Question 1

If both income and substitution effects are strong, this region of the demand curve must be:

Accepted Answer

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

Question 2

Let the price of some good X exceed the price of a second good Y.In consumer equilibrium, it must be true that

Accepted Answer

A) total utility derived from both X and Y has begun to decline. 
B) the marginal utility of X exceeds the marginal utility of Y. 
C) the marginal utility of X equals the marginal utility of Y. 
D) the marginal utility of Y exceeds the marginal utility of X. 
E) any of the above could be, depending upon economic circumstance. 
A) total utility derived from both X and Y has begun to decline. 
B) the marginal utility of X exceeds the marginal utility of Y. 
C) the marginal utility of X equals the marginal utility of Y. 
D) the marginal utility of Y exceeds the marginal utility of X. 
E) any of the above could be, depending upon economic circumstance. B

Question 3

In equilibrium, the ratio of marginal utilities for any two goods will be the same for all consumers who purchase positive quantities of both goods.

Accepted Answer

A) True 
 B)False  True

Question 4

A consumer is said to be in equilibrium in his or her choice between two goods A and B when:

Accepted Answer

A) the total purchase of good A gives the same satisfaction as the total purchase of good B. 
B) the last unit of good A purchased gives the same addition to satisfaction as the last unit of good b purchased. 
C) each penny spent on good A gives the same satisfaction as each penny spent on good B. 
D) the last penny spent on good A gives the same addition to satisfaction as the last penny spent on good B. 
E) the last pennies spent on goods A and B generate no additions to satisfaction. 
A) the total purchase of good A gives the same satisfaction as the total purchase of good B. 
B) the last unit of good A purchased gives the same addition to satisfaction as the last unit of good b purchased. 
C) each penny spent on good A gives the same satisfaction as each penny spent on good B. 
D) the last penny spent on good A gives the same addition to satisfaction as the last penny spent on good B. 
E) the last pennies spent on goods A and B generate no additions to satisfaction.

Question 5

Billy is consuming pancakes for breakfast.He gets 10 utils from the first one he eats, 8 from the second, 2 from the third, and -1 from the fourth.His total utility is 19.

Accepted Answer

A) True 
 B)False

Question 6

The law of diminishing marginal utility states:

Accepted Answer

A) marginal utility is always going down. 
B) as the amount of a good consumed increases, the marginal utility of that good tends to decline. 
C) some goods have a lower marginal utility than others. 
D) you can never have too much ice cream. 
E) none of the above. 
A) marginal utility is always going down. 
B) as the amount of a good consumed increases, the marginal utility of that good tends to decline. 
C) some goods have a lower marginal utility than others. 
D) you can never have too much ice cream. 
E) none of the above.

Question 7

When a buyer experiences consumer surplus, the seller experiences a loss.

Accepted Answer

A) True 
 B)False

Question 8

In the figure below, which area represents consumer surplus at a price of 5?

Accepted Answer

A) OADC. 
B) OBEC. 
C) CEH. 
D) OBEH. 
E) CEGF. 
A) OADC. 
B) OBEC. 
C) CEH. 
D) OBEH. 
E) CEGF.

Question 9

If I get 10 units of total utility (TU)from 2 oranges, 14 of TU from 3 oranges, and 17 of TU from 4 oranges, I obey the law of diminishing marginal utility because:

Accepted Answer

A) MU falls as consumption increases. 
B) TU increases as consumption increases. 
C) TU > MU. 
D) MU > TU. 
E) MU = TU. 
A) MU falls as consumption increases. 
B) TU increases as consumption increases. 
C) TU > MU. 
D) MU > TU. 
E) MU = TU.

Question 10

The concept of consumer surplus is useful in helping evaluate government spending decisions.

Accepted Answer

A) True 
 B)False

Question 11

If the price of harmful addictive substances goes up, it will reduce the number of causal users.

Accepted Answer

A) True 
 B)False

Question 12

The area of consumer surplus is correctly identified by the shaded region in which panel of the figure below?

Accepted Answer

A) a. 
B) b. 
C) c. 
D) d. 
E) e.
F)None of them. 
A) a. 
B) b. 
C) c. 
D) d. 
E) e.
F)None of them.

Question 13

Consumer surplus is always strictly greater than zero, even when demand is perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 14

As you consume more of a good, your marginal utility always rises.

Accepted Answer

A) True 
 B)False

Question 15

The "income-effect" is best described as the:

Accepted Answer

A) effect on demand for a good brought about by a change in money income regardless of the changes in prices. 
B) effect on demand for a good induced by a change in real income. 
C) change in consumer preferences effected by a redistribution of income. 
D) effect on demand for a good induced by a change in the market price of the good. 
E) none of the above. 
A) effect on demand for a good brought about by a change in money income regardless of the changes in prices. 
B) effect on demand for a good induced by a change in real income. 
C) change in consumer preferences effected by a redistribution of income. 
D) effect on demand for a good induced by a change in the market price of the good. 
E) none of the above.

Question 16

Use the following to answer questions :
Figure 5-1    
-Refer to Figure 5-1.What is the slope of the total market demand curve at P = 3?

Accepted Answer

A) 17.5 
B) about .20 
C) about -.06 
D) about -.20 
E) -17.5 
A) 17.5 
B) about .20 
C) about -.06 
D) about -.20 
E) -17.5

Question 17

The saying "more is better" is a denial of the law of diminishing marginal utility.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions :
Figure 5-1    
-Refer to Figure 5-1.What is total demand at P = 3?

Accepted Answer

A) 20 
B) 25 
C) 27.5 
D) 45 
E) None of the above 
A) 20 
B) 25 
C) 27.5 
D) 45 
E) None of the above

Question 19

If a merchant could charge a price for a good which reflected the marginal utilities of each unit sold, then consumer surplus for that good would not be enjoyed by the consumers.

Accepted Answer

A) True 
 B)False

Question 20

A fall in the demand for commodity X can be caused by

Accepted Answer

A) a fall in the price of a substitute. 
B) a fall in the price of a complement. 
C) a rise in the price of a substitute. 
D) a redistribution of income to groups who favor this commodity. 
E) none of the above. 
A) a fall in the price of a substitute. 
B) a fall in the price of a complement. 
C) a rise in the price of a substitute. 
D) a redistribution of income to groups who favor this commodity. 
E) none of the above.

If both income and substitution effects are strong, this region of the demand curve must be:

Let the price of some good X exceed the price of a second good Y.In consumer equilibrium, it must be true that

In equilibrium, the ratio of marginal utilities for any two goods will be the same for all consumers who purchase positive quantities of both goods.

A consumer is said to be in equilibrium in his or her choice between two goods A and B when:

Billy is consuming pancakes for breakfast.He gets 10 utils from the first one he eats, 8 from the second, 2 from the third, and -1 from the fourth.His total utility is 19.

The law of diminishing marginal utility states:

When a buyer experiences consumer surplus, the seller experiences a loss.

In the figure below, which area represents consumer surplus at a price of 5?

If I get 10 units of total utility (TU)from 2 oranges, 14 of TU from 3 oranges, and 17 of TU from 4 oranges, I obey the law of diminishing marginal utility because:

The concept of consumer surplus is useful in helping evaluate government spending decisions.

If the price of harmful addictive substances goes up, it will reduce the number of causal users.

The area of consumer surplus is correctly identified by the shaded region in which panel of the figure below?

Consumer surplus is always strictly greater than zero, even when demand is perfectly elastic.

As you consume more of a good, your marginal utility always rises.

The "income-effect" is best described as the:

Use the following to answer questions : Figure 5-1 -Refer to Figure 5-1.What is the slope of the total market demand curve at P = 3?

The saying "more is better" is a denial of the law of diminishing marginal utility.

Use the following to answer questions : Figure 5-1 -Refer to Figure 5-1.What is total demand at P = 3?

If a merchant could charge a price for a good which reflected the marginal utilities of each unit sold, then consumer surplus for that good would not be enjoyed by the consumers.

A fall in the demand for commodity X can be caused by

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

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Exam 5: Demand and Consumer Behavior

If both income and substitution effects are strong, this region of the demand curve must be:

Let the price of some good X exceed the price of a second good Y.In consumer equilibrium, it must be true that

In equilibrium, the ratio of marginal utilities for any two goods will be the same for all consumers who purchase positive quantities of both goods.

A consumer is said to be in equilibrium in his or her choice between two goods A and B when:

Billy is consuming pancakes for breakfast.He gets 10 utils from the first one he eats, 8 from the second, 2 from the third, and -1 from the fourth.His total utility is 19.

The law of diminishing marginal utility states:

When a buyer experiences consumer surplus, the seller experiences a loss.

In the figure below, which area represents consumer surplus at a price of 5?

If I get 10 units of total utility (TU)from 2 oranges, 14 of TU from 3 oranges, and 17 of TU from 4 oranges, I obey the law of diminishing marginal utility because:

The concept of consumer surplus is useful in helping evaluate government spending decisions.

If the price of harmful addictive substances goes up, it will reduce the number of causal users.

The area of consumer surplus is correctly identified by the shaded region in which panel of the figure below?

Consumer surplus is always strictly greater than zero, even when demand is perfectly elastic.

As you consume more of a good, your marginal utility always rises.

The "income-effect" is best described as the:

Use the following to answer questions : Figure 5-1 -Refer to Figure 5-1.What is the slope of the total market demand curve at P = 3?

The saying "more is better" is a denial of the law of diminishing marginal utility.

Use the following to answer questions : Figure 5-1 -Refer to Figure 5-1.What is total demand at P = 3?

If a merchant could charge a price for a good which reflected the marginal utilities of each unit sold, then consumer surplus for that good would not be enjoyed by the consumers.

A fall in the demand for commodity X can be caused by

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

Filters