marginal utility?

Exhibit 6-21 Refer to Exhibit 6-21.In equilibrium the consumer surplus in this market is area A +

Total utility can be calculated as the

Basil is maximizing his utility from consuming tea and crumpets.If the marginal utility of his last cup of tea was 24 units of utility and that of his last crumpet was 6 units of utility, which of the following is true?

Exhibit 6-14 In Exhibit 6-14, consumer surplus at a price of $2 is the difference between what consumers are willing to

Suppose Jerry consumes three hamburgers at McDonald's one evening.He figured the last one was just worth the price he paid for it.If the hamburgers he buys have a price of $1, then

If an individual's demand is elastic and price increases, what happens to total utility (TU), marginal utility (MU), consumer surplus (CS), and total expenditure (TE)?

Marginal utility is defined as the

To derive a demand curve using utility analysis,

Demand curves usually slope downward because of the income and substitution effects, and because of the law of diminishing marginal utility.

As price falls along a given demand curve for pretzels,

For any given price, the more elastic the demand for a product is, the greater will be the consumer surplus.

Exhibit 6-13 When the price is P in Exhibit 6-13, the shaded area represents

Suppose Enid could increase her total utility by purchasing one more book and one less video rental.Which of the following is true?

Economists assume people's tastes are

A Medicaid experiment in California showed that a nominal fee of $1 charged for doctors' visits

A utility-maximizing consumer who is considering two goods, x and y, would allocate her budget in such a way that

If Dalene's marginal benefit from consuming another cookie is greater than the price of the cookie, then

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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