Question 1

When income decreases, all else held constant, which of the following occurs?

Accepted Answer

A) Demand for an inferior good decreases. 
B) The slope of the highest attainable indifference curve changes. 
C) The budget line shifts out from the origin. 
D) Total utility decreases. 
E) Total utility increases. 
A) Demand for an inferior good decreases. 
B) The slope of the highest attainable indifference curve changes. 
C) The budget line shifts out from the origin. 
D) Total utility decreases. 
E) Total utility increases.

Question 2

Along an indifference curve, different combinations of a good represent the same cost to a consumer.

Accepted Answer

A) True 
 B)False

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

Consumer surplus measures the difference between what consumers are willing to pay and what they actually pay for a given quantity of a good.

Accepted Answer

A) True 
 B)False

Question 5

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 6

When the price of a good increases, all else held equal, which of the following does not occur?

Accepted Answer

A) The slope of the budget line changes. 
B) The consumer's indifference curves shift. 
C) Utility decreases. 
D) Quantity demanded decreases. 
E) The budget line shifts inward along that good's axis. 
A) The slope of the budget line changes. 
B) The consumer's indifference curves shift. 
C) Utility decreases. 
D) Quantity demanded decreases. 
E) The budget line shifts inward along that good's axis.

Question 7

A curve showing different combinations of two products that give a consumer the same satisfaction is

Accepted Answer

A) a paradox of value. 
B) an indifference curve. 
C) total utility. 
D) an indifference map. 
E) a utility curve. 
A) a paradox of value. 
B) an indifference curve. 
C) total utility. 
D) an indifference map. 
E) a utility curve.

Question 8

The budget constraint

Accepted Answer

A) is the lower limit on a consumer's spending. 
B) is the maximum utility an individual can achieve. 
C) has to do with a consumer's willingness to spend. 
D) expresses a consumer's preferences. 
E) is the maximum a consumer can spend on goods and services. 
A) is the lower limit on a consumer's spending. 
B) is the maximum utility an individual can achieve. 
C) has to do with a consumer's willingness to spend. 
D) expresses a consumer's preferences. 
E) is the maximum a consumer can spend on goods and services.

Question 9

The slope of an indifference curve is equal to the

Accepted Answer

A) degree of responsiveness of demand to a change in price. 
B) price elasticity of demand for a good. 
C) rate of substitution between two goods. 
D) marginal utility of a good measured on the horizontal axis. 
E) marginal utility of a good measured on the vertical axis. 
A) degree of responsiveness of demand to a change in price. 
B) price elasticity of demand for a good. 
C) rate of substitution between two goods. 
D) marginal utility of a good measured on the horizontal axis. 
E) marginal utility of a good measured on the vertical axis.

Question 10

Exhibit 5A-1  
-Refer to Exhibit 5A-1. If income for this individual is $120 and the individual is consuming at point B, the price of X is ____ and the price of Y is ____.

Accepted Answer

A) $2.40; $1.20 
B) $1.20; $2.00 
C) $2.40; $2.00 
D) $2.00; $2.40 
E) $1.20; $2.40 
A) $2.40; $1.20 
B) $1.20; $2.00 
C) $2.40; $2.00 
D) $2.00; $2.40 
E) $1.20; $2.40

Question 11

Exhibit 5A-3  
-Derive a continuous individual demand curve using an indifference curve diagram and budget lines. Be careful to label your graphs completely.

Accepted Answer

The answer of Exhibit 5A-3  
-Derive a continuous individual...

Question 12

Which of the following statements regarding the consumption of more than one good is true?

Accepted Answer

A) Utility initially increases when consumption of one or more goods increases. 
B) Utility increases when less of only one good is consumed. 
C) Utility decreases when more of only one good is consumed. 
D) Utility does not necessarily increase if more of all goods are consumed. 
E) If less of all goods is consumed, utility might increase, decrease, or stay the same. 
A) Utility initially increases when consumption of one or more goods increases. 
B) Utility increases when less of only one good is consumed. 
C) Utility decreases when more of only one good is consumed. 
D) Utility does not necessarily increase if more of all goods are consumed. 
E) If less of all goods is consumed, utility might increase, decrease, or stay the same.

Question 13

Marginal benefit is dependent on

Accepted Answer

A) which country's currency is used to measure it. 
B) preferences. 
C) the law of demand. 
D) total utility. 
E) production costs. 
A) which country's currency is used to measure it. 
B) preferences. 
C) the law of demand. 
D) total utility. 
E) production costs.

Question 14

As you move down an indifference curve, your

Accepted Answer

A) budget must decrease. 
B) budget must increase. 
C) total utility increases. 
D) total utility remains the same. 
E) total utility decreases. 
A) budget must decrease. 
B) budget must increase. 
C) total utility increases. 
D) total utility remains the same. 
E) total utility decreases.

Question 15

Which of the following statements is true? The income effect of an increase in the price of iPads refers to the

Accepted Answer

The income effect of an increa

Question 16

Economists assume that people

Accepted Answer

A) act to maximize marginal utility. 
B) experience diminishing marginal utility of income. 
C) act to increase utility. 
D) cannot compare the value of goods. 
E) prefer less to more. 
A) act to maximize marginal utility. 
B) experience diminishing marginal utility of income. 
C) act to increase utility. 
D) cannot compare the value of goods. 
E) prefer less to more.

Question 17

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 18

Define consumer surplus. Does a consumer really get a surplus? Why or why not?

Accepted Answer

Consumer surplus is the difference betwe

Question 19

Exhibit 5-9  
-Refer to Exhibit 5-9. At a price of P1, what labeled area(s) represent(s) consumer surplus?

Accepted Answer

A) 1 + 2 + 3 + 4 
B) 1 + 2 + 3 + 4 + 5 + 6 
C) 1 + 2 
D) 1 + 2 + 3 + 5 
E) 1 
A) 1 + 2 + 3 + 4 
B) 1 + 2 + 3 + 4 + 5 + 6 
C) 1 + 2 
D) 1 + 2 + 3 + 5 
E) 1

Question 20

Marginal utility is the

Accepted Answer

A) utility that an individual gains from consuming an additional unit of a good. 
B) minimum utility that a person must receive from a good in order to consume it. 
C) cost that an individual bears in consuming another unit of a good. 
D) total opportunity cost of consuming a good. 
E) amount of utility that an individual gains from consuming a good. 
A) utility that an individual gains from consuming an additional unit of a good. 
B) minimum utility that a person must receive from a good in order to consume it. 
C) cost that an individual bears in consuming another unit of a good. 
D) total opportunity cost of consuming a good. 
E) amount of utility that an individual gains from consuming a good.

Exam 5: The Demand Curve and the Behavior of Consumers

When income decreases, all else held constant, which of the following occurs?

Along an indifference curve, different combinations of a good represent the same cost to a consumer.

Economists generally assume that a consumer

Consumer surplus measures the difference between what consumers are willing to pay and what they actually pay for a given quantity of a good.

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

When the price of a good increases, all else held equal, which of the following does not occur?

A curve showing different combinations of two products that give a consumer the same satisfaction is

The budget constraint

The slope of an indifference curve is equal to the

Exhibit 5A-1 -Refer to Exhibit 5A-1. If income for this individual is $120 and the individual is consuming at point B, the price of X is ____ and the price of Y is ____.

Exhibit 5A-3 -Derive a continuous individual demand curve using an indifference curve diagram and budget lines. Be careful to label your graphs completely.

Which of the following statements regarding the consumption of more than one good is true?

Marginal benefit is dependent on

As you move down an indifference curve, your

Which of the following statements is true? The income effect of an increase in the price of iPads refers to the

Economists assume that people

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

Define consumer surplus. Does a consumer really get a surplus? Why or why not?

Exhibit 5-9 -Refer to Exhibit 5-9. At a price of P1, what labeled area(s) represent(s) consumer surplus?

Marginal utility is the

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Supply Curve and the Behavior of Firms

The Efficiency of 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

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters

Exhibit 5A-1 -Refer to Exhibit 5A-1. If income for this individual is $120 and the individual is consuming at point B, the price of X is and the price of Y is .

Exhibit 5-9 -Refer to Exhibit 5-9. At a price of P₁, what labeled area(s) represent(s) consumer surplus?