Question 1

An optimal purchase is one that maximizes total utility.

Accepted Answer

A) True 
 B)False  True

Question 2

All inferior goods have upward-sloping demand curves.

Accepted Answer

A) True 
 B)False  False

Question 3

Alice has $10 to spend on wine and cheese.If wine is $2.50 a glass and cheese $2, draw the corresponding budget line.Then draw three indifference curves, one showing the amount of wine and cheese Alice would choose, one showing less preferred combinations of wine and cheese, and the last showing preferred but unaffordable combinations.

Free

(Essay)

4.8/5

(24)

Question 3

Correct Answer:

Verified

Figure 5-22

Accepted Answer

Figure 5-22

Question 4

The consumer maximizes his total utility (measured in money terms) when, at his chosen quantity of every good he buys, marginal utility

Accepted Answer

A)  equals zero. 
B)  divided by price equals zero. 
C)  equals price. 
D)  equals total utility. 
A)  equals zero. 
B)  divided by price equals zero. 
C)  equals price. 
D)  equals total utility.

Question 5

The slope of an indifference curve represents the maximum amount of one commodity that a consumer is willing to give up in exchange for one more unit of another commodity.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that Joan, the only consumer of pork, has a downward-sloping demand curve for pork and faces an upward-sloping supply curve.If her demand curve shifts out because she develops a craving for pork, then at the new equilibrium (everything else equal),

Accepted Answer

A)  the price of pork relative to other goods will be higher than before. 
B)  Joan's marginal utility from every unit of pork she eats will be higher than before. 
C)  Joan's real income will be lower than before. 
D)  All of the above are correct. 
A)  the price of pork relative to other goods will be higher than before. 
B)  Joan's marginal utility from every unit of pork she eats will be higher than before. 
C)  Joan's real income will be lower than before. 
D)  All of the above are correct.

Question 7

Adam Smith's diamond-water puzzle

Accepted Answer

A)  can be resolved by distinguishing between marginal and total utility. 
B)  occurs because diamonds have no utility. 
C)  occurs because scarcity increases total utility. 
D)  will likely never be resolved with existing economic tools. 
A)  can be resolved by distinguishing between marginal and total utility. 
B)  occurs because diamonds have no utility. 
C)  occurs because scarcity increases total utility. 
D)  will likely never be resolved with existing economic tools.

Question 8

The law of demand ensures that a demand curve has a positive slope.

Accepted Answer

A) True 
 B)False

Question 9

Total utility increases if one more unit of a product is purchased and marginal utility is positive.

Accepted Answer

A) True 
 B)False

Question 10

The slope of the budget line

Accepted Answer

A)  always equals 1. 
B)  equals income divided by price. 
C)  equals the ratio of the prices. 
D)  decreases as we move from left to right. 
A)  always equals 1. 
B)  equals income divided by price. 
C)  equals the ratio of the prices. 
D)  decreases as we move from left to right.

Question 11

A budget line is a straight line designed to show

Accepted Answer

A)  how income is related to hours worked. 
B)  all combinations of two goods that can be purchased with a given income. 
C)  the way a homemaker should divide money among several commodities. 
D)  that if more money is spent on one good, the breadwinner must work all the harder to maintain a satisfactory level of living. 
E)  preferences for goods and services. 
A)  how income is related to hours worked. 
B)  all combinations of two goods that can be purchased with a given income. 
C)  the way a homemaker should divide money among several commodities. 
D)  that if more money is spent on one good, the breadwinner must work all the harder to maintain a satisfactory level of living. 
E)  preferences for goods and services.

Question 12

The number of Compact Discs purchased by a consumer depends on the price of the discs as well as the prices of all other goods purchased.

Accepted Answer

A) True 
 B)False

Question 13

If the marginal net utility of beer is a positive number, the consumer should buy more beer in order to maximize utility.

Accepted Answer

A) True 
 B)False

Question 14

Scarcity raises both price and marginal utility but generally reduces total utility.

Accepted Answer

A) True 
 B)False

Question 15

Consumer's surplus

Accepted Answer

A)  is the gap between total willingness to pay and the total market value of a good. 
B)  guarantees that the market value of a good in money is equal to the total economic value of the good. 
C)  is always negative because of diminishing marginal utility. 
D)  is the total area under a consumer's demand curve. 
A)  is the gap between total willingness to pay and the total market value of a good. 
B)  guarantees that the market value of a good in money is equal to the total economic value of the good. 
C)  is always negative because of diminishing marginal utility. 
D)  is the total area under a consumer's demand curve.

Question 16

If you go to a bar tonight and have three beers before going home to study economics, will you likely receive some consumer surplus? Explain why or why not.

Accepted Answer

The law of diminishing marginal utility

Question 17

Which of the following scenarios could be an example of increasing marginal utility?

Accepted Answer

A)  A father buying three game CDs for his son. 
B)  A shopkeeper selling the tenth unit of hamburger. 
C)  A philatelist buying an additional stamp for collection. 
D)  A consumer buying an additional unit of apple. 
A)  A father buying three game CDs for his son. 
B)  A shopkeeper selling the tenth unit of hamburger. 
C)  A philatelist buying an additional stamp for collection. 
D)  A consumer buying an additional unit of apple.

Question 18

Are there ever exceptions to the law of demand?

Accepted Answer

When consumers associate quality with hi

Question 19

Figure 5-13
  
-In Figure 5-13, the consumer can afford any combination of X and Y represented by a point

Accepted Answer

A)  on line AB only. 
B)  on or below line AB. 
C)  on or above line AB. 
D)  anywhere on the graph. 
A)  on line AB only. 
B)  on or below line AB. 
C)  on or above line AB. 
D)  anywhere on the graph.

Question 20

All decisions involve opportunity cost.

Accepted Answer

A) True 
 B)False

Exam 5: Consumer Choice: Individual and Market Demand

An optimal purchase is one that maximizes total utility.

All inferior goods have upward-sloping demand curves.

The consumer maximizes his total utility (measured in money terms) when, at his chosen quantity of every good he buys, marginal utility

The slope of an indifference curve represents the maximum amount of one commodity that a consumer is willing to give up in exchange for one more unit of another commodity.

Suppose that Joan, the only consumer of pork, has a downward-sloping demand curve for pork and faces an upward-sloping supply curve.If her demand curve shifts out because she develops a craving for pork, then at the new equilibrium (everything else equal),

Adam Smith's diamond-water puzzle

The law of demand ensures that a demand curve has a positive slope.

Total utility increases if one more unit of a product is purchased and marginal utility is positive.

The slope of the budget line

A budget line is a straight line designed to show

The number of Compact Discs purchased by a consumer depends on the price of the discs as well as the prices of all other goods purchased.

If the marginal net utility of beer is a positive number, the consumer should buy more beer in order to maximize utility.

Scarcity raises both price and marginal utility but generally reduces total utility.

Consumer's surplus

If you go to a bar tonight and have three beers before going home to study economics, will you likely receive some consumer surplus? Explain why or why not.

Which of the following scenarios could be an example of increasing marginal utility?

Are there ever exceptions to the law of demand?

Figure 5-13 -In Figure 5-13, the consumer can afford any combination of X and Y represented by a point

All decisions involve opportunity cost.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters