Question 1

The income effect of an increase in the price of computers may include all of the following except a decrease in

Accepted Answer

A) the number of computers the consumer will purchase. 
B) other goods that the consumer will purchase. 
C) the consumer's actual, or nominal, budget. 
D) the consumer's real income. 
E) most goods that the consumer will purchase. 
A) the number of computers the consumer will purchase. 
B) other goods that the consumer will purchase. 
C) the consumer's actual, or nominal, budget. 
D) the consumer's real income. 
E) most goods that the consumer will purchase.

Question 2

Suppose a consumer can spend $1,000 on food and clothing. The price of food is $5 per unit and the price of clothing is $20 per unit. Also suppose the consumer was consuming 100 units of food and 25 units of clothing, and then the price of food rose to $10. Which of the following statements is true?

Accepted Answer

A) The maximum amount of food the consumer can buy is 100 units. 
B) The maximum amount of clothing the consumer can buy is 25 units. 
C) The maximum amount of food the consumer can buy is 50 units. 
D) If the consumer does not reduce food consumption, clothing consumption can be 12.5 units, at best. 
E) The consumer can consume 50 units of clothing. 
A) The maximum amount of food the consumer can buy is 100 units. 
B) The maximum amount of clothing the consumer can buy is 25 units. 
C) The maximum amount of food the consumer can buy is 50 units. 
D) If the consumer does not reduce food consumption, clothing consumption can be 12.5 units, at best. 
E) The consumer can consume 50 units of clothing.

Question 3

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Accepted Answer

A) True 
 B)False

Question 4

Suppose Kim is willing to pay $5 for her first ice cream sundae, $4 for a second ice cream sundae, and $2 for a third. If Kim is able to buy all three ice cream sundaes for $2 each, she has realized a consumer surplus of

Accepted Answer

A) $3. 
B) $5. 
C) $2. 
D) $1. 
E) $4. 
A) $3. 
B) $5. 
C) $2. 
D) $1. 
E) $4.

Question 5

Suppose music CDs and movie DVDs give the same utility to Jane, and she has $200 to spend on music CDs and movie DVDs. The price of a movie DVD is $15, and the price of a music CD is $10. Which of the following is the most affordable bundle for maximizing her utility?

Accepted Answer

A) 10 music CDs and 5 movie DVDs 
B) 10 music CDs and 10 movie DVDs 
C) 5 music CDs and 5 movie DVDs 
D) 15 music CDs and 5 movie DVDs 
E) 5 music CDs and 10 movie DVDs 
A) 10 music CDs and 5 movie DVDs 
B) 10 music CDs and 10 movie DVDs 
C) 5 music CDs and 5 movie DVDs 
D) 15 music CDs and 5 movie DVDs 
E) 5 music CDs and 10 movie DVDs

Question 6

The reason individual demand slopes downward is that

Accepted Answer

A) market demand slopes downward. 
B) a fall in price causes marginal utility to fall. 
C) when price falls, an individual consumes more in order to use all of his or her income. 
D) when price falls, total utility can be increased when more of the good is purchased. 
E) when price rises, total utility can be increased when more of the good is purchased. 
A) market demand slopes downward. 
B) a fall in price causes marginal utility to fall. 
C) when price falls, an individual consumes more in order to use all of his or her income. 
D) when price falls, total utility can be increased when more of the good is purchased. 
E) when price rises, total utility can be increased when more of the good is purchased.

Question 7

Exhibit 5-6  
-Exhibit 5-6 shows Andy's marginal benefit from latte consumption. If the price of one cup of latte is $2.50, then which of the following is true?

Accepted Answer

A) Andy will consume 1 cup of latte. 
B) Andy will consume 2 cups of latte. 
C) Andy will consume 3 cups of latte. 
D) Andy will consume 4 cups of latte. 
E) Andy will not consume any latte. 
A) Andy will consume 1 cup of latte. 
B) Andy will consume 2 cups of latte. 
C) Andy will consume 3 cups of latte. 
D) Andy will consume 4 cups of latte. 
E) Andy will not consume any latte.

Question 8

Different prices might be charged for the same good for all the following reasons except

Accepted Answer

A) quality differences. 
B) different shopping locations. 
C) consumer ignorance. 
D) the degree of service with the sale. 
E) the degree of consumer sensibility to prices. 
A) quality differences. 
B) different shopping locations. 
C) consumer ignorance. 
D) the degree of service with the sale. 
E) the degree of consumer sensibility to prices.

Question 9

An increase in income causes a consumer's budget constraint to shift outward.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 5-7  
-Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte. If the market price of one cup of latte is $2, which of the following is true?

Accepted Answer

A) Monet will consume 3 cups of latte, and Andrew will consume 4 cups. 
B) Monet will consume 4 cups of latte, and Andrew will consume 3 cups. 
C) Both Monet and Andrew will consume 3 cups of latte. 
D) Both Monet and Andrew will consume 4 cups of latte. 
E) Monet will consume no latte, and Andrew will consume 7 cups. 
A) Monet will consume 3 cups of latte, and Andrew will consume 4 cups. 
B) Monet will consume 4 cups of latte, and Andrew will consume 3 cups. 
C) Both Monet and Andrew will consume 3 cups of latte. 
D) Both Monet and Andrew will consume 4 cups of latte. 
E) Monet will consume no latte, and Andrew will consume 7 cups.

Question 11

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14, then

Accepted Answer

A) you receive a consumer surplus of $4. 
B) you experience a paradox of value. 
C) you receive a consumer surplus of $2. 
D) you do not have consumer sovereignty. 
E) your demand factor is $2 per unit. 
A) you receive a consumer surplus of $4. 
B) you experience a paradox of value. 
C) you receive a consumer surplus of $2. 
D) you do not have consumer sovereignty. 
E) your demand factor is $2 per unit.

Question 12

The data below show Paula and Susan's willingness to pay for compact discs.

Accepted Answer

The answer of The data below show Paula and Susan's...

Question 13

Exhibit 5-2  
-Refer to Exhibit 5-2. The marginal utility of the third unit is

Accepted Answer

A) smaller than the marginal utility of the second unit. 
B) smaller than the marginal utility of the fourth unit. 
C) smaller than the marginal utility of the fifth unit. 
D) smaller than the marginal utility of the sixth unit. 
E) impossible to calculate given the available information. 
A) smaller than the marginal utility of the second unit. 
B) smaller than the marginal utility of the fourth unit. 
C) smaller than the marginal utility of the fifth unit. 
D) smaller than the marginal utility of the sixth unit. 
E) impossible to calculate given the available information.

Question 14

Suppose Isabella has $20 to spend on pizza and soda. The price of a slice of pizza is $1.00 and the price of a can of soda is $.75. Which of the following is the most affordable bundle for maximizing her utility?

Accepted Answer

A) 20 slices of pizza and 10 cans of soda 
B) 10 slices of pizza and 20 cans of soda 
C) 4 slices of pizza and 17 cans of soda 
D) 7 slices of pizza and 17 cans of soda 
E) 20 slices of pizza and 25 cans of soda 
A) 20 slices of pizza and 10 cans of soda 
B) 10 slices of pizza and 20 cans of soda 
C) 4 slices of pizza and 17 cans of soda 
D) 7 slices of pizza and 17 cans of soda 
E) 20 slices of pizza and 25 cans of soda

Question 15

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 16

For every point along a demand curve, utility is being maximized.

Accepted Answer

A) True 
 B)False

Question 17

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

Accepted Answer

A) True 
 B)False

Question 18

The height of a demand curve is consumer surplus.

Accepted Answer

A) True 
 B)False

Question 19

Suppose Jose receives diminishing marginal benefits from consuming more cups of latte. Do you think that Jose may eventually receive negative marginal benefits from consuming an additional cup of latte?

Accepted Answer

People typically experience de

Question 20

The market demand curve is derived graphically by

Accepted Answer

A) adding the prices paid by all individuals in the market at each quantity demanded. 
B) adding the quantity demanded by all individuals in the market at each specific price. 
C) adding the marginal utilities for all individuals in the market at each specific price. 
D) the process of vertical summation. 
E) adding the prices all individuals are willing to pay at each specific quantity demanded. 
A) adding the prices paid by all individuals in the market at each quantity demanded. 
B) adding the quantity demanded by all individuals in the market at each specific price. 
C) adding the marginal utilities for all individuals in the market at each specific price. 
D) the process of vertical summation. 
E) adding the prices all individuals are willing to pay at each specific quantity demanded.

Exam 5: The Demand Curve and the Behavior of Consumers

The income effect of an increase in the price of computers may include all of the following except a decrease in

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Suppose Kim is willing to pay $5 for her first ice cream sundae, $4 for a second ice cream sundae, and $2 for a third. If Kim is able to buy all three ice cream sundaes for $2 each, she has realized a consumer surplus of

Suppose music CDs and movie DVDs give the same utility to Jane, and she has $200 to spend on music CDs and movie DVDs. The price of a movie DVD is $15, and the price of a music CD is $10. Which of the following is the most affordable bundle for maximizing her utility?

The reason individual demand slopes downward is that

Exhibit 5-6 -Exhibit 5-6 shows Andy's marginal benefit from latte consumption. If the price of one cup of latte is $2.50, then which of the following is true?

Different prices might be charged for the same good for all the following reasons except

An increase in income causes a consumer's budget constraint to shift outward.

Exhibit 5-7 -Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte. If the market price of one cup of latte is $2, which of the following is true?

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14, then

The data below show Paula and Susan's willingness to pay for compact discs.

Exhibit 5-2 -Refer to Exhibit 5-2. The marginal utility of the third unit is

Suppose Isabella has $20 to spend on pizza and soda. The price of a slice of pizza is $1.00 and the price of a can of soda is $.75. Which of the following is the most affordable bundle for maximizing her utility?

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

For every point along a demand curve, utility is being maximized.

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

The height of a demand curve is consumer surplus.

Suppose Jose receives diminishing marginal benefits from consuming more cups of latte. Do you think that Jose may eventually receive negative marginal benefits from consuming an additional cup of latte?

The market demand curve is derived graphically by

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

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