Question 1

The budget constraint is the set of all prices of the goods an individual regularly consumes.

Accepted Answer

A) True 
 B)False

Question 2

Why is an individual willing to buy more of a good when its price falls?

Accepted Answer

Marginal utility decreases with increase

Question 3

Economists generally assume that a consumer

Accepted Answer

A)  consumes until marginal utility is equal to zero. 
B)  consumes until total utility is equal to zero. 
C)  maximizes her marginal utility given her budget constraint. 
D)  maximizes her total utility given her budget constraint. 
E)  minimizes her spending given her budget constraint. 
A)  consumes until marginal utility is equal to zero. 
B)  consumes until total utility is equal to zero. 
C)  maximizes her marginal utility given her budget constraint. 
D)  maximizes her total utility given her budget constraint. 
E)  minimizes her spending given her budget constraint.

Question 4

Marginal utility is

Accepted Answer

A)  always greater than total utility. 
B)  utility that is not as good as normal utility. 
C)  not related to total utility. 
D)  always positive. 
E)  the extra utility derived from consuming one additional unit of a good or service. 
A)  always greater than total utility. 
B)  utility that is not as good as normal utility. 
C)  not related to total utility. 
D)  always positive. 
E)  the extra utility derived from consuming one additional unit of a good or service.

Question 5

A market demand curve

Accepted Answer

A)  is based on consumer utility maximization. 
B)  can be derived only if market price actually falls. 
C)  graphically illustrates decreasing marginal utility. 
D)  is derived from the law of diminishing utility. 
E)  is derived by the process of vertical summation. 
A)  is based on consumer utility maximization. 
B)  can be derived only if market price actually falls. 
C)  graphically illustrates decreasing marginal utility. 
D)  is derived from the law of diminishing utility. 
E)  is derived by the process of vertical summation.

Question 6

Why does water, which is essential to our health, cost so much less than diamonds, which are far less useful?

Accepted Answer

This water-diamond paradox is based on t

Question 7

If an individual's preferences can be illustrated using the concept of utility, why can't individuals' utilities be compared?

Accepted Answer

Utility is a theoretical measure used to

Question 8

A consumer will consume such that price equals marginal benefit for every good consumed because

Accepted Answer

A)  income is maximized. 
B)  of the substitution effect. 
C)  utility is maximized. 
D)  price is maximized. 
E)  wealth is maximized. 
A)  income is maximized. 
B)  of the substitution effect. 
C)  utility is maximized. 
D)  price is maximized. 
E)  wealth is maximized.

Question 9

When utility derived from many goods is multiplied or divided by any number, the new utility measure indicates

Accepted Answer

A)  a different set of preferences for the highest and the lowest quantities of goods consumed, but the same preferences for the middle quantities. 
B)  the same preferences as before. 
C)  a different set of preferences only for the highest quantities of goods consumed. 
D)  a different set of preferences only for the lowest quantities of goods consumed. 
E)  an entirely different set of preferences. 
A)  a different set of preferences for the highest and the lowest quantities of goods consumed, but the same preferences for the middle quantities. 
B)  the same preferences as before. 
C)  a different set of preferences only for the highest quantities of goods consumed. 
D)  a different set of preferences only for the lowest quantities of goods consumed. 
E)  an entirely different set of preferences.

Question 10

Exhibit 5-2  
-Refer to Exhibit 5-2. Which of the following statements is true?

Accepted Answer

A)  The equation to obtain the marginal utility of the third unit is 89 - 35. 
B)  The marginal utility for the first unit cannot be calculated. 
C)  The marginal utility of the fourth unit is 28 units of utility. 
D)  The marginal utility of the sixth unit is 20 units of utility. 
E)  Total utility is increasing faster with each additional unit. 
A)  The equation to obtain the marginal utility of the third unit is 89 - 35. 
B)  The marginal utility for the first unit cannot be calculated. 
C)  The marginal utility of the fourth unit is 28 units of utility. 
D)  The marginal utility of the sixth unit is 20 units of utility. 
E)  Total utility is increasing faster with each additional unit.

Question 11

On a supply and demand diagram, consumer surplus is the area

Accepted Answer

A)  between the supply and demand curves 
B)  below the supply curve and below price. 
C)  below the demand curve and above price. 
D)  below the entire demand curve. 
E)  above the entire demand curve. 
A)  between the supply and demand curves 
B)  below the supply curve and below price. 
C)  below the demand curve and above price. 
D)  below the entire demand curve. 
E)  above the entire demand curve.

Question 12

The following table shows David's willingness to pay for ice cream.

Accepted Answer

The answer of The following table shows David's willingness to...

Question 13

The height of the demand curve is the amount of marginal benefit.

Accepted Answer

A) True 
 B)False

Question 14

An increase in income causes a consumer's budget constraint to shift outward.

Accepted Answer

A) True 
 B)False

Question 15

The maximum combinations of goods and services a consumer can buy because he or she has a limited amount of money to spend is called the

Accepted Answer

A)  production possibilities. 
B)  marginal propensity to consume. 
C)  maximum total utility curve. 
D)  indifference curve. 
E)  budget constraint. 
A)  production possibilities. 
B)  marginal propensity to consume. 
C)  maximum total utility curve. 
D)  indifference curve. 
E)  budget constraint.

Question 16

Suppose Monica has $20 to spend on pizza and soda. The price of a slice of pizza is $1.00 and the price of a can of soda is $.75. Which of the following is the most affordable bundle for maximizing her utility?

Accepted Answer

A)  20 slices of pizza and 10 cans of soda 
B)  10 slices of pizza and 20 cans of soda 
C)  4 slices of pizza and 17 cans of soda 
D)  7 slices of pizza and 17 cans of soda 
E)  20 slices of pizza and 25 cans of soda 
A)  20 slices of pizza and 10 cans of soda 
B)  10 slices of pizza and 20 cans of soda 
C)  4 slices of pizza and 17 cans of soda 
D)  7 slices of pizza and 17 cans of soda 
E)  20 slices of pizza and 25 cans of soda

Question 17

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

Accepted Answer

A) True 
 B)False

Question 18

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Accepted Answer

A) True 
 B)False

Question 19

Generally speaking, when the utility from good A is greater than the utility from good B,

Accepted Answer

A)  good B is preferred compared to good A. 
B)  good B will be consumed. 
C)  good A is preferred compared to good B. 
D)  good B is more useful than good A. 
E)  good A is more useful than good B. 
A)  good B is preferred compared to good A. 
B)  good B will be consumed. 
C)  good A is preferred compared to good B. 
D)  good B is more useful than good A. 
E)  good A is more useful than good B.

Question 20

For most goods, the marginal utility of additional units consumed of almost any good

Accepted Answer

A)  is always positive. 
B)  is always negative. 
C)  decreases. 
D)  increases. 
E)  remains the same. 
A)  is always positive. 
B)  is always negative. 
C)  decreases. 
D)  increases. 
E)  remains the same.

The budget constraint is the set of all prices of the goods an individual regularly consumes.

Why is an individual willing to buy more of a good when its price falls?

Economists generally assume that a consumer

Marginal utility is

A market demand curve

Why does water, which is essential to our health, cost so much less than diamonds, which are far less useful?

If an individual's preferences can be illustrated using the concept of utility, why can't individuals' utilities be compared?

A consumer will consume such that price equals marginal benefit for every good consumed because

When utility derived from many goods is multiplied or divided by any number, the new utility measure indicates

Exhibit 5-2 -Refer to Exhibit 5-2. Which of the following statements is true?

On a supply and demand diagram, consumer surplus is the area

The following table shows David's willingness to pay for ice cream.

The height of the demand curve is the amount of marginal benefit.

An increase in income causes a consumer's budget constraint to shift outward.

The maximum combinations of goods and services a consumer can buy because he or she has a limited amount of money to spend is called the

Suppose Monica has $20 to spend on pizza and soda. The price of a slice of pizza is $1.00 and the price of a can of soda is $.75. Which of the following is the most affordable bundle for maximizing her utility?

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Generally speaking, when the utility from good A is greater than the utility from good B,

For most goods, the marginal utility of additional units consumed of almost any good

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 budget constraint is the set of all prices of the goods an individual regularly consumes.

Why is an individual willing to buy more of a good when its price falls?

Economists generally assume that a consumer

Marginal utility is

A market demand curve

Why does water, which is essential to our health, cost so much less than diamonds, which are far less useful?

If an individual's preferences can be illustrated using the concept of utility, why can't individuals' utilities be compared?

A consumer will consume such that price equals marginal benefit for every good consumed because

When utility derived from many goods is multiplied or divided by any number, the new utility measure indicates

Exhibit 5-2 -Refer to Exhibit 5-2. Which of the following statements is true?

On a supply and demand diagram, consumer surplus is the area

The following table shows David's willingness to pay for ice cream.

The height of the demand curve is the amount of marginal benefit.

An increase in income causes a consumer's budget constraint to shift outward.

The maximum combinations of goods and services a consumer can buy because he or she has a limited amount of money to spend is called the

Suppose Monica has $20 to spend on pizza and soda. The price of a slice of pizza is $1.00 and the price of a can of soda is $.75. Which of the following is the most affordable bundle for maximizing her utility?

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Generally speaking, when the utility from good A is greater than the utility from good B,

For most goods, the marginal utility of additional units consumed of almost any good

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