Question 1

An increase in the price of a good

Accepted Answer

A)  increases the quantity of the good demanded by a consumer. 
B)  decreases the total utility of the consumer. 
C)  changes the consumer's preferences. 
D)  increases the number of combinations of goods a consumer can purchase. 
E)  has no effect on the maximum combinations of goods the consumer can purchase. 
A)  increases the quantity of the good demanded by a consumer. 
B)  decreases the total utility of the consumer. 
C)  changes the consumer's preferences. 
D)  increases the number of combinations of goods a consumer can purchase. 
E)  has no effect on the maximum combinations of goods the consumer can purchase.

Question 2

Like marginal utility, marginal benefit

Accepted Answer

A)  measures satisfaction for a consumer. 
B)  is used to analyze government behavior. 
C)  decreases with increased consumption of a good. 
D)  is a purely theoretical, immeasurable quantity. 
E)  is a dollar measure. 
A)  measures satisfaction for a consumer. 
B)  is used to analyze government behavior. 
C)  decreases with increased consumption of a good. 
D)  is a purely theoretical, immeasurable quantity. 
E)  is a dollar measure.

Question 3

The reason individual demand slopes downward is that

Accepted Answer

A)  market demand slopes downward. 
B)  a fall in price causes marginal utility to fall. 
C)  when price falls, an individual consumes more in order to use all of his or her income. 
D)  when price falls, total utility can be increased when more of the good is purchased. 
E)  when price rises, total utility can be increased when more of the good is purchased. 
A)  market demand slopes downward. 
B)  a fall in price causes marginal utility to fall. 
C)  when price falls, an individual consumes more in order to use all of his or her income. 
D)  when price falls, total utility can be increased when more of the good is purchased. 
E)  when price rises, total utility can be increased when more of the good is purchased.

Question 4

Using the information in Exhibit 5-4, which of the following combinations is preferred to 3 apples and 2 cans of cola?

Accepted Answer

A)  4 apples and 1 can of cola 
B)  3 apples and 2 cans of cola 
C)  1 apple and 4 cans of cola 
D)  2 apples and 3 cans of cola 
E)  2 apples and 2 cans of cola 
A)  4 apples and 1 can of cola 
B)  3 apples and 2 cans of cola 
C)  1 apple and 4 cans of cola 
D)  2 apples and 3 cans of cola 
E)  2 apples and 2 cans of cola

Question 5

Which of the following statements regarding the consumption of more than one good is true?

Accepted Answer

A)  Utility initially increases when consumption of one or more goods increases. 
B)  Utility increases when less of only one good is consumed. 
C)  Utility decreases when more of only one good is consumed. 
D)  Utility does not necessarily increase if more of all goods are consumed. 
E)  If less of all goods is consumed, utility might increase, decrease, or stay the same. 
A)  Utility initially increases when consumption of one or more goods increases. 
B)  Utility increases when less of only one good is consumed. 
C)  Utility decreases when more of only one good is consumed. 
D)  Utility does not necessarily increase if more of all goods are consumed. 
E)  If less of all goods is consumed, utility might increase, decrease, or stay the same.

Question 6

The budget constraint cannot be affected by an individual's preferences.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the price of a pair of shoes is $20 and the price of a shirt is $10. Suppose further that a consumer can spend a maximum of $100 on shirts and shoes. Which of the following is the most affordable bundle for maximizing the consumer's utility?

Accepted Answer

A)  10 shirts and 5 pairs of shoes 
B)  2 shirts and 4 pairs of shoes 
C)  4 shirts and 2 pairs of shoes 
D)  Only 4 pairs of shoes 
E)  5 shirts and 10 pairs of shoes 
A)  10 shirts and 5 pairs of shoes 
B)  2 shirts and 4 pairs of shoes 
C)  4 shirts and 2 pairs of shoes 
D)  Only 4 pairs of shoes 
E)  5 shirts and 10 pairs of shoes

Question 8

Consider the table below showing Anne's willingness to pay for magazines.

Accepted Answer

The answer of Consider the table below showing Anne's willingness...

Question 9

The market demand curve represents the utility maximization behavior of a typical consumer.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements about market demand curves is true?

Accepted Answer

A)  Only similar demand curves can be summed to make market demand. 
B)  Market demand curves are usually shaped similar to individual demand curves. 
C)  The inclusion of many individuals' demand curves makes market demand smooth. 
D)  Market demand shifts upward as each additional individual demand curve is added. 
E)  Market demand shifts downward as each additional individual demand curve is added. 
A)  Only similar demand curves can be summed to make market demand. 
B)  Market demand curves are usually shaped similar to individual demand curves. 
C)  The inclusion of many individuals' demand curves makes market demand smooth. 
D)  Market demand shifts upward as each additional individual demand curve is added. 
E)  Market demand shifts downward as each additional individual demand curve is added.

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, then the total demand for latte equals

Accepted Answer

A)  3 cups. 
B)  6 cups. 
C)  7 cups. 
D)  8 cups. 
E)  10 cups. 
A)  3 cups. 
B)  6 cups. 
C)  7 cups. 
D)  8 cups. 
E)  10 cups.

Question 12

The diamond-water paradox is based on the assumption of increasing marginal utility.

Accepted Answer

A) True 
 B)False

Question 13

The term utility maximization means that

Accepted Answer

A)  individuals consume to gain as much utility as possible, given the limits of the budget constraint. 
B)  total utility does not change with a change in income. 
C)  once utility is at its maximum, leftover income can be saved. 
D)  individuals consume the maximum amount of a good that the budget constraint makes possible. 
E)  individuals maximize their usefulness to society. 
A)  individuals consume to gain as much utility as possible, given the limits of the budget constraint. 
B)  total utility does not change with a change in income. 
C)  once utility is at its maximum, leftover income can be saved. 
D)  individuals consume the maximum amount of a good that the budget constraint makes possible. 
E)  individuals maximize their usefulness to society.

Question 14

Explain how it is possible for marginal utility to decrease as total utility increases.

Accepted Answer

Marginal utility measures the change in

Question 15

Economists generally agree that a comparison between the marginal utility of one person with that of another

Accepted Answer

A)  should be made. 
B)  is inappropriate. 
C)  is appropriate only if one good is considered at a time. 
D)  is generally appropriate. 
E)  is appropriate only between two individuals and one good at a time. 
A)  should be made. 
B)  is inappropriate. 
C)  is appropriate only if one good is considered at a time. 
D)  is generally appropriate. 
E)  is appropriate only between two individuals and one good at a time.

Question 16

If the marginal utility of consuming one pound of apples is 200 units for John and 50 units for Jane, we can conclude

Accepted Answer

A)  that John will eat four times more apples than Jane. 
B)  that John will eat the same amount of apples as Jane. 
C)  that John will eat four times fewer apples than Jane. 
D)  that John and Jane will not eat any apples. 
E)  nothing about how many apples John will eat compared to Jane. 
A)  that John will eat four times more apples than Jane. 
B)  that John will eat the same amount of apples as Jane. 
C)  that John will eat four times fewer apples than Jane. 
D)  that John and Jane will not eat any apples. 
E)  nothing about how many apples John will eat compared to Jane.

Question 17

Economists assume that people

Accepted Answer

A)  act to maximize marginal utility. 
B)  experience diminishing marginal utility of income. 
C)  act to increase utility. 
D)  cannot compare the value of goods. 
E)  prefer less to more. 
A)  act to maximize marginal utility. 
B)  experience diminishing marginal utility of income. 
C)  act to increase utility. 
D)  cannot compare the value of goods. 
E)  prefer less to more.

Question 18

Exhibit 5-1  
-Refer to Exhibit 5-1. As the individual consumes each additional can of soda, total utility

Accepted Answer

A)  increases by 9 units of utility. 
B)  increases at a decreasing rate. 
C)  stays constant. 
D)  increases at an increasing rate. 
E)  decreases by 9 units of utility. 
A)  increases by 9 units of utility. 
B)  increases at a decreasing rate. 
C)  stays constant. 
D)  increases at an increasing rate. 
E)  decreases by 9 units of utility.

Question 19

Economists assume that marginal utility cannot be negative.

Accepted Answer

A) True 
 B)False

Question 20

Total utility is the

Accepted Answer

A)  change in utility a person receives from consuming a good. 
B)  change in utility a person receives from consuming a good divided by the price of that good. 
C)  total amount of satisfaction a person receives from consuming a good. 
D)  price a person pays for consuming a good. 
E)  total amount of satisfaction a person receives from consuming a good divided by the price of that good. 
A)  change in utility a person receives from consuming a good. 
B)  change in utility a person receives from consuming a good divided by the price of that good. 
C)  total amount of satisfaction a person receives from consuming a good. 
D)  price a person pays for consuming a good. 
E)  total amount of satisfaction a person receives from consuming a good divided by the price of that good.

An increase in the price of a good

Like marginal utility, marginal benefit

The reason individual demand slopes downward is that

Using the information in Exhibit 5-4, which of the following combinations is preferred to 3 apples and 2 cans of cola?

Which of the following statements regarding the consumption of more than one good is true?

The budget constraint cannot be affected by an individual's preferences.

Suppose the price of a pair of shoes is $20 and the price of a shirt is $10. Suppose further that a consumer can spend a maximum of $100 on shirts and shoes. Which of the following is the most affordable bundle for maximizing the consumer's utility?

Consider the table below showing Anne's willingness to pay for magazines.

The market demand curve represents the utility maximization behavior of a typical consumer.

Which of the following statements about market demand curves is true?

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, then the total demand for latte equals

The diamond-water paradox is based on the assumption of increasing marginal utility.

The term utility maximization means that

Explain how it is possible for marginal utility to decrease as total utility increases.

Economists generally agree that a comparison between the marginal utility of one person with that of another

If the marginal utility of consuming one pound of apples is 200 units for John and 50 units for Jane, we can conclude

Economists assume that people

Exhibit 5-1 -Refer to Exhibit 5-1. As the individual consumes each additional can of soda, total utility

Economists assume that marginal utility cannot be negative.

Total utility is the

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

An increase in the price of a good

Like marginal utility, marginal benefit

The reason individual demand slopes downward is that

Using the information in Exhibit 5-4, which of the following combinations is preferred to 3 apples and 2 cans of cola?

Which of the following statements regarding the consumption of more than one good is true?

The budget constraint cannot be affected by an individual's preferences.

Suppose the price of a pair of shoes is $20 and the price of a shirt is $10. Suppose further that a consumer can spend a maximum of $100 on shirts and shoes. Which of the following is the most affordable bundle for maximizing the consumer's utility?

Consider the table below showing Anne's willingness to pay for magazines.

The market demand curve represents the utility maximization behavior of a typical consumer.

Which of the following statements about market demand curves is true?

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, then the total demand for latte equals

The diamond-water paradox is based on the assumption of increasing marginal utility.

The term utility maximization means that

Explain how it is possible for marginal utility to decrease as total utility increases.

Economists generally agree that a comparison between the marginal utility of one person with that of another

If the marginal utility of consuming one pound of apples is 200 units for John and 50 units for Jane, we can conclude

Economists assume that people

Exhibit 5-1 -Refer to Exhibit 5-1. As the individual consumes each additional can of soda, total utility

Economists assume that marginal utility cannot be negative.

Total utility is the

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