Question 1

An individual buys more of a good at lower prices than at higher prices because

Accepted Answer

A)  at lower prices, total utility is greater than price. 
B)  at lower prices, marginal benefit is greater than price over a greater quantity of the good than at higher prices. 
C)  at lower prices, marginal utility is greater than price over a greater quantity of the good than at higher prices. 
D)  marginal benefit increases. 
E)  marginal benefit falls more slowly than price. 
A)  at lower prices, total utility is greater than price. 
B)  at lower prices, marginal benefit is greater than price over a greater quantity of the good than at higher prices. 
C)  at lower prices, marginal utility is greater than price over a greater quantity of the good than at higher prices. 
D)  marginal benefit increases. 
E)  marginal benefit falls more slowly than price.

Question 2

Marginal utility is used to compare behavior among different consumers.

Accepted Answer

A) True 
 B)False

Question 3

In utility analysis, it is assumed that marginal utility decreases as consumption of a product decreases.

Accepted Answer

A) True 
 B)False

Question 4

What is the difference between the income effect and substitution effect of a change in the price of a good?

Accepted Answer

The income effect is the amount by which

Question 5

To obtain utility, a consumer must

Accepted Answer

A)  do unto others as he or she would have them do unto him or her. 
B)  save. 
C)  consume. 
D)  work. 
E)  be happy. 
A)  do unto others as he or she would have them do unto him or her. 
B)  save. 
C)  consume. 
D)  work. 
E)  be happy.

Question 6

Utility maximization implies that the total utility of the consumer can be maximized only when the price of a good increases.

Accepted Answer

A) True 
 B)False

Question 7

A change in the price of a good causes a change in the combination of goods consumed within the budget constraint.

Accepted Answer

A) True 
 B)False

Question 8

Use the information of utility in the box below to find the quantity of each good the consumer will purchase in each of the three cases to maximize utility.

Accepted Answer

Case A: 3 pounds of apples and

Question 9

The market demand curve is derived by adding the different prices that consumers pay at a given quantity demanded.

Accepted Answer

A) True 
 B)False

Question 10

Analyze the following data for Julie's utility from consumption of CDs and magazines.

Accepted Answer

The answer of Analyze the following data for Julie's utility...

Question 11

An increase in income

Accepted Answer

A)  causes a change in consumer preferences. 
B)  causes total utility to increase. 
C)  does not shift a consumer's demand. 
D)  is assumed to have no effect on consumer expenditures. 
E)  has no effect on a consumer's budget constraint. 
A)  causes a change in consumer preferences. 
B)  causes total utility to increase. 
C)  does not shift a consumer's demand. 
D)  is assumed to have no effect on consumer expenditures. 
E)  has no effect on a consumer's budget constraint.

Question 12

Exhibit 5-4
The numbers inside the box below give the utility from consuming the amount of apples and the number of cans of cola shown outside the box.  
-Refer to Exhibit 5-4. Which of the following is the combination that gives the first preference?

Accepted Answer

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

Question 13

The market demand curve is the sum of all the individual demand curves.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 5-10  
-What happens to consumer surplus if the price of a good falls? Why?

Accepted Answer

When the price of a good falls, consumer

Question 15

Which of the following statements is true about the substitution and income effects of an increase in the price of a good?

Accepted Answer

A)  The net effect of the substitution and income effects results in a decrease in the quantity demanded of the good. 
B)  Both the substitution and income effects predict that the quantity demanded of the good increases. 
C)  The substitution effect predicts that the quantity demanded of the good increases, but the income effect predicts that the quantity demanded of the good decreases. 
D)  The substitution effect predicts that the quantity demanded of the good decreases, but the income effect predicts that the quantity demanded of the good increases. 
E)  Neither the substitution effect nor the income effect provides any prediction about changes in the quantity demanded of the good. 
A)  The net effect of the substitution and income effects results in a decrease in the quantity demanded of the good. 
B)  Both the substitution and income effects predict that the quantity demanded of the good increases. 
C)  The substitution effect predicts that the quantity demanded of the good increases, but the income effect predicts that the quantity demanded of the good decreases. 
D)  The substitution effect predicts that the quantity demanded of the good decreases, but the income effect predicts that the quantity demanded of the good increases. 
E)  Neither the substitution effect nor the income effect provides any prediction about changes in the quantity demanded of the good.

Question 16

The diamond-water paradox

Accepted Answer

A)  is the fact that people get more utility from water than diamonds, but the price of diamonds is much higher than that of water. 
B)  occurs whenever someone is willing to pay more for something that is a necessity compared to what he or she is willing to pay for a luxury. 
C)  illustrates the ability economists have to measure utility. 
D)  occurs when an individual prefers water to diamonds. 
E)  occurs when an individual prefers diamonds to water. 
A)  is the fact that people get more utility from water than diamonds, but the price of diamonds is much higher than that of water. 
B)  occurs whenever someone is willing to pay more for something that is a necessity compared to what he or she is willing to pay for a luxury. 
C)  illustrates the ability economists have to measure utility. 
D)  occurs when an individual prefers water to diamonds. 
E)  occurs when an individual prefers diamonds to water.

An individual buys more of a good at lower prices than at higher prices because

Marginal utility is used to compare behavior among different consumers.

In utility analysis, it is assumed that marginal utility decreases as consumption of a product decreases.

What is the difference between the income effect and substitution effect of a change in the price of a good?

To obtain utility, a consumer must

Utility maximization implies that the total utility of the consumer can be maximized only when the price of a good increases.

A change in the price of a good causes a change in the combination of goods consumed within the budget constraint.

Use the information of utility in the box below to find the quantity of each good the consumer will purchase in each of the three cases to maximize utility.

The market demand curve is derived by adding the different prices that consumers pay at a given quantity demanded.

Analyze the following data for Julie's utility from consumption of CDs and magazines.

An increase in income

Exhibit 5-4 The numbers inside the box below give the utility from consuming the amount of apples and the number of cans of cola shown outside the box. -Refer to Exhibit 5-4. Which of the following is the combination that gives the first preference?

The market demand curve is the sum of all the individual demand curves.

Exhibit 5-10 -What happens to consumer surplus if the price of a good falls? Why?

Which of the following statements is true about the substitution and income effects of an increase in the price of a good?

The diamond-water paradox

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 individual buys more of a good at lower prices than at higher prices because

Marginal utility is used to compare behavior among different consumers.

In utility analysis, it is assumed that marginal utility decreases as consumption of a product decreases.

What is the difference between the income effect and substitution effect of a change in the price of a good?

To obtain utility, a consumer must

Utility maximization implies that the total utility of the consumer can be maximized only when the price of a good increases.

A change in the price of a good causes a change in the combination of goods consumed within the budget constraint.

Use the information of utility in the box below to find the quantity of each good the consumer will purchase in each of the three cases to maximize utility.

The market demand curve is derived by adding the different prices that consumers pay at a given quantity demanded.

Analyze the following data for Julie's utility from consumption of CDs and magazines.

An increase in income

Exhibit 5-4 The numbers inside the box below give the utility from consuming the amount of apples and the number of cans of cola shown outside the box. -Refer to Exhibit 5-4. Which of the following is the combination that gives the first preference?

The market demand curve is the sum of all the individual demand curves.

Exhibit 5-10 -What happens to consumer surplus if the price of a good falls? Why?

Which of the following statements is true about the substitution and income effects of an increase in the price of a good?

The diamond-water paradox

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