Question 1

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

Accepted Answer

A) his total utility from eating hot dogs is negative. 
B) the marginal utility from the next hot dog Joey eats will be negative. 
C) the additional satisfaction he receives from eating another hot dog will be less then the satisfaction he received from his eating his last hot dog. 
D) Joey is maximizing the marginal utility per dollar he receives from eating hot dogs. 
A) his total utility from eating hot dogs is negative. 
B) the marginal utility from the next hot dog Joey eats will be negative. 
C) the additional satisfaction he receives from eating another hot dog will be less then the satisfaction he received from his eating his last hot dog. 
D) Joey is maximizing the marginal utility per dollar he receives from eating hot dogs.

Question 2

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Accepted Answer

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

Question 3

A network externality refers to a situation in which the usefulness of a product decreases with the number of consumers who use it.

Accepted Answer

A) True 
 B)False

Question 4

If your total satisfaction increases when you consume another unit,your marginal utility must be

Accepted Answer

A) increasing. 
B) decreasing. 
C) negative. 
D) positive. 
A) increasing. 
B) decreasing. 
C) negative. 
D) positive.

Question 5

Suppose the marginal utilities for the first three cans of soda are 100,80 and 60,respectively.The total utility received from consuming 2 cans is

Accepted Answer

A) 20. 
B) 80. 
C) 90. 
D) 180. 
A) 20. 
B) 80. 
C) 90. 
D) 180.

Question 6

________ is an experiment that tests the significance of fairness in consumer decision making.

Accepted Answer

A) The fairness challenge 
B) The consumer choice paradigm 
C) The ultimatum game 
D) The Giffen paradox 
A) The fairness challenge 
B) The consumer choice paradigm 
C) The ultimatum game 
D) The Giffen paradox

Question 7

Most people would prefer to drive a luxury car that has all the options,but more people buy less expensive cars even though they could afford the luxury car because

Accepted Answer

A) car buyers are irrational. 
B) the total utility of less expensive cars is greater than that of luxury cars. 
C) the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars. 
D) luxury cars cost a lot more than non-luxury cars. 
A) car buyers are irrational. 
B) the total utility of less expensive cars is greater than that of luxury cars. 
C) the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars. 
D) luxury cars cost a lot more than non-luxury cars.

Question 8

Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price."

Accepted Answer

A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic. 
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic. 
C) The statement is true. 
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall. 
A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic. 
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic. 
C) The statement is true. 
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall.

Question 9

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used in computer keyboards today).What is this phenomenon called?

Accepted Answer

A) network externalities 
B) path dependency 
C) sunk cost 
D) comparative advantage 
A) network externalities 
B) path dependency 
C) sunk cost 
D) comparative advantage

Question 10

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised her price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

Accepted Answer

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

Question 11

Economists have noted that businesses of a certain type tend to congregate geographically,attracting workers with skills in those fields.This,in turn,lures more firms seeking employees with those skills.Some examples include commercial banking,software development,and the automobile industry.What mechanism is at work here? Briefly explain how the mechanism works to the advantage of employers and employees.

Accepted Answer

The mechanism at work is a network exter

Question 12

The economic model of consumer behavior explains how consumers' tastes and preferences are formed.

Accepted Answer

A) True 
 B)False

Question 13

Behavioral economics helps explain why customers ________ at J.C.Penney.

Accepted Answer

A) favored the policy of everyday low prices and not sales and coupons 
B) favored sales and coupons and not the policy of everyday low prices 
C) were equally happy with sales and coupons and the policy of everyday low prices 
D) responded negatively to both sales and coupons and the policy of everyday low prices 
A) favored the policy of everyday low prices and not sales and coupons 
B) favored sales and coupons and not the policy of everyday low prices 
C) were equally happy with sales and coupons and the policy of everyday low prices 
D) responded negatively to both sales and coupons and the policy of everyday low prices

Question 14

Along a downward sloping,linear demand curve,total revenue is the greatest

Accepted Answer

A) where demand is normal. 
B) where demand is the most inelastic. 
C) where demand is the most elastic. 
D) where demand is unit-elastic. 
A) where demand is normal. 
B) where demand is the most inelastic. 
C) where demand is the most elastic. 
D) where demand is unit-elastic.

Question 15

The law of diminishing marginal utility states that

Accepted Answer

A) eventually total utility falls as more of a good is consumed, other things constant. 
B) the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. 
C) the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant. 
D) when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant. 
A) eventually total utility falls as more of a good is consumed, other things constant. 
B) the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. 
C) the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant. 
D) when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant.

Question 16

Identify the one statement that does not demonstrate how social effects influence consumer choice.

Accepted Answer

A) Students in an Economics class are required to purchase a textbook assigned by the professor. 
B) There is utility gained from consuming goods or services that others are consuming. 
C) Some products that people consume are determined by the social popularity of the products. 
D) Companies such as Zappos.com and Netflix invite their consumers to write reviews about their experience with their products which are then posted on the internet for others to see. 
A) Students in an Economics class are required to purchase a textbook assigned by the professor. 
B) There is utility gained from consuming goods or services that others are consuming. 
C) Some products that people consume are determined by the social popularity of the products. 
D) Companies such as Zappos.com and Netflix invite their consumers to write reviews about their experience with their products which are then posted on the internet for others to see.

Question 17

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons.What is the absolute value of the price elasticity of demand?

Accepted Answer

A) 0.11 
B) 0.37 
C) 2.69 
D) 9.33 
A) 0.11 
B) 0.37 
C) 2.69 
D) 9.33

Question 18

Table 7-7
 $$\begin{array} { | c | c | } 
\hline \text { Price } & \text { Quantity } \
\hline \$ 35 & 40 \
\hline 25 & 50 \
\hline
\end{array}$$
-Refer to Table 7-7.Suppose you own a bookstore.You believe that you can sell 40 copies per day of the latest John Grisham novel when the price is $35.You consider lowering the price to $25 and believe this will increase the quantity sold to 50 books per day.Compute the price elasticity of demand using the mid-point formula and these data.Select the correct implication from your work.

Accepted Answer

A) The demand for the John Grisham book is inelastic.Revenue will fall if the price is lowered. 
B) The demand for the John Grisham book is elastic.Revenue will rise if the price is lowered. 
C) The demand for the John Grisham book is inelastic.Revenue will rise if the price is lowered. 
D) The demand for the John Grisham book is elastic.Revenue will fall if the price is lowered. 
A) The demand for the John Grisham book is inelastic.Revenue will fall if the price is lowered. 
B) The demand for the John Grisham book is elastic.Revenue will rise if the price is lowered. 
C) The demand for the John Grisham book is inelastic.Revenue will rise if the price is lowered. 
D) The demand for the John Grisham book is elastic.Revenue will fall if the price is lowered.

Question 19

Figure 7-6
  
-Refer to Figure 7-6.At the midpoint of the demand curve,in absolute value

Accepted Answer

A) the price elasticity coefficient is at a maximum. 
B) the price elasticity coefficient is at a minimum. 
C) the price elasticity coefficient is zero. 
D) the price elasticity coefficient is one. 
A) the price elasticity coefficient is at a maximum. 
B) the price elasticity coefficient is at a minimum. 
C) the price elasticity coefficient is zero. 
D) the price elasticity coefficient is one.

Question 20

If,as a person consumes more and more of a good,each additional unit adds less satisfaction than the previous unit consumed,we are seeing the workings of

Accepted Answer

A) the law of demand. 
B) the law of supply. 
C) the law of increasing marginal opportunity cost. 
D) the law of diminishing marginal utility. 
A) the law of demand. 
B) the law of supply. 
C) the law of increasing marginal opportunity cost. 
D) the law of diminishing marginal utility.

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

A network externality refers to a situation in which the usefulness of a product decreases with the number of consumers who use it.

If your total satisfaction increases when you consume another unit,your marginal utility must be

Suppose the marginal utilities for the first three cans of soda are 100,80 and 60,respectively.The total utility received from consuming 2 cans is

________ is an experiment that tests the significance of fairness in consumer decision making.

Most people would prefer to drive a luxury car that has all the options,but more people buy less expensive cars even though they could afford the luxury car because

Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price."

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used in computer keyboards today).What is this phenomenon called?

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised her price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

The economic model of consumer behavior explains how consumers' tastes and preferences are formed.

Behavioral economics helps explain why customers ________ at J.C.Penney.

Along a downward sloping,linear demand curve,total revenue is the greatest

The law of diminishing marginal utility states that

Identify the one statement that does not demonstrate how social effects influence consumer choice.

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons.What is the absolute value of the price elasticity of demand?

Figure 7-6 -Refer to Figure 7-6.At the midpoint of the demand curve,in absolute value

If,as a person consumes more and more of a good,each additional unit adds less satisfaction than the previous unit consumed,we are seeing the workings of

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 7: Consumer Choice and Elasticity

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

A network externality refers to a situation in which the usefulness of a product decreases with the number of consumers who use it.

If your total satisfaction increases when you consume another unit,your marginal utility must be

Suppose the marginal utilities for the first three cans of soda are 100,80 and 60,respectively.The total utility received from consuming 2 cans is

________ is an experiment that tests the significance of fairness in consumer decision making.

Most people would prefer to drive a luxury car that has all the options,but more people buy less expensive cars even though they could afford the luxury car because

Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price."

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used in computer keyboards today).What is this phenomenon called?

At a price of $8 per dozen,Chuy sells 40 dozen homemade tamales per week.When he raised her price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is

The economic model of consumer behavior explains how consumers' tastes and preferences are formed.

Behavioral economics helps explain why customers ________ at J.C.Penney.

Along a downward sloping,linear demand curve,total revenue is the greatest

The law of diminishing marginal utility states that

Identify the one statement that does not demonstrate how social effects influence consumer choice.

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons.What is the absolute value of the price elasticity of demand?

Figure 7-6 -Refer to Figure 7-6.At the midpoint of the demand curve,in absolute value

If,as a person consumes more and more of a good,each additional unit adds less satisfaction than the previous unit consumed,we are seeing the workings of

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters