Question 1

Water tends to have a low marginal utility because substitutes for it are widely available.

Accepted Answer

A) True 
 B)False

Question 2

The "paradox of value," with respect to prices and consumer purchases, refers to which one of the following?

Accepted Answer

A) Prices of commodities are not always proportional to the total satisfaction they give us. 
B) It is impossible to explain the price of a commodity in terms of either demand factors alone or supply factors alone. 
C) It is impossible to explain why people's tastes are what they are, or why tastes vary from one person to the next. 
D) Some consumers tend to value commodities according to their price, even to the point of buying more if the price goes up. 
E) None of the above. 
A) Prices of commodities are not always proportional to the total satisfaction they give us. 
B) It is impossible to explain the price of a commodity in terms of either demand factors alone or supply factors alone. 
C) It is impossible to explain why people's tastes are what they are, or why tastes vary from one person to the next. 
D) Some consumers tend to value commodities according to their price, even to the point of buying more if the price goes up. 
E) None of the above.

Question 3

The income-effect:

Accepted Answer

A) isolates the effect of a change in the relative price structure on the demand of the given commodity. 
B) is the sole cause of the increase in quantity demanded when the price of a good falls. 
C) is identical to the substitution effect for most goods. 
D) is the change in the quantity demanded of the given commodity due to a change in real income. 
E) is none of the above. 
A) isolates the effect of a change in the relative price structure on the demand of the given commodity. 
B) is the sole cause of the increase in quantity demanded when the price of a good falls. 
C) is identical to the substitution effect for most goods. 
D) is the change in the quantity demanded of the given commodity due to a change in real income. 
E) is none of the above.

Question 4

For the consumer to act rationally (i.e., achieve the greatest amount of satisfaction), he or she must:

Accepted Answer

A) maximize the sum of the marginal utilities of the last unit purchased of all goods in his or her budget. 
B) equalize the marginal utilities of the last unit purchased of all commodities. 
C) purchase no inferior goods. 
D) equalize the marginal utilities of the last dollar spent upon each commodity or service purchased. 
E) do none of the above. 
A) maximize the sum of the marginal utilities of the last unit purchased of all goods in his or her budget. 
B) equalize the marginal utilities of the last unit purchased of all commodities. 
C) purchase no inferior goods. 
D) equalize the marginal utilities of the last dollar spent upon each commodity or service purchased. 
E) do none of the above.

Question 5

Use the following to answer questions :
Table 5-1  
-Refer to Table 5-1.If good X costs $6 per unit and good Y costs $5 per unit, at what quantities of X and Y is utility maximized if the budget is $33?

Accepted Answer

A) X = 2, Y = 3 
B) X = 4, Y = 5 
C) X = 3, Y = 4 
D) X = 3, Y = 3 
E) None of the above 
A) X = 2, Y = 3 
B) X = 4, Y = 5 
C) X = 3, Y = 4 
D) X = 3, Y = 3 
E) None of the above

Question 6

It is possible to sum individual demand curves to get the market demand curve only when all consumers are exactly alike in their demands.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following does not affect the demand curve for automobile tires?

Accepted Answer

A) The price of gasoline. 
B) Consumer incomes. 
C) Gasoline rationing. 
D) The price of tires. 
E) None of the above. 
A) The price of gasoline. 
B) Consumer incomes. 
C) Gasoline rationing. 
D) The price of tires. 
E) None of the above.

Question 8

If A and B are substitutes, then an increase in the price of A will tend to result in an increase in the demand for B.

Accepted Answer

A) True 
 B)False

Question 9

An upward shift in the supply curve of good Y, a complement of some good X, will tend to cause:

Accepted Answer

A) the demand curve for X to shift to the left. 
B) the demand curve for X to shift to the right. 
C) the price of X to increase even though the demand curve for X is unaffected. 
D) the price of X to fall even though the demand curve for X is unaffected. 
E) none of the above. 
A) the demand curve for X to shift to the left. 
B) the demand curve for X to shift to the right. 
C) the price of X to increase even though the demand curve for X is unaffected. 
D) the price of X to fall even though the demand curve for X is unaffected. 
E) none of the above.

Question 10

Good A is said to be complementary to good B if more of B is bought when the price of A falls.

Accepted Answer

A) True 
 B)False

Question 11

Why are most demand curves downward sloping?

Accepted Answer

A) consumers get tired of goods and use less of them. 
B) consumers want more variety in goods and services. 
C) a higher price for a good reduces the consumer's desired consumption of a good. 
D) a lower price for a good reduces the consumer's desired consumption of a good. 
E) none of the above. 
A) consumers get tired of goods and use less of them. 
B) consumers want more variety in goods and services. 
C) a higher price for a good reduces the consumer's desired consumption of a good. 
D) a lower price for a good reduces the consumer's desired consumption of a good. 
E) none of the above.

Question 12

A consumer has $20 per week available to spend as she wishes on commodities A and B.She is currently spending all her money; the prices of these commodities, the quantities she now buys, and her evaluation of the utility provided by these quantities are as follows:   For maximum satisfaction, this consumer should (assuming she can buy fractions of units of A and B):

Accepted Answer

A) buy less of A, more of B. 
B) buy same quantity of A, more of B. 
C) buy more of A, less of B. 
D) buy more of A, same quantity of B. 
E) do nothing, being already at best possible position. 
A) buy less of A, more of B. 
B) buy same quantity of A, more of B. 
C) buy more of A, less of B. 
D) buy more of A, same quantity of B. 
E) do nothing, being already at best possible position.

Question 13

The market demand curve for all consumers is derived by adding horizontally the separate demand curves of each consumer.

Accepted Answer

A) True 
 B)False

Question 14

The theory of "consumer surplus" really says that when goods are exchanged between seller and buyer, the buyer gains at the expense of the seller.

Accepted Answer

A) True 
 B)False

Question 15

If we know each consumer's demand curve, we can derive the market demand curve by:

Accepted Answer

A) vertically summing the individual demand curves. 
B) horizontally summing the individual demand curves. 
C) averaging the individual demand curves. 
D) obtaining consumer incomes and summing them. 
E) none of the above. 
A) vertically summing the individual demand curves. 
B) horizontally summing the individual demand curves. 
C) averaging the individual demand curves. 
D) obtaining consumer incomes and summing them. 
E) none of the above.

Question 16

Consumer surplus is the gap between the total utility of a good and its total market value.

Accepted Answer

A) True 
 B)False

Question 17

The price of good X is $1.50 and that of good Y, $1.A particular consumer who evaluates the marginal utility of Y to be 30 units, and is in equilibrium with respect to purchases of X and Y, must consider the marginal utility of X to be:

Accepted Answer

A) 15 units. 
B) 20 units. 
C) 30 units. 
D) 45 units. 
E) none of the above. 
A) 15 units. 
B) 20 units. 
C) 30 units. 
D) 45 units. 
E) none of the above.

Question 18

Economists assume that consumers make rational and consistent decisions.

Accepted Answer

A) True 
 B)False

Question 19

Let there be two goods, X and Y.For individual A, the marginal utility of X is 2 while the marginal utility of Y is 1.If the prices of X and Y were both equal to $10, then individual A could improve his welfare even without an infusion of extra income by consuming:

Accepted Answer

A) more X even at the expense of consuming less Y. 
B) more Y even at the expense of consuming less X. 
C) more X only if consumption of Y could be maintained at the original level. 
D) less X, but only if consumption of Y could be maintained at the original level. 
E) none of the above. 
A) more X even at the expense of consuming less Y. 
B) more Y even at the expense of consuming less X. 
C) more X only if consumption of Y could be maintained at the original level. 
D) less X, but only if consumption of Y could be maintained at the original level. 
E) none of the above.

Question 20

Two goods are considered to be independent if a change in the price of one good has no effect on the demand curve for the other good.

Accepted Answer

A) True 
 B)False

Water tends to have a low marginal utility because substitutes for it are widely available.

The "paradox of value," with respect to prices and consumer purchases, refers to which one of the following?

The income-effect:

For the consumer to act rationally (i.e., achieve the greatest amount of satisfaction), he or she must:

Use the following to answer questions : Table 5-1 -Refer to Table 5-1.If good X costs $6 per unit and good Y costs $5 per unit, at what quantities of X and Y is utility maximized if the budget is $33?

It is possible to sum individual demand curves to get the market demand curve only when all consumers are exactly alike in their demands.

Which of the following does not affect the demand curve for automobile tires?

If A and B are substitutes, then an increase in the price of A will tend to result in an increase in the demand for B.

An upward shift in the supply curve of good Y, a complement of some good X, will tend to cause:

Good A is said to be complementary to good B if more of B is bought when the price of A falls.

Why are most demand curves downward sloping?

The market demand curve for all consumers is derived by adding horizontally the separate demand curves of each consumer.

The theory of "consumer surplus" really says that when goods are exchanged between seller and buyer, the buyer gains at the expense of the seller.

If we know each consumer's demand curve, we can derive the market demand curve by:

Consumer surplus is the gap between the total utility of a good and its total market value.

The price of good X is $1.50 and that of good Y, $1.A particular consumer who evaluates the marginal utility of Y to be 30 units, and is in equilibrium with respect to purchases of X and Y, must consider the marginal utility of X to be:

Economists assume that consumers make rational and consistent decisions.

Let there be two goods, X and Y.For individual A, the marginal utility of X is 2 while the marginal utility of Y is 1.If the prices of X and Y were both equal to $10, then individual A could improve his welfare even without an infusion of extra income by consuming:

Two goods are considered to be independent if a change in the price of one good has no effect on the demand curve for the other good.

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

Water tends to have a low marginal utility because substitutes for it are widely available.

The "paradox of value," with respect to prices and consumer purchases, refers to which one of the following?

The income-effect:

For the consumer to act rationally (i.e., achieve the greatest amount of satisfaction), he or she must:

Use the following to answer questions : Table 5-1 -Refer to Table 5-1.If good X costs $6 per unit and good Y costs $5 per unit, at what quantities of X and Y is utility maximized if the budget is $33?

It is possible to sum individual demand curves to get the market demand curve only when all consumers are exactly alike in their demands.

Which of the following does not affect the demand curve for automobile tires?

If A and B are substitutes, then an increase in the price of A will tend to result in an increase in the demand for B.

An upward shift in the supply curve of good Y, a complement of some good X, will tend to cause:

Good A is said to be complementary to good B if more of B is bought when the price of A falls.

Why are most demand curves downward sloping?

The market demand curve for all consumers is derived by adding horizontally the separate demand curves of each consumer.

The theory of "consumer surplus" really says that when goods are exchanged between seller and buyer, the buyer gains at the expense of the seller.

If we know each consumer's demand curve, we can derive the market demand curve by:

Consumer surplus is the gap between the total utility of a good and its total market value.

The price of good X is $1.50 and that of good Y, $1.A particular consumer who evaluates the marginal utility of Y to be 30 units, and is in equilibrium with respect to purchases of X and Y, must consider the marginal utility of X to be:

Economists assume that consumers make rational and consistent decisions.

Let there be two goods, X and Y.For individual A, the marginal utility of X is 2 while the marginal utility of Y is 1.If the prices of X and Y were both equal to $10, then individual A could improve his welfare even without an infusion of extra income by consuming:

Two goods are considered to be independent if a change in the price of one good has no effect on the demand curve for the other good.

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