Question 1

The marginal benefit of a good increases as its price decreases.

Accepted Answer

A) True 
 B)False

Question 2

Water is cheaper than diamonds because

Accepted Answer

A)  water is a less useful resource. 
B)  markets fail to reflect value. 
C)  water yields lower total utility. 
D)  the last drop of water consumed yields lower marginal utility. 
E)  people receive negative utility from water. 
A)  water is a less useful resource. 
B)  markets fail to reflect value. 
C)  water yields lower total utility. 
D)  the last drop of water consumed yields lower marginal utility. 
E)  people receive negative utility from water.

Question 3

Explain how it is possible to add individual demand curves, which are ragged and discontinuous, to get a smooth market demand curve.

Accepted Answer

There are many individual demand curves

Question 4

Only demand curves from individuals with similar preferences can be summed to obtain a market demand curve.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that a consumer's total benefit is $4 for consuming one cup of ice cream and $7 for consuming two cups of ice cream. The consumer's willingness to pay for the second cup of ice cream is

Accepted Answer

A)  $0. 
B)  $3. 
C)  $4. 
D)  $7. 
E)  $11. 
A)  $0. 
B)  $3. 
C)  $4. 
D)  $7. 
E)  $11.

Question 6

Suppose Kim is willing to pay $5 for her first ice cream sundae, $4 for a second ice cream sundae, and $2 for a third. If Kim is able to buy all three ice cream sundaes for $2 each, she has realized a consumer surplus of

Accepted Answer

A)  $3. 
B)  $5. 
C)  $2. 
D)  $1. 
E)  $4. 
A)  $3. 
B)  $5. 
C)  $2. 
D)  $1. 
E)  $4.

Question 7

If a consumer is already consuming a good and is willing to pay a maximum of $100 for one more unit of it, then the total benefit from consuming the good is $100.

Accepted Answer

A) True 
 B)False

Question 8

Suppose Austin is willing to pay $5 for one more burger but he actually pays $2 for it. The consumer surplus for Austin to consume that additional burger is

Accepted Answer

A)  -$7. 
B)  -$2. 
C)  $0. 
D)  $3. 
E)  $7. 
A)  -$7. 
B)  -$2. 
C)  $0. 
D)  $3. 
E)  $7.

Question 9

Individual demand tells us the

Accepted Answer

A)  minimum amount an individual is willing to pay for an extra unit of a good. 
B)  maximum quantity of a good an individual is willing to buy at any given price. 
C)  total benefit a consumer gets from a good, but only when the price is equal to zero. 
D)  marginal benefit is unrelated to willingness to pay. 
E)  maximum marginal utility an individual receives from consuming one more unit of a good. 
A)  minimum amount an individual is willing to pay for an extra unit of a good. 
B)  maximum quantity of a good an individual is willing to buy at any given price. 
C)  total benefit a consumer gets from a good, but only when the price is equal to zero. 
D)  marginal benefit is unrelated to willingness to pay. 
E)  maximum marginal utility an individual receives from consuming one more unit of a good.

Question 10

The data below show Paula and Susan's willingness to pay for compact discs.

Accepted Answer

The answer of The data below show Paula and Susan's...

Question 11

Exhibit 5-7  
-Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte. If the market price of one cup of latte is $2, which of the following is true?

Accepted Answer

A)  Monet will consume 3 cups of latte, and Andrew will consume 4 cups. 
B)  Monet will consume 4 cups of latte, and Andrew will consume 3 cups. 
C)  Both Monet and Andrew will consume 3 cups of latte. 
D)  Both Monet and Andrew will consume 4 cups of latte. 
E)  Monet will consume no latte, and Andrew will consume 7 cups. 
A)  Monet will consume 3 cups of latte, and Andrew will consume 4 cups. 
B)  Monet will consume 4 cups of latte, and Andrew will consume 3 cups. 
C)  Both Monet and Andrew will consume 3 cups of latte. 
D)  Both Monet and Andrew will consume 4 cups of latte. 
E)  Monet will consume no latte, and Andrew will consume 7 cups.

Question 12

Utility maximization implies that a change in income results in a movement along a demand curve.

Accepted Answer

A) True 
 B)False

Question 13

For a consumer to maximize utility,

Accepted Answer

A)  marginal utility should equal marginal benefit. 
B)  price should equal marginal benefit. 
C)  marginal benefit should equal total utility. 
D)  price should equal marginal utility. 
E)  price should equal marginal cost. 
A)  marginal utility should equal marginal benefit. 
B)  price should equal marginal benefit. 
C)  marginal benefit should equal total utility. 
D)  price should equal marginal utility. 
E)  price should equal marginal cost.

Question 14

Exhibit 5-2  
-Refer to Exhibit 5-2. Total utility

Accepted Answer

A)  and marginal utility are decreasing. 
B)  cannot be calculated. 
C)  is decreasing, but marginal utility is increasing. 
D)  is increasing, but marginal utility is decreasing. 
E)  and marginal utility are increasing. 
A)  and marginal utility are decreasing. 
B)  cannot be calculated. 
C)  is decreasing, but marginal utility is increasing. 
D)  is increasing, but marginal utility is decreasing. 
E)  and marginal utility are increasing.

Question 15

Economists refer to utility as the

Accepted Answer

A)  satisfaction that a producer receives from selling a good. 
B)  satisfaction that a consumer receives from consuming a good. 
C)  revenue that a seller receives from selling a good. 
D)  price that a consumer pays for a good. 
E)  difference between the value and the price of a good. 
A)  satisfaction that a producer receives from selling a good. 
B)  satisfaction that a consumer receives from consuming a good. 
C)  revenue that a seller receives from selling a good. 
D)  price that a consumer pays for a good. 
E)  difference between the value and the price of a good.

Question 16

Refer to the table below. Calculate the total utility of 4 cans of Coca-Cola.

Accepted Answer

Add the marginal uti

Question 17

Suppose an individual's income is $1,000, and all of it is spent on food and clothing. If the price of food is $10 and the price of clothing is $25, calculate the maximum amount of food that can be consumed. Do the same for clothing. Finally, calculate how much food and clothing can be consumed if half of the income is spent on each.

Accepted Answer

Maximum food = $1,000/$10 = 10

Question 18

Marginal benefit is the

Accepted Answer

A)  change in total expenditures as a result of buying one more unit of a good. 
B)  maximum amount a consumer is willing to pay for one more unit of a good. 
C)  change in total utility that results from consuming one more unit of a good. 
D)  same as total benefit. 
E)  price of a good. 
A)  change in total expenditures as a result of buying one more unit of a good. 
B)  maximum amount a consumer is willing to pay for one more unit of a good. 
C)  change in total utility that results from consuming one more unit of a good. 
D)  same as total benefit. 
E)  price of a good.

Question 19

Why does an individual consume a good so that marginal benefit is equal to price?

Accepted Answer

Marginal benefit reflects willingness to

Question 20

Total utility always increases when a person increases the consumption of one good while reducing the consumption of another.

Accepted Answer

A) True 
 B)False

The marginal benefit of a good increases as its price decreases.

Water is cheaper than diamonds because

Explain how it is possible to add individual demand curves, which are ragged and discontinuous, to get a smooth market demand curve.

Only demand curves from individuals with similar preferences can be summed to obtain a market demand curve.

Suppose that a consumer's total benefit is $4 for consuming one cup of ice cream and $7 for consuming two cups of ice cream. The consumer's willingness to pay for the second cup of ice cream is

Suppose Kim is willing to pay $5 for her first ice cream sundae, $4 for a second ice cream sundae, and $2 for a third. If Kim is able to buy all three ice cream sundaes for $2 each, she has realized a consumer surplus of

If a consumer is already consuming a good and is willing to pay a maximum of $100 for one more unit of it, then the total benefit from consuming the good is $100.

Suppose Austin is willing to pay $5 for one more burger but he actually pays $2 for it. The consumer surplus for Austin to consume that additional burger is

Individual demand tells us the

The data below show Paula and Susan's willingness to pay for compact discs.

Exhibit 5-7 -Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte. If the market price of one cup of latte is $2, which of the following is true?

Utility maximization implies that a change in income results in a movement along a demand curve.

For a consumer to maximize utility,

Exhibit 5-2 -Refer to Exhibit 5-2. Total utility

Economists refer to utility as the

Refer to the table below. Calculate the total utility of 4 cans of Coca-Cola.

Marginal benefit is the

Why does an individual consume a good so that marginal benefit is equal to price?

Total utility always increases when a person increases the consumption of one good while reducing the consumption of another.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

Exam 5: The Demand Curve and the Behavior of Consumers

The marginal benefit of a good increases as its price decreases.

Water is cheaper than diamonds because

Explain how it is possible to add individual demand curves, which are ragged and discontinuous, to get a smooth market demand curve.

Only demand curves from individuals with similar preferences can be summed to obtain a market demand curve.

Suppose that a consumer's total benefit is $4 for consuming one cup of ice cream and $7 for consuming two cups of ice cream. The consumer's willingness to pay for the second cup of ice cream is

Suppose Kim is willing to pay $5 for her first ice cream sundae, $4 for a second ice cream sundae, and $2 for a third. If Kim is able to buy all three ice cream sundaes for $2 each, she has realized a consumer surplus of

If a consumer is already consuming a good and is willing to pay a maximum of $100 for one more unit of it, then the total benefit from consuming the good is $100.

Suppose Austin is willing to pay $5 for one more burger but he actually pays $2 for it. The consumer surplus for Austin to consume that additional burger is

Individual demand tells us the

The data below show Paula and Susan's willingness to pay for compact discs.

Exhibit 5-7 -Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte. If the market price of one cup of latte is $2, which of the following is true?

Utility maximization implies that a change in income results in a movement along a demand curve.

For a consumer to maximize utility,

Exhibit 5-2 -Refer to Exhibit 5-2. Total utility

Economists refer to utility as the

Refer to the table below. Calculate the total utility of 4 cans of Coca-Cola.

Marginal benefit is the

Why does an individual consume a good so that marginal benefit is equal to price?

Total utility always increases when a person increases the consumption of one good while reducing the consumption of another.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters