Question 1

-Refer to the table above.At a price of $2.50,total expenditure on hamburgers will be

Accepted Answer

A)  $47.50. 
B)  $40. 
C)  $25. 
D)  $15. 
E)  $7.50. 
A)  $47.50. 
B)  $40. 
C)  $25. 
D)  $15. 
E)  $7.50.

Question 2

-Refer to the table above.When the price of Good A increases from $5 to $6,the extra utility from spending an extra dollar on Good A associated with 2 units of consumption

Accepted Answer

A)  falls from 27 to 15. 
B)  rises from 5.4 to 6.8. 
C)  rises from 6.8 to 9. 
D)  falls from 5.4 to 4.5. 
E)  remains constant. 
A)  falls from 27 to 15. 
B)  rises from 5.4 to 6.8. 
C)  rises from 6.8 to 9. 
D)  falls from 5.4 to 4.5. 
E)  remains constant.

Question 3

Summing the quantities of butter all consumers are willing and able to purchase at different prices results in

Accepted Answer

A)  total expenditure for butter. 
B)  total revenue. 
C)  the market demand curve for butter. 
D)  the market supply curve for butter. 
E)  an upward-sloping relationship. 
A)  total expenditure for butter. 
B)  total revenue. 
C)  the market demand curve for butter. 
D)  the market supply curve for butter. 
E)  an upward-sloping relationship.

Question 4

-Refer to the graph above.Demand is unit-elastic at a quantity of

Accepted Answer

A)  4. 
B)  12. 
C)  16. 
D)  28. 
E)  30. 
A)  4. 
B)  12. 
C)  16. 
D)  28. 
E)  30.

Question 5

Assume that the income elasticity of a basic microwave oven is 4.8 and the price elasticity of the same product is 1.2.In a small town,where a recession hit hard and the average income fell by about 5%,would a 5% price cut in microwave ovens help producers get rid of a new shipment of inventories?

Accepted Answer

A)  Yes,microwave ovens are price elastic. 
B)  No,microwave ovens are price inelastic. 
C)  Yes,microwave ovens are income elastic. 
D)  No,microwave ovens are income inelastic. 
E)  Probably not,since the effect of the decrease in income is more significant than the price decrease. 
A)  Yes,microwave ovens are price elastic. 
B)  No,microwave ovens are price inelastic. 
C)  Yes,microwave ovens are income elastic. 
D)  No,microwave ovens are income inelastic. 
E)  Probably not,since the effect of the decrease in income is more significant than the price decrease.

Question 6

Marginal utility is defined as the

Accepted Answer

A)  extra utility gained by consuming an extra unit of a good. 
B)  total utility from all units consumed of a good. 
C)  average utility gained by consuming an average amount of the good. 
D)  total utility gained by consuming an extra unit of a good. 
E)  change in quantity divided by the change in utility. 
A)  extra utility gained by consuming an extra unit of a good. 
B)  total utility from all units consumed of a good. 
C)  average utility gained by consuming an average amount of the good. 
D)  total utility gained by consuming an extra unit of a good. 
E)  change in quantity divided by the change in utility.

Question 7

-Refer to the table above.If the price of Good A is $1 and the price of Good B is $3,then the rational spending rule predicts that _____ units of Good A and ______ units of Good B will be purchased.

Accepted Answer

A)  4;3 
B)  3;4 
C)  4;4 
D)  3;3 
E)  1;2 
A)  4;3 
B)  3;4 
C)  4;4 
D)  3;3 
E)  1;2

Question 8

If the ratios of prices and the ratios of marginal utilities are not equal,then Mary,with a tight and limited budget for food,can increase her welfare by

Accepted Answer

A)  not spending on food at all. 
B)  changing the price of food. 
C)  waiting for the prices to fall before spending on any food. 
D)  reducing the consumption of foods that yield relatively low amounts of marginal utility per dollar. 
E)  increasing consumption of all food. 
A)  not spending on food at all. 
B)  changing the price of food. 
C)  waiting for the prices to fall before spending on any food. 
D)  reducing the consumption of foods that yield relatively low amounts of marginal utility per dollar. 
E)  increasing consumption of all food.

Question 9

A single producer,whose objective is to raise total revenue,would reduce the price of its product if it is operating in the portion of the demand curve with price elasticity of demand equal to

Accepted Answer

A)  0. 
B)  0.33 
C)  0.033 
D)  1. 
E)  3. 
A)  0. 
B)  0.33 
C)  0.033 
D)  1. 
E)  3.

Question 10

Moe is a rational consumer with a limited budget.He has rented the DVD Crouching Tiger,Hidden Dragon seventeen times.We can conclude that

Accepted Answer

A)  Moe has little money but has too much time. 
B)  Moe has a high income. 
C)  the movie Crouching Tiger,Hidden Dragon must be free. 
D)  the movie Crouching Tiger,Hidden Dragon yields a relatively higher amount of marginal utility per dollar to Moe than other goods. 
E)  Moe is insane. 
A)  Moe has little money but has too much time. 
B)  Moe has a high income. 
C)  the movie Crouching Tiger,Hidden Dragon must be free. 
D)  the movie Crouching Tiger,Hidden Dragon yields a relatively higher amount of marginal utility per dollar to Moe than other goods. 
E)  Moe is insane.

Question 11

If the producers of a particular brand of beer want to raise revenue,they should _______ their price because demand for their brand of beer is likely to be ________.

Accepted Answer

A)  lower;inelastic 
B)  raise;elastic 
C)  lower;elastic 
D)  raise;inelastic 
E)  lower;perfectly inelastic 
A)  lower;inelastic 
B)  raise;elastic 
C)  lower;elastic 
D)  raise;inelastic 
E)  lower;perfectly inelastic

Question 12

-Refer to the table above.If the price of one frozen dinner is $2 and the price of one dozen jelly donuts is $1,which of the following would Kathy,a utility-maximizing consumer,buy if she has $6 to spend?

Accepted Answer

A)  Three frozen dinners. 
B)  Two frozen dinners and two dozen jelly donuts. 
C)  One frozen dinner and four dozen jelly donuts. 
D)  Six dozen jelly donuts. 
E)  Four frozen dinners. 
A)  Three frozen dinners. 
B)  Two frozen dinners and two dozen jelly donuts. 
C)  One frozen dinner and four dozen jelly donuts. 
D)  Six dozen jelly donuts. 
E)  Four frozen dinners.

Question 13

Suppose that,as price falls from $10 to $9,quantity demanded rises from 1 to 2 units and,as price falls from $2 to $1,quantity demanded increases from 9 to 10 units.The price elasticity of demand measured between the $10 and $9 points compared to that between the $2 and $1 points will show the

Accepted Answer

A)  two elasticities are the same. 
B)  elasticity between $10 and $9 to be smaller. 
C)  elasticity between $2 and $1 to be more elastic. 
D)  elasticity between $10 and $9 to be more elastic. 
E)  elasticity between $2 and $1 to be larger. 
A)  two elasticities are the same. 
B)  elasticity between $10 and $9 to be smaller. 
C)  elasticity between $2 and $1 to be more elastic. 
D)  elasticity between $10 and $9 to be more elastic. 
E)  elasticity between $2 and $1 to be larger.

Question 14

The price elasticity of demand for a good is 5.Which of the following would be an explanation for this?

Accepted Answer

A)  The good is a necessity. 
B)  The good is broadly defined. 
C)  Expenditure on the good is a large portion of one's total income. 
D)  The time interval considered is short. 
E)  Expenditure on the good is a small portion of one's total income 
A)  The good is a necessity. 
B)  The good is broadly defined. 
C)  Expenditure on the good is a large portion of one's total income. 
D)  The time interval considered is short. 
E)  Expenditure on the good is a small portion of one's total income

Question 15

-Refer to the above diagram.Between points C and D,marginal utility is __________,so total utility is __________.

Accepted Answer

A)  decreasing;falling 
B)  positive;increasing 
C)  positive;falling 
D)  decreasing;at its maximum 
E)  indeterminate;indeterminate 
A)  decreasing;falling 
B)  positive;increasing 
C)  positive;falling 
D)  decreasing;at its maximum 
E)  indeterminate;indeterminate

Question 16

Consumers who buy luxury cars seldom pay much attention to the prices of economy cars.Which of the following is the most likely cross-price elasticity of demand for a low-price Ford Focus with respect to a relatively more expensive BMW?

Accepted Answer

A)  0.001. 
B)  3.001. 
C)  -0.001. 
D)  -3.001. 
E)  -6.001. 
A)  0.001. 
B)  3.001. 
C)  -0.001. 
D)  -3.001. 
E)  -6.001.

Question 17

If the demand curve for beets is P = 5,the price elasticity of demand is

Accepted Answer

A)  5. 
B)  0.2. 
C)  0. 
D)  infinity. 
E)  unable to be calculated with the information available. 
A)  5. 
B)  0.2. 
C)  0. 
D)  infinity. 
E)  unable to be calculated with the information available.

Question 18

The local electricity utility wants to increase total revenue.Their economist suggests that they

Accepted Answer

A)  advertise the usefulness of electricity. 
B)  lower the price of electricity. 
C)  give away attractive coffee mugs to new customers. 
D)  raise the price of electricity. 
E)  encourage the adoption of solar heating. 
A)  advertise the usefulness of electricity. 
B)  lower the price of electricity. 
C)  give away attractive coffee mugs to new customers. 
D)  raise the price of electricity. 
E)  encourage the adoption of solar heating.

Question 19

The rational spending rule is derived from the consumer's efforts to

Accepted Answer

A)  maximize expenditure. 
B)  maximize utility. 
C)  minimize expenditure. 
D)  obtain the lowest possible price. 
E)  maximize the number of units purchased. 
A)  maximize expenditure. 
B)  maximize utility. 
C)  minimize expenditure. 
D)  obtain the lowest possible price. 
E)  maximize the number of units purchased.

Question 20

-The demand curve shown in the diagram above can be expressed as

Accepted Answer

A)  P = 50 - 50Q. 
B)  P = 100 - Q. 
C)  P = 100 - 100Q. 
D)  Q = 100 - 100P. 
E)  Q = 100 - K. 
A)  P = 50 - 50Q. 
B)  P = 100 - Q. 
C)  P = 100 - 100Q. 
D)  Q = 100 - 100P. 
E)  Q = 100 - K.

-Refer to the table above.At a price of $2.50,total expenditure on hamburgers will be

-Refer to the table above.When the price of Good A increases from $5 to $6,the extra utility from spending an extra dollar on Good A associated with 2 units of consumption

Summing the quantities of butter all consumers are willing and able to purchase at different prices results in

-Refer to the graph above.Demand is unit-elastic at a quantity of

Assume that the income elasticity of a basic microwave oven is 4.8 and the price elasticity of the same product is 1.2.In a small town,where a recession hit hard and the average income fell by about 5%,would a 5% price cut in microwave ovens help producers get rid of a new shipment of inventories?

Marginal utility is defined as the

-Refer to the table above.If the price of Good A is $1 and the price of Good B is $3,then the rational spending rule predicts that _ units of Good A and __ units of Good B will be purchased.

If the ratios of prices and the ratios of marginal utilities are not equal,then Mary,with a tight and limited budget for food,can increase her welfare by

A single producer,whose objective is to raise total revenue,would reduce the price of its product if it is operating in the portion of the demand curve with price elasticity of demand equal to

Moe is a rational consumer with a limited budget.He has rented the DVD Crouching Tiger,Hidden Dragon seventeen times.We can conclude that

If the producers of a particular brand of beer want to raise revenue,they should _ their price because demand for their brand of beer is likely to be __.

-Refer to the table above.If the price of one frozen dinner is $2 and the price of one dozen jelly donuts is $1,which of the following would Kathy,a utility-maximizing consumer,buy if she has $6 to spend?

Suppose that,as price falls from $10 to $9,quantity demanded rises from 1 to 2 units and,as price falls from $2 to $1,quantity demanded increases from 9 to 10 units.The price elasticity of demand measured between the $10 and $9 points compared to that between the $2 and $1 points will show the

The price elasticity of demand for a good is 5.Which of the following would be an explanation for this?

-Refer to the above diagram.Between points C and D,marginal utility is ,so total utility is .

Consumers who buy luxury cars seldom pay much attention to the prices of economy cars.Which of the following is the most likely cross-price elasticity of demand for a low-price Ford Focus with respect to a relatively more expensive BMW?

If the demand curve for beets is P = 5,the price elasticity of demand is

The local electricity utility wants to increase total revenue.Their economist suggests that they

The rational spending rule is derived from the consumer's efforts to

-The demand curve shown in the diagram above can be expressed as

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 4: Demand: the Benefit Side of the Market

-Refer to the table above.At a price of $2.50,total expenditure on hamburgers will be

-Refer to the table above.When the price of Good A increases from $5 to $6,the extra utility from spending an extra dollar on Good A associated with 2 units of consumption

Summing the quantities of butter all consumers are willing and able to purchase at different prices results in

-Refer to the graph above.Demand is unit-elastic at a quantity of

Assume that the income elasticity of a basic microwave oven is 4.8 and the price elasticity of the same product is 1.2.In a small town,where a recession hit hard and the average income fell by about 5%,would a 5% price cut in microwave ovens help producers get rid of a new shipment of inventories?

Marginal utility is defined as the

-Refer to the table above.If the price of Good A is $1 and the price of Good B is $3,then the rational spending rule predicts that _____ units of Good A and ______ units of Good B will be purchased.

If the ratios of prices and the ratios of marginal utilities are not equal,then Mary,with a tight and limited budget for food,can increase her welfare by

A single producer,whose objective is to raise total revenue,would reduce the price of its product if it is operating in the portion of the demand curve with price elasticity of demand equal to

Moe is a rational consumer with a limited budget.He has rented the DVD Crouching Tiger,Hidden Dragon seventeen times.We can conclude that

If the producers of a particular brand of beer want to raise revenue,they should _______ their price because demand for their brand of beer is likely to be ________.

-Refer to the table above.If the price of one frozen dinner is $2 and the price of one dozen jelly donuts is $1,which of the following would Kathy,a utility-maximizing consumer,buy if she has $6 to spend?

Suppose that,as price falls from $10 to $9,quantity demanded rises from 1 to 2 units and,as price falls from $2 to $1,quantity demanded increases from 9 to 10 units.The price elasticity of demand measured between the $10 and $9 points compared to that between the $2 and $1 points will show the

The price elasticity of demand for a good is 5.Which of the following would be an explanation for this?

-Refer to the above diagram.Between points C and D,marginal utility is __________,so total utility is __________.

Consumers who buy luxury cars seldom pay much attention to the prices of economy cars.Which of the following is the most likely cross-price elasticity of demand for a low-price Ford Focus with respect to a relatively more expensive BMW?

If the demand curve for beets is P = 5,the price elasticity of demand is

The local electricity utility wants to increase total revenue.Their economist suggests that they

The rational spending rule is derived from the consumer's efforts to

-The demand curve shown in the diagram above can be expressed as

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

-Refer to the table above.If the price of Good A is $1 and the price of Good B is $3,then the rational spending rule predicts that _ units of Good A and __ units of Good B will be purchased.

If the producers of a particular brand of beer want to raise revenue,they should _ their price because demand for their brand of beer is likely to be __.

-Refer to the above diagram.Between points C and D,marginal utility is ,so total utility is .