Question 1

Which of the following statements about total utility is FALSE?

Accepted Answer

A)  Total utility cannot be measured. 
B)  The increase in total utility from the first unit consumed is greater than or equal to the increase from the second unit consumed. 
C)  Total utility increases as more units of a good are consumed. 
D)  The increase in total utility from the second unit consumed exceeds the increase from the first unit consumed. 
E)  At some point,the increase in total utility from consuming an extra unit begins to get smaller. 
A)  Total utility cannot be measured. 
B)  The increase in total utility from the first unit consumed is greater than or equal to the increase from the second unit consumed. 
C)  Total utility increases as more units of a good are consumed. 
D)  The increase in total utility from the second unit consumed exceeds the increase from the first unit consumed. 
E)  At some point,the increase in total utility from consuming an extra unit begins to get smaller.

Question 2

The marginal utility to a person from acquiring his tenth car is likely to be

Accepted Answer

A)  relatively large. 
B)  the same as the marginal utility of his ninth car. 
C)  less than the marginal utility of his ninth car. 
D)  greater than the marginal utility of his ninth car. 
E)  relatively small. 
A)  relatively large. 
B)  the same as the marginal utility of his ninth car. 
C)  less than the marginal utility of his ninth car. 
D)  greater than the marginal utility of his ninth car. 
E)  relatively small.

Question 3

-Refer to the table above.If the price of Good A is $3 and the consumer purchases 3 units,then the extra utility from spending an extra dollar on Good A is

Accepted Answer

A)  15. 
B)  5. 
C)  45. 
D)  3. 
E)  9. 
A)  15. 
B)  5. 
C)  45. 
D)  3. 
E)  9.

Question 4

Zero price elasticity occurs when

Accepted Answer

A)  total utility is equal to zero. 
B)  marginal utility is equal to zero. 
C)  the quantity demanded does not change as the price changes. 
D)  the quantity demanded does not change as marginal utility changes. 
E)  demand changes in the same proportion as the change in marginal utility. 
A)  total utility is equal to zero. 
B)  marginal utility is equal to zero. 
C)  the quantity demanded does not change as the price changes. 
D)  the quantity demanded does not change as marginal utility changes. 
E)  demand changes in the same proportion as the change in marginal utility.

Question 5

In general,if the marginal utility of the last unit of a good is X,then the marginal utility of the next-to-last unit is likely to be

Accepted Answer

A)  less than X. 
B)  equal to X. 
C)  equal to (X/(n-1)). 
D)  greater than X. 
E)  impossible to gauge without numbers. 
A)  less than X. 
B)  equal to X. 
C)  equal to (X/(n-1)). 
D)  greater than X. 
E)  impossible to gauge without numbers.

Question 6

If a person is consuming two goods,the rational spending rule requires that

Accepted Answer

A)  total expenditure on the two goods be equal. 
B)  total utility from the two goods be equal. 
C)  average utility from the two goods be equal. 
D)  the extra utility from the last dollar spent on one good equals the extra utility from the first dollar spent on the other good. 
E)  the ratio of marginal utility to price be equal for the two goods. 
A)  total expenditure on the two goods be equal. 
B)  total utility from the two goods be equal. 
C)  average utility from the two goods be equal. 
D)  the extra utility from the last dollar spent on one good equals the extra utility from the first dollar spent on the other good. 
E)  the ratio of marginal utility to price be equal for the two goods.

Question 7

If the absolute value of the percentage change in quantity demanded is larger than the absolute value of the percentage change in price,demand is classified as being

Accepted Answer

A)  inelastic. 
B)  perfectly inelastic. 
C)  unit-elastic. 
D)  perfectly elastic. 
E)  elastic. 
A)  inelastic. 
B)  perfectly inelastic. 
C)  unit-elastic. 
D)  perfectly elastic. 
E)  elastic.

Question 8

Which of the following is NOT true of the law of demand?

Accepted Answer

A)  It is based on the cost-benefit principle. 
B)  It predicts a negative relationship between costs and benefits. 
C)  It applies only to monetary costs. 
D)  It predicts that consumers will purchase a smaller quantity of a good as the price of that good increases. 
E)  It requires demand curves to be downward-sloping. 
A)  It is based on the cost-benefit principle. 
B)  It predicts a negative relationship between costs and benefits. 
C)  It applies only to monetary costs. 
D)  It predicts that consumers will purchase a smaller quantity of a good as the price of that good increases. 
E)  It requires demand curves to be downward-sloping.

Question 9

The percentage change in quantity demanded divided the percentage change in price is

Accepted Answer

A)  the income elasticity of demand. 
B)  always greater than 1. 
C)  the price elasticity of demand. 
D)  always less than 1. 
E)  the cross price elasticity of demand. 
A)  the income elasticity of demand. 
B)  always greater than 1. 
C)  the price elasticity of demand. 
D)  always less than 1. 
E)  the cross price elasticity of demand.

Question 10

In the late 1970s,Canadians bought smaller cars that used less gasoline.We can conclude that consumers were responding to the fact that

Accepted Answer

A)  the nominal price of gasoline had risen. 
B)  the nominal price of gasoline had fallen. 
C)  the nominal price of gasoline was unchanged. 
D)  the average price of gasoline had risen. 
E)  the nominal price of gasoline had risen much more rapidly than the average rate of increase for other nominal prices. 
A)  the nominal price of gasoline had risen. 
B)  the nominal price of gasoline had fallen. 
C)  the nominal price of gasoline was unchanged. 
D)  the average price of gasoline had risen. 
E)  the nominal price of gasoline had risen much more rapidly than the average rate of increase for other nominal prices.

Question 11

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

Accepted Answer

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

Question 12

Total revenue is

Accepted Answer

A)  what the firm seeks to maximize. 
B)  greater than total expenditure. 
C)  less than total expenditure. 
D)  calculated as sales divided by quantity. 
E)  calculated as price multiplied by quantity. 
A)  what the firm seeks to maximize. 
B)  greater than total expenditure. 
C)  less than total expenditure. 
D)  calculated as sales divided by quantity. 
E)  calculated as price multiplied by quantity.

Question 13

-Refer to the table above.The total utility of consuming two music CDs is

Accepted Answer

A)  less than 100. 
B)  more than 235. 
C)  175. 
D)  160. 
E)  75. 
A)  less than 100. 
B)  more than 235. 
C)  175. 
D)  160. 
E)  75.

Question 14

Consumers who buy luxury cars tend to compare the prices of other luxury model cars.Which of the following is the most likely cross-price elasticity of demand for a luxury model Lexus with respect to a similarly luxurious BMW?

Accepted Answer

A)  0.001. 
B)  3.001. 
C)  -0.001. 
D)  -0.100. 
E)  -3.001. 
A)  0.001. 
B)  3.001. 
C)  -0.001. 
D)  -0.100. 
E)  -3.001.

Question 15

In general,demand for a good will be less elastic if

Accepted Answer

A)  the time frame for adjustment is long. 
B)  the good is a necessity. 
C)  the fraction of income spent on the good is large. 
D)  many substitutes exist. 
E)  the time frame for adjustment is short. 
A)  the time frame for adjustment is long. 
B)  the good is a necessity. 
C)  the fraction of income spent on the good is large. 
D)  many substitutes exist. 
E)  the time frame for adjustment is short.

Question 16

If Ann has $20 to spend on pears and bananas,her budget constraint will show

Accepted Answer

A)  all the combinations of pears and bananas that can be bought for less than $20. 
B)  all the combinations of pears and bananas that can be bought. 
C)  all the combinations of pears and bananas that can be bought for exactly $20. 
D)  all the combinations of pears and bananas that can be bought for more than $20. 
E)  none of the combinations of pears and bananas that can be bought for $20. 
A)  all the combinations of pears and bananas that can be bought for less than $20. 
B)  all the combinations of pears and bananas that can be bought. 
C)  all the combinations of pears and bananas that can be bought for exactly $20. 
D)  all the combinations of pears and bananas that can be bought for more than $20. 
E)  none of the combinations of pears and bananas that can be bought for $20.

Question 17

The price elasticity of demand measures the responsiveness of quantity demanded to a(n)

Accepted Answer

A)  price change. 
B)  income change. 
C)  price change of a related good. 
D)  expectations change. 
E)  taste change. 
A)  price change. 
B)  income change. 
C)  price change of a related good. 
D)  expectations change. 
E)  taste change.

Question 18

The introduction of the AMD Athlon microprocessor caused the demand for Intel Pentium processors to become

Accepted Answer

A)  more inelastic. 
B)  a smaller number in absolute value. 
C)  less elastic. 
D)  more elastic. 
E)  steeper. 
A)  more inelastic. 
B)  a smaller number in absolute value. 
C)  less elastic. 
D)  more elastic. 
E)  steeper.

Question 19

The proper sequence of consumer responsiveness to price changes from most to least is

Accepted Answer

A)  perfectly elastic,perfectly inelastic,inelastic,elastic. 
B)  perfectly elastic,elastic,inelastic,perfectly inelastic. 
C)  elastic,perfectly elastic,perfectly inelastic,inelastic. 
D)  elastic,inelastic,perfectly elastic,perfectly inelastic. 
E)  perfectly inelastic,inelastic,elastic,perfectly elastic. 
A)  perfectly elastic,perfectly inelastic,inelastic,elastic. 
B)  perfectly elastic,elastic,inelastic,perfectly inelastic. 
C)  elastic,perfectly elastic,perfectly inelastic,inelastic. 
D)  elastic,inelastic,perfectly elastic,perfectly inelastic. 
E)  perfectly inelastic,inelastic,elastic,perfectly elastic.

Question 20

Assume that the consumer is correctly applying the rational spending rule for normal goods X and Z.If the consumer's income increases,purchases of both X and Z rise because

Accepted Answer

A)  the marginal utility of X decreases. 
B)  the price of Z falls. 
C)  the marginal utility of Z decreases. 
D)  combinations of X and Z that could not be considered before are now available. 
E)  the price of X increases. 
A)  the marginal utility of X decreases. 
B)  the price of Z falls. 
C)  the marginal utility of Z decreases. 
D)  combinations of X and Z that could not be considered before are now available. 
E)  the price of X increases.

Which of the following statements about total utility is FALSE?

The marginal utility to a person from acquiring his tenth car is likely to be

-Refer to the table above.If the price of Good A is $3 and the consumer purchases 3 units,then the extra utility from spending an extra dollar on Good A is

Zero price elasticity occurs when

In general,if the marginal utility of the last unit of a good is X,then the marginal utility of the next-to-last unit is likely to be

If a person is consuming two goods,the rational spending rule requires that

If the absolute value of the percentage change in quantity demanded is larger than the absolute value of the percentage change in price,demand is classified as being

Which of the following is NOT true of the law of demand?

The percentage change in quantity demanded divided the percentage change in price is

In the late 1970s,Canadians bought smaller cars that used less gasoline.We can conclude that consumers were responding to the fact that

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

Total revenue is

-Refer to the table above.The total utility of consuming two music CDs is

Consumers who buy luxury cars tend to compare the prices of other luxury model cars.Which of the following is the most likely cross-price elasticity of demand for a luxury model Lexus with respect to a similarly luxurious BMW?

In general,demand for a good will be less elastic if

If Ann has $20 to spend on pears and bananas,her budget constraint will show

The price elasticity of demand measures the responsiveness of quantity demanded to a(n)

The introduction of the AMD Athlon microprocessor caused the demand for Intel Pentium processors to become

The proper sequence of consumer responsiveness to price changes from most to least is

Assume that the consumer is correctly applying the rational spending rule for normal goods X and Z.If the consumer's income increases,purchases of both X and Z rise because

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

Which of the following statements about total utility is FALSE?

The marginal utility to a person from acquiring his tenth car is likely to be

-Refer to the table above.If the price of Good A is $3 and the consumer purchases 3 units,then the extra utility from spending an extra dollar on Good A is

Zero price elasticity occurs when

In general,if the marginal utility of the last unit of a good is X,then the marginal utility of the next-to-last unit is likely to be

If a person is consuming two goods,the rational spending rule requires that

If the absolute value of the percentage change in quantity demanded is larger than the absolute value of the percentage change in price,demand is classified as being

Which of the following is NOT true of the law of demand?

The percentage change in quantity demanded divided the percentage change in price is

In the late 1970s,Canadians bought smaller cars that used less gasoline.We can conclude that consumers were responding to the fact that

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

Total revenue is

-Refer to the table above.The total utility of consuming two music CDs is

Consumers who buy luxury cars tend to compare the prices of other luxury model cars.Which of the following is the most likely cross-price elasticity of demand for a luxury model Lexus with respect to a similarly luxurious BMW?

In general,demand for a good will be less elastic if

If Ann has $20 to spend on pears and bananas,her budget constraint will show

The price elasticity of demand measures the responsiveness of quantity demanded to a(n)

The introduction of the AMD Athlon microprocessor caused the demand for Intel Pentium processors to become

The proper sequence of consumer responsiveness to price changes from most to least is

Assume that the consumer is correctly applying the rational spending rule for normal goods X and Z.If the consumer's income increases,purchases of both X and Z rise because

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