Question 1

The time one spends researching the performance and fuel economy of new cars on the Internet is an example of a(n)

Accepted Answer

A)  monetary cost. 
B)  non-monetary cost. 
C)  information cost. 
D)  implied cost. 
A)  monetary cost. 
B)  non-monetary cost. 
C)  information cost. 
D)  implied cost. B

Question 2

JoJo is shopping for a new computer.A mail-order computer can be delivered to JoJo's home for $1,200.JoJo could pick up the same computer at the warehouse for $1,000.How should JoJo decide?

Accepted Answer

A)  JoJo should definitely drive to the warehouse because the monetary cost is $200 lower. 
B)  JoJo should drive to the warehouse if the value of his travel time plus wear and tear on his car is less than $200. 
C)  JoJo should definitely have the computer delivered,because the $200 saving is less than 20% of the purchase price. 
D)  JoJo should definitely drive to the warehouse because the $200 saving is more than 10% of the purchase price. 
A)  JoJo should definitely drive to the warehouse because the monetary cost is $200 lower. 
B)  JoJo should drive to the warehouse if the value of his travel time plus wear and tear on his car is less than $200. 
C)  JoJo should definitely have the computer delivered,because the $200 saving is less than 20% of the purchase price. 
D)  JoJo should definitely drive to the warehouse because the $200 saving is more than 10% of the purchase price. B

Question 3

The ______ combination of goods is the combination of goods that yields the highest total utility given the consumer's income.

Accepted Answer

A)  affordable 
B)  economical 
C)  utility satiating 
D)  optimal 
A)  affordable 
B)  economical 
C)  utility satiating 
D)  optimal D

Question 4

Pat's total utility after eating 100 Reese's Peanut Butter Cups was less than his total utility after eating his ninety-ninth.Therefore,Pat's marginal utility for the 100th peanut butter cup was

Accepted Answer

A)  positive,but less than one. 
B)  positive,but less than Pat's marginal utility for the 99th peanut butter cup. 
C)  zero. 
D)  negative. 
A)  positive,but less than one. 
B)  positive,but less than Pat's marginal utility for the 99th peanut butter cup. 
C)  zero. 
D)  negative.

Question 5

Suppose you are a government analyst,and you want to help homeless families.To do so,you have decided to subsidize rental housing for poor families.(A subsidy is a payment by the government that pays part of the price of a specific product.For example,the government pays part of the rent payment. )If families had been choosing rationally before the subsidy,what is most likely to happen as a result of the subsidy?

Accepted Answer

A)  The substitution effect will cause people to consume less rental housing as the price of housing falls. 
B)  The income effect will cause people to consume less rental housing,but only if rental housing is a normal or luxury good. 
C)  People will consume more housing and more of another good,for example,groceries. 
D)  Any rational person will respond by consuming more housing,and no more of the other goods he or she consumes. 
A)  The substitution effect will cause people to consume less rental housing as the price of housing falls. 
B)  The income effect will cause people to consume less rental housing,but only if rental housing is a normal or luxury good. 
C)  People will consume more housing and more of another good,for example,groceries. 
D)  Any rational person will respond by consuming more housing,and no more of the other goods he or she consumes.

Question 6

Consumer surplus measures

Accepted Answer

A)  marginal utility. 
B)  total utility. 
C)  the cumulative difference between real and nominal prices. 
D)  the cumulative difference between price and maximum willingness to pay. 
A)  marginal utility. 
B)  total utility. 
C)  the cumulative difference between real and nominal prices. 
D)  the cumulative difference between price and maximum willingness to pay.

Question 7

______ is the additional utility gained from consuming an additional unit of a good.

Accepted Answer

A)  Total utility 
B)  Marginal Utility 
C)  Utility 
D)  Utils 
A)  Total utility 
B)  Marginal Utility 
C)  Utility 
D)  Utils

Question 8

It is impossible for total utility to be _________ when marginal utility is ___________

Accepted Answer

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

Question 9

This graph shows one consumer's demand for ice cream at the student union:  
Fran is one of the students whose demand is shown.When price is $4.00,Fran buys ____ scoops,but when price is $2.00,Fran buys _______ scoops.

Accepted Answer

A)  1;3 
B)  2;5 
C)  2;4 
D)  2;6 
A)  1;3 
B)  2;5 
C)  2;4 
D)  2;6

Question 10

Fran runs a doughnut shop in a tiny 3-person town.Fran's rational consumers have the following demand schedules: $$\begin{array} { | l | l | l | l | } 
\hline \text { Price } & \text { Art } & \text { Betty } & \text { Cal } \
\hline 10 \text { cents } & 10 & 4 & 6 \
\hline 25 \text { cents } & 9 & 2 & 5 \
\hline 35 \text { cents } & 7 & 1 & 5 \
\hline 50 \text { cents } & 5 & 0 & 4 \
\hline
\end{array}$$
Market demand for doughnuts when the price is 50 cents is

Accepted Answer

A)  31 doughnuts. 
B)  20 doughnuts. 
C)  9 doughnuts. 
D)  13 doughnuts. 
A)  31 doughnuts. 
B)  20 doughnuts. 
C)  9 doughnuts. 
D)  13 doughnuts.

Question 11

Jess gets half as much marginal utility from an additional bagel than from an additional muffin.If the price of muffin is $2.00/each,then Jess is maximizing utility if the price of a bagel is

Accepted Answer

A)  $1.00 
B)  $1.50 
C)  $2.00 
D)  $4.00 
A)  $1.00 
B)  $1.50 
C)  $2.00 
D)  $4.00

Question 12

Casey earns $150 a week and consumes only fish and shrimp.The price of fish is $3 a pound and the price of shrimp is $5 a pound.
If Casey's income falls to $120,the rational spending rule would predict Casey would buy

Accepted Answer

A)  more fish and less shrimp. 
B)  more fish and more shrimp. 
C)  less fish and more shrimp. 
D)  less fish and less shrimp. 
A)  more fish and less shrimp. 
B)  more fish and more shrimp. 
C)  less fish and more shrimp. 
D)  less fish and less shrimp.

Question 13

Angel's marginal utility for playing pool is 10 after playing 5 games.Angel's marginal utility for bowling is 6 after 3 games.If both pool and bowling cost $1 a game,to maximize his utility Angel should

Accepted Answer

A)  bowl more and play pool less 
B)  just go home 
C)  bowl only 
D)  bowl less and play pool more 
A)  bowl more and play pool less 
B)  just go home 
C)  bowl only 
D)  bowl less and play pool more

Question 14

Assume that Dusty has $30 in income,the price of a loaf of bread is $1.50,and the price of a jar of peanut butter is $3.
Suppose that at the original income of $30 the price of a loaf of bread increased to $3.00 and the price of a jar of peanut butter decreased to $2.Dusty can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter.

Accepted Answer

A)  10,15 
B)  15,10 
C)  20,15 
D)  15,20 
A)  10,15 
B)  15,10 
C)  20,15 
D)  15,20

Question 15

Assume that Dusty has $30 in income,the price of a loaf of bread is $1.50,and the price of a jar of peanut butter is $3.
Suppose that at the original income of $30 the price of a loaf of bread decreased to $1.00 and the price of a jar of peanut butter increased to $5.Dusty can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter.

Accepted Answer

A)  20,5 
B)  5,20 
C)  30,6 
D)  6,30 
A)  20,5 
B)  5,20 
C)  30,6 
D)  6,30

Question 16

Pat applies the rational spending rule and purchases 5 units of potato chips and 3 units of lemonade Suppose the price of lemonade increases.One can predict that Pat will

Accepted Answer

A)  cease purchasing lemonade. 
B)  reduce purchases of lemonade and increase purchases of potato chips. 
C)  continue to make the same purchases. 
D)  reduce purchases of potato chips. 
A)  cease purchasing lemonade. 
B)  reduce purchases of lemonade and increase purchases of potato chips. 
C)  continue to make the same purchases. 
D)  reduce purchases of potato chips.

Question 17

This table shows demand for shoes in a 3 consumer market: $$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { When the price } \
\text { of shoes is }
\end{array} & \begin{array} { l } 
\text { Pat buys this } \
\text { many: }
\end{array} & \begin{array} { l } 
\text { Leigh buys this } \
\text { many: }
\end{array} & \begin{array} { l } 
\text { and Chris buys } \
\text { this many: }
\end{array} \
\hline \$ 100 \text { a pair } & \text { none } & 1 \text { pair } & \text { none } \
\hline \$ 75 \text { a pair } & \text { none } & 3 \text { pairs } & 1 \text { pair } \
\hline \$ 50 \text { a pair } & 1 \text { pair } & 7 \text { pairs } & 3 \text { pairs } \
\hline \$ 30 \text { a pair } & 2 \text { pairs } & 10 \text { pairs } & 5 \text { pairs } \
\hline
\end{array}$$
At $100 per pair,the market demand

Accepted Answer

A)  intersects the y-axis. 
B)  intersects the x-axis. 
C)  is exactly the same as Leigh's demand. 
D)  is less than the quantity supplied. 
A)  intersects the y-axis. 
B)  intersects the x-axis. 
C)  is exactly the same as Leigh's demand. 
D)  is less than the quantity supplied.

Question 18

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _______ and as a result,consumers purchase _______ of that good.

Accepted Answer

A)  rises;more 
B)  falls;more 
C)  rises;less 
D)  falls;less 
A)  rises;more 
B)  falls;more 
C)  rises;less 
D)  falls;less

Question 19

Utility maximization means that people try to allocate their ______ to maximize their ___________.

Accepted Answer

A)  utility,spending 
B)  resources,satisfaction 
C)  time,work 
D)  limited resource,desires 
A)  utility,spending 
B)  resources,satisfaction 
C)  time,work 
D)  limited resource,desires

Question 20

This table shows demand for shoes in a 3 consumer market: $$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { When the price } \
\text { of shoes is }
\end{array} & \begin{array} { l } 
\text { Pat buys this } \
\text { many: }
\end{array} & \begin{array} { l } 
\text { Leigh buys this } \
\text { many: }
\end{array} & \begin{array} { l } 
\text { and Chris buys } \
\text { this many: }
\end{array} \
\hline \$ 100 \text { a pair } & \text { none } & 1 \text { pair } & \text { none } \
\hline \$ 75 \text { a pair } & \text { none } & 3 \text { pairs } & 1 \text { pair } \
\hline \$ 50 \text { a pair } & 1 \text { pair } & 7 \text { pairs } & 3 \text { pairs } \
\hline \$ 30 \text { a pair } & 2 \text { pairs } & 10 \text { pairs } & 5 \text { pairs } \
\hline
\end{array}$$
What is the market demand for shoes when the price is $50 per pair?

Accepted Answer

A)  7 Pairs of shoes. 
B)  11 Pairs of shoes. 
C)  15 Pairs of shoes. 
D)  It will depend on the supply at $50. 
A)  7 Pairs of shoes. 
B)  11 Pairs of shoes. 
C)  15 Pairs of shoes. 
D)  It will depend on the supply at $50.

The time one spends researching the performance and fuel economy of new cars on the Internet is an example of a(n)

JoJo is shopping for a new computer.A mail-order computer can be delivered to JoJo's home for $1,200.JoJo could pick up the same computer at the warehouse for $1,000.How should JoJo decide?

The ______ combination of goods is the combination of goods that yields the highest total utility given the consumer's income.

Pat's total utility after eating 100 Reese's Peanut Butter Cups was less than his total utility after eating his ninety-ninth.Therefore,Pat's marginal utility for the 100^th peanut butter cup was

Consumer surplus measures

______ is the additional utility gained from consuming an additional unit of a good.

It is impossible for total utility to be _ when marginal utility is ___

This graph shows one consumer's demand for ice cream at the student union: Fran is one of the students whose demand is shown.When price is $4.00,Fran buys scoops,but when price is $2.00,Fran buys ___ scoops.

Fran runs a doughnut shop in a tiny 3-person town.Fran's rational consumers have the following demand schedules: Price Art Betty Cal 10 cents 10 4 6 25 cents 9 2 5 35 cents 7 1 5 50 cents 5 0 4 Market demand for doughnuts when the price is 50 cents is

Jess gets half as much marginal utility from an additional bagel than from an additional muffin.If the price of muffin is $2.00/each,then Jess is maximizing utility if the price of a bagel is

Casey earns $150 a week and consumes only fish and shrimp.The price of fish is $3 a pound and the price of shrimp is $5 a pound. If Casey's income falls to $120,the rational spending rule would predict Casey would buy

Angel's marginal utility for playing pool is 10 after playing 5 games.Angel's marginal utility for bowling is 6 after 3 games.If both pool and bowling cost $1 a game,to maximize his utility Angel should

Pat applies the rational spending rule and purchases 5 units of potato chips and 3 units of lemonade Suppose the price of lemonade increases.One can predict that Pat will

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _ and as a result,consumers purchase _ of that good.

Utility maximization means that people try to allocate their to maximize their _____.

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

Exam 5: Demand

The time one spends researching the performance and fuel economy of new cars on the Internet is an example of a(n)

JoJo is shopping for a new computer.A mail-order computer can be delivered to JoJo's home for $1,200.JoJo could pick up the same computer at the warehouse for $1,000.How should JoJo decide?

The ______ combination of goods is the combination of goods that yields the highest total utility given the consumer's income.

Pat's total utility after eating 100 Reese's Peanut Butter Cups was less than his total utility after eating his ninety-ninth.Therefore,Pat's marginal utility for the 100th peanut butter cup was

Consumer surplus measures

______ is the additional utility gained from consuming an additional unit of a good.

It is impossible for total utility to be _________ when marginal utility is ___________

This graph shows one consumer's demand for ice cream at the student union: Fran is one of the students whose demand is shown.When price is $4.00,Fran buys ____ scoops,but when price is $2.00,Fran buys _______ scoops.

Fran runs a doughnut shop in a tiny 3-person town.Fran's rational consumers have the following demand schedules: Price Art Betty Cal 10 cents 10 4 6 25 cents 9 2 5 35 cents 7 1 5 50 cents 5 0 4 Market demand for doughnuts when the price is 50 cents is

Jess gets half as much marginal utility from an additional bagel than from an additional muffin.If the price of muffin is $2.00/each,then Jess is maximizing utility if the price of a bagel is

Casey earns $150 a week and consumes only fish and shrimp.The price of fish is $3 a pound and the price of shrimp is $5 a pound. If Casey's income falls to $120,the rational spending rule would predict Casey would buy

Angel's marginal utility for playing pool is 10 after playing 5 games.Angel's marginal utility for bowling is 6 after 3 games.If both pool and bowling cost $1 a game,to maximize his utility Angel should

Pat applies the rational spending rule and purchases 5 units of potato chips and 3 units of lemonade Suppose the price of lemonade increases.One can predict that Pat will

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _______ and as a result,consumers purchase _______ of that good.

Utility maximization means that people try to allocate their ______ to maximize their ___________.

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

Pat's total utility after eating 100 Reese's Peanut Butter Cups was less than his total utility after eating his ninety-ninth.Therefore,Pat's marginal utility for the 100^th peanut butter cup was

It is impossible for total utility to be _ when marginal utility is ___

This graph shows one consumer's demand for ice cream at the student union: Fran is one of the students whose demand is shown.When price is $4.00,Fran buys scoops,but when price is $2.00,Fran buys ___ scoops.

When the price of a good falls,the ratio of the marginal utility of that good divided by its price _ and as a result,consumers purchase _ of that good.

Utility maximization means that people try to allocate their to maximize their _____.