Question 1

Exhibit 5-9  
-Refer to Exhibit 5-9. When price falls from P2 to P1, the size of consumer surplus

Accepted Answer

A)  increases by area 2. 
B)  decreases by area 2. 
C)  remains the same. 
D)  increases by areas 1 + 2. 
E)  decreases by areas 1 + 2. 
A)  increases by area 2. 
B)  decreases by area 2. 
C)  remains the same. 
D)  increases by areas 1 + 2. 
E)  decreases by areas 1 + 2.

Question 2

Marginal utility is the

Accepted Answer

A)  utility that an individual gains from consuming an additional unit of a good. 
B)  minimum utility that a person must receive from a good in order to consume it. 
C)  cost that an individual bears in consuming another unit of a good. 
D)  total opportunity cost of consuming a good. 
E)  amount of utility that an individual gains from consuming a good. 
A)  utility that an individual gains from consuming an additional unit of a good. 
B)  minimum utility that a person must receive from a good in order to consume it. 
C)  cost that an individual bears in consuming another unit of a good. 
D)  total opportunity cost of consuming a good. 
E)  amount of utility that an individual gains from consuming a good.

Question 3

Exhibit 5-8  
-Consumer surplus is the difference between

Accepted Answer

A)  the supply curve and the equilibrium price line in a supply/demand diagram. 
B)  the minimum quantity consumers are willing to buy and the amount they actually buy. 
C)  total utility and marginal utility for every unit of a good consumed. 
D)  the total marginal benefit for every unit of a good consumed and total expenditures on the good. 
E)  total revenue and total cost in a market for a good. 
A)  the supply curve and the equilibrium price line in a supply/demand diagram. 
B)  the minimum quantity consumers are willing to buy and the amount they actually buy. 
C)  total utility and marginal utility for every unit of a good consumed. 
D)  the total marginal benefit for every unit of a good consumed and total expenditures on the good. 
E)  total revenue and total cost in a market for a good.

Question 4

The budget constraint

Accepted Answer

A)  is the combined price of all goods and services an individual can consume. 
B)  is the total amount of money an individual can spend on goods and services per period of time. 
C)  is the maximum amount of money an individual can gain without earning it. 
D)  applies only to society as a whole, not to individuals. 
E)  is the total amount of utility an individual can receive from goods and services per period of time. 
A)  is the combined price of all goods and services an individual can consume. 
B)  is the total amount of money an individual can spend on goods and services per period of time. 
C)  is the maximum amount of money an individual can gain without earning it. 
D)  applies only to society as a whole, not to individuals. 
E)  is the total amount of utility an individual can receive from goods and services per period of time.

Question 5

Exhibit 5-3  
-Exhibit 5-3 shows Alison's total utility from consuming yogurt. Which of the following is true?

Accepted Answer

A)  The marginal utility of the second cup of yogurt is 1 unit of utility. 
B)  The marginal utility of the third cup of yogurt is 20 units of utility. 
C)  The marginal utility of the fourth cup of yogurt is 1 unit of utility. 
D)  The marginal utility of the fourth cup of yogurt is 21 units of utility. 
E)  The marginal utility of the first cup of yogurt is 0. 
A)  The marginal utility of the second cup of yogurt is 1 unit of utility. 
B)  The marginal utility of the third cup of yogurt is 20 units of utility. 
C)  The marginal utility of the fourth cup of yogurt is 1 unit of utility. 
D)  The marginal utility of the fourth cup of yogurt is 21 units of utility. 
E)  The marginal utility of the first cup of yogurt is 0.

Question 6

As tastes and preferences differ from person to another, so too is marginal utility.

Accepted Answer

A) True 
 B)False

Question 7

A change in the price of a good changes a consumer's budget constraint and causes a shift of the demand curve.

Accepted Answer

A) True 
 B)False

Question 8

Utility is easily measured by economists using a unit of measure called a util.

Accepted Answer

A) True 
 B)False

Question 9

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14, then

Accepted Answer

A)  you receive a consumer surplus of $4. 
B)  you experience a paradox of value. 
C)  you receive a consumer surplus of $2. 
D)  you do not have consumer sovereignty. 
E)  your demand factor is $2 per unit. 
A)  you receive a consumer surplus of $4. 
B)  you experience a paradox of value. 
C)  you receive a consumer surplus of $2. 
D)  you do not have consumer sovereignty. 
E)  your demand factor is $2 per unit.

Question 10

In looking at the consumption of two or more goods,

Accepted Answer

A)  changes in the amount of one good consumed might affect the amount of utility gained from one or more other goods. 
B)  the utility from one good is always independent of how much of any other good is consumed. 
C)  utility from some goods must be added, whereas utility from others must be subtracted. 
D)  utility from all of the goods must be multiplied to get total utility. 
E)  a change in the quantity of one good consumed always affects the amount of utility derived from all other goods. 
A)  changes in the amount of one good consumed might affect the amount of utility gained from one or more other goods. 
B)  the utility from one good is always independent of how much of any other good is consumed. 
C)  utility from some goods must be added, whereas utility from others must be subtracted. 
D)  utility from all of the goods must be multiplied to get total utility. 
E)  a change in the quantity of one good consumed always affects the amount of utility derived from all other goods.

Question 11

Consumer surplus is

Accepted Answer

A)  equivalent to value in use. 
B)  equivalent to value in exchange. 
C)  the difference between total expenditure and what consumers have to pay per unit. 
D)  total expenditure divided by the price per unit. 
E)  the difference between what consumers would be willing to pay and what they have to pay. 
A)  equivalent to value in use. 
B)  equivalent to value in exchange. 
C)  the difference between total expenditure and what consumers have to pay per unit. 
D)  total expenditure divided by the price per unit. 
E)  the difference between what consumers would be willing to pay and what they have to pay.

Question 12

Suppose that Mary's willingness to pay for T-shirts is $20 for one T-shirt, $26 for two T-shirts, $30 for three T-shirts, and $32 for four T-shirts. Draw Mary's demand curve for T-shirts. If the price of a T-shirt is $6, how many T-shirts would Mary buy? What is Mary's consumer surplus? Show the consumer surplus in a diagram. Now suppose that a sale reduces the price of T-shirts to $4. How many T-shirts will Mary buy now? What is the new consumer surplus?

Accepted Answer

@#IMG-DLM& If the price of a T-shirt is $6, then M

Question 13

Which of the following represents the substitution effect of an increase in the price of apples?

Accepted Answer

A)  A decrease in the consumer's real income 
B)  A decrease in the quantity of apples purchased 
C)  A decrease in the quantities of all goods purchased by the consumer 
D)  A shift of consumption from other goods to apples 
E)  A decrease in the opportunity cost of consuming apples 
A)  A decrease in the consumer's real income 
B)  A decrease in the quantity of apples purchased 
C)  A decrease in the quantities of all goods purchased by the consumer 
D)  A shift of consumption from other goods to apples 
E)  A decrease in the opportunity cost of consuming apples

Question 14

Exhibit 5-2  
-Refer to Exhibit 5-2. The marginal utility of the third unit is

Accepted Answer

A)  smaller than the marginal utility of the second unit. 
B)  smaller than the marginal utility of the fourth unit. 
C)  smaller than the marginal utility of the fifth unit. 
D)  smaller than the marginal utility of the sixth unit. 
E)  impossible to calculate given the available information. 
A)  smaller than the marginal utility of the second unit. 
B)  smaller than the marginal utility of the fourth unit. 
C)  smaller than the marginal utility of the fifth unit. 
D)  smaller than the marginal utility of the sixth unit. 
E)  impossible to calculate given the available information.

Question 15

The total amount of money that you can spend on goods and services within a month is your monthly

Accepted Answer

A)  utility. 
B)  income. 
C)  budget constraint. 
D)  wealth. 
E)  quota. 
A)  utility. 
B)  income. 
C)  budget constraint. 
D)  wealth. 
E)  quota.

Question 16

Does an increase in income always increase demand? Why or why not?

Accepted Answer

No. If the good is a

Question 17

Exhibit 5-9  
-Refer to Exhibit 5-9. At a price of P1, what labeled area(s) represent(s) consumer surplus?

Accepted Answer

A)  1 + 2 + 3 + 4 
B)  1 + 2 + 3 + 4 + 5 + 6 
C)  1 + 2 
D)  1 + 2 + 3 + 5 
E)  1 
A)  1 + 2 + 3 + 4 
B)  1 + 2 + 3 + 4 + 5 + 6 
C)  1 + 2 
D)  1 + 2 + 3 + 5 
E)  1

Question 18

Different prices might be charged for the same good for all the following reasons except

Accepted Answer

A)  quality differences. 
B)  different shopping locations. 
C)  consumer ignorance. 
D)  the degree of service with the sale. 
E)  the degree of consumer sensibility to prices. 
A)  quality differences. 
B)  different shopping locations. 
C)  consumer ignorance. 
D)  the degree of service with the sale. 
E)  the degree of consumer sensibility to prices.

Question 19

Marginal utility can be positive, zero, or negative.

Accepted Answer

A) True 
 B)False

Question 20

Consumer surplus increases as price decreases.

Accepted Answer

A) True 
 B)False

Exhibit 5-9 -Refer to Exhibit 5-9. When price falls from P₂ to P₁, the size of consumer surplus

Marginal utility is the

Exhibit 5-8 -Consumer surplus is the difference between

The budget constraint

Exhibit 5-3 -Exhibit 5-3 shows Alison's total utility from consuming yogurt. Which of the following is true?

As tastes and preferences differ from person to another, so too is marginal utility.

A change in the price of a good changes a consumer's budget constraint and causes a shift of the demand curve.

Utility is easily measured by economists using a unit of measure called a util.

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14, then

In looking at the consumption of two or more goods,

Consumer surplus is

Which of the following represents the substitution effect of an increase in the price of apples?

Exhibit 5-2 -Refer to Exhibit 5-2. The marginal utility of the third unit is

The total amount of money that you can spend on goods and services within a month is your monthly

Does an increase in income always increase demand? Why or why not?

Exhibit 5-9 -Refer to Exhibit 5-9. At a price of P₁, what labeled area(s) represent(s) consumer surplus?

Different prices might be charged for the same good for all the following reasons except

Marginal utility can be positive, zero, or negative.

Consumer surplus increases as price decreases.

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

Exhibit 5-9 -Refer to Exhibit 5-9. When price falls from P2 to P1, the size of consumer surplus

Marginal utility is the

Exhibit 5-8 -Consumer surplus is the difference between

The budget constraint

Exhibit 5-3 -Exhibit 5-3 shows Alison's total utility from consuming yogurt. Which of the following is true?

As tastes and preferences differ from person to another, so too is marginal utility.

A change in the price of a good changes a consumer's budget constraint and causes a shift of the demand curve.

Utility is easily measured by economists using a unit of measure called a util.

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14, then

In looking at the consumption of two or more goods,

Consumer surplus is

Which of the following represents the substitution effect of an increase in the price of apples?

Exhibit 5-2 -Refer to Exhibit 5-2. The marginal utility of the third unit is

The total amount of money that you can spend on goods and services within a month is your monthly

Does an increase in income always increase demand? Why or why not?

Exhibit 5-9 -Refer to Exhibit 5-9. At a price of P1, what labeled area(s) represent(s) consumer surplus?

Different prices might be charged for the same good for all the following reasons except

Marginal utility can be positive, zero, or negative.

Consumer surplus increases as price decreases.

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

Exhibit 5-9 -Refer to Exhibit 5-9. When price falls from P₂ to P₁, the size of consumer surplus

Exhibit 5-9 -Refer to Exhibit 5-9. At a price of P₁, what labeled area(s) represent(s) consumer surplus?