Question 1

Laura's total utility from consuming eight,nine,and ten candies is 35,42,and 45,respectively.Her marginal utility from the ninth candy is

Accepted Answer

A)  42. 
B)  9. 
C)  7. 
D)  4.67. 
E)  77. 
A)  42. 
B)  9. 
C)  7. 
D)  4.67. 
E)  77.

Question 2

If the marginal utility of the third cup of coffee is 23 and the marginal utility of the fourth cup is 15,then

Accepted Answer

A)  it is optimal for the consumer to have three cups of coffee. 
B)  the price of a cup of coffee must be relatively low. 
C)  it is optimal for the consumer to have four cups of coffee. 
D)  the law of diminishing marginal utility is evident. 
E)  the price of a cup of coffee must be relatively high. 
A)  it is optimal for the consumer to have three cups of coffee. 
B)  the price of a cup of coffee must be relatively low. 
C)  it is optimal for the consumer to have four cups of coffee. 
D)  the law of diminishing marginal utility is evident. 
E)  the price of a cup of coffee must be relatively high.

Question 3

Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the

Accepted Answer

A)  greatest total utility. 
B)  lowest expenditure on goods. 
C)  greatest average utility. 
D)  greatest expenditure on goods. 
E)  expenditure for all goods being the same. 
A)  greatest total utility. 
B)  lowest expenditure on goods. 
C)  greatest average utility. 
D)  greatest expenditure on goods. 
E)  expenditure for all goods being the same.

Question 4

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _______ and,as a result,consumers purchase _______of that good.

Accepted Answer

A)  rises;more 
B)  falls;more 
C)  rises;less 
D)  falls;less 
E)  does not change;the same quantity 
A)  rises;more 
B)  falls;more 
C)  rises;less 
D)  falls;less 
E)  does not change;the same quantity

Question 5

A normal good will have an income elasticity that is

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  less than 1. 
E)  greater than 1. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  less than 1. 
E)  greater than 1.

Question 6

Assume that the price of gasoline doubles tonight and remains there for the next two years.The price elasticity of demand for gasoline measured tomorrow,when compared with the price elasticity of demand for gasoline measured two years from now,will be

Accepted Answer

A)  more elastic. 
B)  larger in absolute value. 
C)  the same. 
D)  more inelastic. 
E)  less inelastic. 
A)  more elastic. 
B)  larger in absolute value. 
C)  the same. 
D)  more inelastic. 
E)  less inelastic.

Question 7

Goods with few substitutes

Accepted Answer

A)  are classified as necessities. 
B)  have,in absolute value,large price elasticities. 
C)  have relatively inelastic demand. 
D)  have relatively elastic demand. 
E)  are usually expensive. 
A)  are classified as necessities. 
B)  have,in absolute value,large price elasticities. 
C)  have relatively inelastic demand. 
D)  have relatively elastic demand. 
E)  are usually expensive.

Question 8

Jake applies the rational spending rule and purchases five units of good M and three units of good N.Suppose that the price of N increases.One can predict that Jake will

Accepted Answer

A)  cease purchasing N. 
B)  reduce purchases of N and increase purchases of M. 
C)  continue to make the same purchases. 
D)  reduce purchases of M. 
E)  increase purchases of N. 
A)  cease purchasing N. 
B)  reduce purchases of N and increase purchases of M. 
C)  continue to make the same purchases. 
D)  reduce purchases of M. 
E)  increase purchases of N.

Question 9

Firms that produce goods with many substitutes will find that

Accepted Answer

A)  lowering price increases total revenue. 
B)  lowering price decreases total revenue. 
C)  raising price increases total revenue. 
D)  lowering price leaves total revenue unchanged. 
E)  raising price leaves total revenue unchanged. 
A)  lowering price increases total revenue. 
B)  lowering price decreases total revenue. 
C)  raising price increases total revenue. 
D)  lowering price leaves total revenue unchanged. 
E)  raising price leaves total revenue unchanged.

Question 10

A firm wishes to increase its total revenue by changing the price it charges.To be successful,the firm must ____________ price if demand for its product is _________.

Accepted Answer

A)  decrease;inelastic 
B)  increase;elastic 
C)  decrease;elastic 
D)  increase;unit-elastic 
E)  decrease;unit-elastic 
A)  decrease;inelastic 
B)  increase;elastic 
C)  decrease;elastic 
D)  increase;unit-elastic 
E)  decrease;unit-elastic

Question 11

A cross-price elasticity of -1.2 indicates the two goods are

Accepted Answer

A)  inferior. 
B)  elastic. 
C)  complements. 
D)  substitutes. 
E)  normal. 
A)  inferior. 
B)  elastic. 
C)  complements. 
D)  substitutes. 
E)  normal.

Question 12

The reason firms that face elastic demand should lower price to increase total revenue is that

Accepted Answer

A)  demand curves are downward-sloping. 
B)  consumers prefer lower prices. 
C)  the percentage increase in sales will be larger than the percentage decrease in price. 
D)  more consumers will try their products. 
E)  the percentage increase in sales will be smaller than the percentage decrease in price. 
A)  demand curves are downward-sloping. 
B)  consumers prefer lower prices. 
C)  the percentage increase in sales will be larger than the percentage decrease in price. 
D)  more consumers will try their products. 
E)  the percentage increase in sales will be smaller than the percentage decrease in price.

Question 13

The time spent researching the quality and reliability of DVD players

Accepted Answer

A)  is not part of the total cost of a DVD player. 
B)  has risen due to the Internet,and hence the total cost of purchasing a DVD player has also risen. 
C)  has not been affected by the Internet. 
D)  has fallen due to the Internet,and hence the total cost of purchasing a DVD player has also fallen. 
E)  is only a cost if you do not purchase a DVD player. 
A)  is not part of the total cost of a DVD player. 
B)  has risen due to the Internet,and hence the total cost of purchasing a DVD player has also risen. 
C)  has not been affected by the Internet. 
D)  has fallen due to the Internet,and hence the total cost of purchasing a DVD player has also fallen. 
E)  is only a cost if you do not purchase a DVD player.

Question 14

-Generally,the lower the marginal utility,the

Accepted Answer

A)  greater the extra satisfaction of an additional unit. 
B)  lower the total utility. 
C)  more of the item has been consumed. 
D)  less of the item has been consumed. 
E)  more likely that total utility is constant. 
A)  greater the extra satisfaction of an additional unit. 
B)  lower the total utility. 
C)  more of the item has been consumed. 
D)  less of the item has been consumed. 
E)  more likely that total utility is constant.

Question 15

Kuo S.Huang estimated the elasticity of demand for beef to be 0.62 and the elasticity of demand for milk to be 0.04.Which of the following would be an explanation of the difference in elasticities?

Accepted Answer

A)  Milk comprises a greater portion of one's expenditure than does beef. 
B)  Milk has fewer substitutes than does beef. 
C)  Milk is less of a necessity than beef. 
D)  Milk is more specifically defined than beef. 
E)  Milk has more substitutes than does beef. 
A)  Milk comprises a greater portion of one's expenditure than does beef. 
B)  Milk has fewer substitutes than does beef. 
C)  Milk is less of a necessity than beef. 
D)  Milk is more specifically defined than beef. 
E)  Milk has more substitutes than does beef.

Question 16

Refer to the indifference curve in the diagram above.The marginal rate of substitution is equal to

Accepted Answer

A)  the rate at which apples can be substituted for bananas without changing total satisfaction. 
B)  the rate at which bananas can be substituted for apples without changing total satisfaction. 
C)  the rate at which apples can be substituted for bananas such that total satisfaction will be increased. 
D)  the rate at which apples can be substituted for bananas such that total satisfaction will be decreased. 
E)  the rate at which bananas can be substituted for apples such that total satisfaction will be increased. 
A)  the rate at which apples can be substituted for bananas without changing total satisfaction. 
B)  the rate at which bananas can be substituted for apples without changing total satisfaction. 
C)  the rate at which apples can be substituted for bananas such that total satisfaction will be increased. 
D)  the rate at which apples can be substituted for bananas such that total satisfaction will be decreased. 
E)  the rate at which bananas can be substituted for apples such that total satisfaction will be increased.

Question 17

-Refer to the table above.If the price of coffee increases from $5 per kilogram to $6 per kilogram,

Accepted Answer

A)  producers will sell more. 
B)  total expenditure on coffee rises. 
C)  total revenue of coffee producers falls. 
D)  consumers purchase more coffee. 
E)  total expenditure on coffee does not change. 
A)  producers will sell more. 
B)  total expenditure on coffee rises. 
C)  total revenue of coffee producers falls. 
D)  consumers purchase more coffee. 
E)  total expenditure on coffee does not change.

Question 18

The income elasticity of demand for the BMW Z3 sportscar is found to be 0.9.This means the BMW Z3

Accepted Answer

A)  is a normal good. 
B)  has inelastic demand. 
C)  is a superior good. 
D)  has elastic demand. 
E)  is an inferior good. 
A)  is a normal good. 
B)  has inelastic demand. 
C)  is a superior good. 
D)  has elastic demand. 
E)  is an inferior good.

Question 19

-Refer to the table above.Which of the following statements is NOT consistent with the data for music CDs?

Accepted Answer

A)  Total utility increases with each additional CD. 
B)  Marginal utility decreases with each additional CD. 
C)  The first CD provides the largest increase in utility. 
D)  The law of diminishing marginal utility is evident for CDs. 
E)  The marginal utility of the fifth CD is greater than 15. 
A)  Total utility increases with each additional CD. 
B)  Marginal utility decreases with each additional CD. 
C)  The first CD provides the largest increase in utility. 
D)  The law of diminishing marginal utility is evident for CDs. 
E)  The marginal utility of the fifth CD is greater than 15.

Question 20

Given the following demand curve,P = 55 - 0.048Q,price elasticity of demand when P = $20 is

Accepted Answer

A)  1.22. 
B)  1.01. 
C)  0.97. 
D)  0.57. 
E)  0.33. 
A)  1.22. 
B)  1.01. 
C)  0.97. 
D)  0.57. 
E)  0.33.

Laura's total utility from consuming eight,nine,and ten candies is 35,42,and 45,respectively.Her marginal utility from the ninth candy is

If the marginal utility of the third cup of coffee is 23 and the marginal utility of the fourth cup is 15,then

Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _ and,as a result,consumers purchase _of that good.

A normal good will have an income elasticity that is

Assume that the price of gasoline doubles tonight and remains there for the next two years.The price elasticity of demand for gasoline measured tomorrow,when compared with the price elasticity of demand for gasoline measured two years from now,will be

Goods with few substitutes

Jake applies the rational spending rule and purchases five units of good M and three units of good N.Suppose that the price of N increases.One can predict that Jake will

Firms that produce goods with many substitutes will find that

A firm wishes to increase its total revenue by changing the price it charges.To be successful,the firm must ____ price if demand for its product is _.

A cross-price elasticity of -1.2 indicates the two goods are

The reason firms that face elastic demand should lower price to increase total revenue is that

The time spent researching the quality and reliability of DVD players

-Generally,the lower the marginal utility,the

Kuo S.Huang estimated the elasticity of demand for beef to be 0.62 and the elasticity of demand for milk to be 0.04.Which of the following would be an explanation of the difference in elasticities?

Refer to the indifference curve in the diagram above.The marginal rate of substitution is equal to

-Refer to the table above.If the price of coffee increases from $5 per kilogram to $6 per kilogram,

The income elasticity of demand for the BMW Z3 sportscar is found to be 0.9.This means the BMW Z3

-Refer to the table above.Which of the following statements is NOT consistent with the data for music CDs?

Given the following demand curve,P = 55 - 0.048Q,price elasticity of demand when P = $20 is

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

Laura's total utility from consuming eight,nine,and ten candies is 35,42,and 45,respectively.Her marginal utility from the ninth candy is

If the marginal utility of the third cup of coffee is 23 and the marginal utility of the fourth cup is 15,then

Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _______ and,as a result,consumers purchase _______of that good.

A normal good will have an income elasticity that is

Assume that the price of gasoline doubles tonight and remains there for the next two years.The price elasticity of demand for gasoline measured tomorrow,when compared with the price elasticity of demand for gasoline measured two years from now,will be

Goods with few substitutes

Jake applies the rational spending rule and purchases five units of good M and three units of good N.Suppose that the price of N increases.One can predict that Jake will

Firms that produce goods with many substitutes will find that

A firm wishes to increase its total revenue by changing the price it charges.To be successful,the firm must ____________ price if demand for its product is _________.

A cross-price elasticity of -1.2 indicates the two goods are

The reason firms that face elastic demand should lower price to increase total revenue is that

The time spent researching the quality and reliability of DVD players

-Generally,the lower the marginal utility,the

Kuo S.Huang estimated the elasticity of demand for beef to be 0.62 and the elasticity of demand for milk to be 0.04.Which of the following would be an explanation of the difference in elasticities?

Refer to the indifference curve in the diagram above.The marginal rate of substitution is equal to

-Refer to the table above.If the price of coffee increases from $5 per kilogram to $6 per kilogram,

The income elasticity of demand for the BMW Z3 sportscar is found to be 0.9.This means the BMW Z3

-Refer to the table above.Which of the following statements is NOT consistent with the data for music CDs?

Given the following demand curve,P = 55 - 0.048Q,price elasticity of demand when P = $20 is

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

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _ and,as a result,consumers purchase _of that good.

A firm wishes to increase its total revenue by changing the price it charges.To be successful,the firm must ____ price if demand for its product is _.