Question 1

The indifference curve approach to measuring consumer surplus will yield the same answer as the approach using areas under the demand curve if:

Accepted Answer

A) the substitution effect of a price change is zero. 
B) the substitution effect of a price change is larger than the income effect. 
C) the income effect of a price change is larger than the substitution effect. 
D) the income effect of a price change is zero. 
A) the substitution effect of a price change is zero. 
B) the substitution effect of a price change is larger than the income effect. 
C) the income effect of a price change is larger than the substitution effect. 
D) the income effect of a price change is zero. D

Question 2

If the costs of production increase,consumer surplus will:

Accepted Answer

A) increase. 
B) decrease. 
C) remain the same. 
D) increase initially,then decrease. 
A) increase. 
B) decrease. 
C) remain the same. 
D) increase initially,then decrease. B

Question 3

Suppose the total benefit eight people enjoyed from consuming one cookie each was $8 + $6 + $6 + $5 + $4 + $3 + $3 +$1.If the price of a cookie was $1,what was the consumer surplus in this market?

Accepted Answer

A) $8 
B) $28 
C) $36 
D) $37 
A) $8 
B) $28 
C) $36 
D) $37 B

Question 4

With respect to the ordinary least-squares technique of estimating an equation,
"best fitting" means that the estimated equation line will:

Accepted Answer

A) be as straight as possible. 
B) pass through the minimum number of the observed data points as possible. 
C) be as close as possible to the observed data points. 
D) maximize the sum of the distances between the estimated line and observed data points. 
A) be as straight as possible. 
B) pass through the minimum number of the observed data points as possible. 
C) be as close as possible to the observed data points. 
D) maximize the sum of the distances between the estimated line and observed data points.

Question 5

Assume that a market demand curve is constructed from one hundred identical individual demand curves.Assume also that at a price of $4,the elasticity of individual demand is 0.6.Then the elasticity of the market demand curve derived from these individual demand curves must be:

Accepted Answer

A) 0.6. 
B) any value more than 0.6. 
C) any value less than 0.6. 
D) 60. 
A) 0.6. 
B) any value more than 0.6. 
C) any value less than 0.6. 
D) 60.

Question 6

The substitution effect of a price decrease:

Accepted Answer

A) allows the consumer to obtain a higher level of well-being. 
B) reflects an increase in real income. 
C) is a movement along the indifference curve to consume more of the lower priced good and less of the higher priced good. 
D) is a shift of the indifference curve indicating higher consumption of both the goods. 
A) allows the consumer to obtain a higher level of well-being. 
B) reflects an increase in real income. 
C) is a movement along the indifference curve to consume more of the lower priced good and less of the higher priced good. 
D) is a shift of the indifference curve indicating higher consumption of both the goods.

Question 7

A consumer is willing to pay a maximum of $5 for the first pretzel,$4 for the second pretzel,$3 for the third pretzel,$2 for the fourth pretzel,$1 for the fifth pretzel and nothing for the sixth pretzel.If the price per unit of pretzel is $2,calculate the net benefit to the consumer.

Accepted Answer

A) $6 
B) $14 
C) $5 
D) $8 
A) $6 
B) $14 
C) $5 
D) $8

Question 8

Suppose red onions are on the horizontal axis and white onions on the vertical axis.If both are perfect substitutes with two white onions worth one red onion,and the price of red onions falls from four to three times the price of white onions,the consumer:

Accepted Answer

A) decreases her consumption of white onions and increases her consumption of red onions. 
B) increases her consumption of white onions and decreases her consumption of white onions. 
C) moves to a higher indifference curve 
D) makes no change in his/her consumption of onions and experiences no income effect as a result of the price change. 
A) decreases her consumption of white onions and increases her consumption of red onions. 
B) increases her consumption of white onions and decreases her consumption of white onions. 
C) moves to a higher indifference curve 
D) makes no change in his/her consumption of onions and experiences no income effect as a result of the price change.

Question 9

Alex distributes his monthly income of $600 between two goods,movies,and food.By spending his entire income on movies,he can enjoy a maximum of 20 movies.On the other hand,by spending his entire income on food he can consume a total of 60 units of food.Assume that food consumption is measured along the horizontal axis and the consumption of movies is measured on the vertical axis.What will be the slope of Alex's budget line when the maximum possible movie consumption declines to 15,all other things remaining the same?

Accepted Answer

A) -0.5 
B) -0.25 
C) -1 
D) -0.47 
A) -0.5 
B) -0.25 
C) -1 
D) -0.47

Question 10

How does the income effect from the decrease in the price of a good differ from the income effect resulting from an increase in one's income?

Accepted Answer

A) The former moves the consumer to a higher indifference curve but the latter does not. 
B) The latter moves the consumer to a higher indifference curve but the former does not. 
C) With the price change the consumer is on a higher indifference curve but on a lower slope relative to the increase in income. 
D) There is no difference between the two. 
A) The former moves the consumer to a higher indifference curve but the latter does not. 
B) The latter moves the consumer to a higher indifference curve but the former does not. 
C) With the price change the consumer is on a higher indifference curve but on a lower slope relative to the increase in income. 
D) There is no difference between the two.

Question 11

A consumer considers apples and oranges to be perfect substitutes,one for one.If apples currently cost $5 per unit and oranges $6 per unit,and if the price of apples increases to $9 per unit:

Accepted Answer

A) the income effect of the change in demand for apples will be bigger than the substitution effect. 
B) there will be no change in demand for oranges. 
C) the entire change in demand for apples will be due to the substitution effect. 
D) one-quarter of the change in demand for apples will be due to the income effect. 
A) the income effect of the change in demand for apples will be bigger than the substitution effect. 
B) there will be no change in demand for oranges. 
C) the entire change in demand for apples will be due to the substitution effect. 
D) one-quarter of the change in demand for apples will be due to the income effect.

Question 12

Troy likes attending Major League Baseball games and going to concerts.Following a 10% increase in the price of tickets to Major League Baseball (MLb.games,Troy's attendance at these games fell by 10%.If tickets to MLB games are on the horizontal axis and tickets to concerts on the vertical axis,using the information above,we can conclude that Troy's price-consumption curve between tickets to MLB games and tickets to concerts is:

Accepted Answer

A) positively sloped. 
B) negatively sloped. 
C) horizontal. 
D) U-shaped. 
A) positively sloped. 
B) negatively sloped. 
C) horizontal. 
D) U-shaped.

Question 13

A consumer's demand function for a good Q is of the form P = 20 - 2Q.Derive the consumer's price elasticity of demand for this good when price decreases to $6 from $8.What can be inferred about the shape of the consumer's price consumption curve?

Accepted Answer

When the price is $8,quantity demanded w

Question 14

From which of the following can we derive a consumer's demand curve for a commodity?

Accepted Answer

A) Isoquants 
B) Price-consumption curve 
C) Production-possibility frontier 
D) Contract curve 
A) Isoquants 
B) Price-consumption curve 
C) Production-possibility frontier 
D) Contract curve

Question 15

Consumer surplus can be depicted as the vertical distance between indifference curves,provided:

Accepted Answer

A) the substitution effect is positive. 
B) the substitution effect is zero. 
C) the income effect is positive. 
D) the income effect is zero. 
A) the substitution effect is positive. 
B) the substitution effect is zero. 
C) the income effect is positive. 
D) the income effect is zero.

Question 16

If the price-consumption curve is U-shaped then the demand for the commodity is:

Accepted Answer

A) perfectly inelastic. 
B) relatively inelastic. 
C) elastic at high prices and inelastic at low prices. 
D) inelastic at high prices and elastic at low prices. 
A) perfectly inelastic. 
B) relatively inelastic. 
C) elastic at high prices and inelastic at low prices. 
D) inelastic at high prices and elastic at low prices.

Question 17

If the price-consumption curve is horizontal,then demand elasticity:

Accepted Answer

A) must be negative. 
B) must be between 0 and 0.5. 
C) is greater than 1. 
D) is equal to 1. 
A) must be negative. 
B) must be between 0 and 0.5. 
C) is greater than 1. 
D) is equal to 1.

Question 18

To economists,survey data is not always reliable because:

Accepted Answer

A) surveys are not conducted on a random sample from the population. 
B) there is no cost involved in providing incorrect or poorly thought out responses to survey questions. 
C) once gathered,the data is not in a format useful to economic analysis. 
D) people are never honest. 
A) surveys are not conducted on a random sample from the population. 
B) there is no cost involved in providing incorrect or poorly thought out responses to survey questions. 
C) once gathered,the data is not in a format useful to economic analysis. 
D) people are never honest.

Question 19

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5.If the price of hamburgers was $2 each,what was the total benefit enjoyed by these consumers?

Accepted Answer

A) $39 
B) $45 
C) $55 
D) $71 
A) $39 
B) $45 
C) $55 
D) $71

Question 20

A case where a consumer buys less of a good when its price falls:

Accepted Answer

A) cannot occur if the indifference curves are convex to the origin. 
B) is an example of a Giffen good and will produce an upward-sloping market demand curve. 
C) gives rise to a positively sloped price-consumption curve. 
D) refers to an inferior good with a substitution effect that dominates the income effect. 
A) cannot occur if the indifference curves are convex to the origin. 
B) is an example of a Giffen good and will produce an upward-sloping market demand curve. 
C) gives rise to a positively sloped price-consumption curve. 
D) refers to an inferior good with a substitution effect that dominates the income effect.

The indifference curve approach to measuring consumer surplus will yield the same answer as the approach using areas under the demand curve if:

If the costs of production increase,consumer surplus will:

Suppose the total benefit eight people enjoyed from consuming one cookie each was $8 + $6 + $6 + $5 + $4 + $3 + $3 +$1.If the price of a cookie was $1,what was the consumer surplus in this market?

With respect to the ordinary least-squares technique of estimating an equation, "best fitting" means that the estimated equation line will:

Assume that a market demand curve is constructed from one hundred identical individual demand curves.Assume also that at a price of $4,the elasticity of individual demand is 0.6.Then the elasticity of the market demand curve derived from these individual demand curves must be:

The substitution effect of a price decrease:

A consumer is willing to pay a maximum of $5 for the first pretzel,$4 for the second pretzel,$3 for the third pretzel,$2 for the fourth pretzel,$1 for the fifth pretzel and nothing for the sixth pretzel.If the price per unit of pretzel is $2,calculate the net benefit to the consumer.

Suppose red onions are on the horizontal axis and white onions on the vertical axis.If both are perfect substitutes with two white onions worth one red onion,and the price of red onions falls from four to three times the price of white onions,the consumer:

How does the income effect from the decrease in the price of a good differ from the income effect resulting from an increase in one's income?

A consumer considers apples and oranges to be perfect substitutes,one for one.If apples currently cost $5 per unit and oranges $6 per unit,and if the price of apples increases to $9 per unit:

A consumer's demand function for a good Q is of the form P = 20 - 2Q.Derive the consumer's price elasticity of demand for this good when price decreases to $6 from $8.What can be inferred about the shape of the consumer's price consumption curve?

From which of the following can we derive a consumer's demand curve for a commodity?

Consumer surplus can be depicted as the vertical distance between indifference curves,provided:

If the price-consumption curve is U-shaped then the demand for the commodity is:

If the price-consumption curve is horizontal,then demand elasticity:

To economists,survey data is not always reliable because:

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5.If the price of hamburgers was $2 each,what was the total benefit enjoyed by these consumers?

A case where a consumer buys less of a good when its price falls:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 4: Individual and Market Demand

The indifference curve approach to measuring consumer surplus will yield the same answer as the approach using areas under the demand curve if:

If the costs of production increase,consumer surplus will:

Suppose the total benefit eight people enjoyed from consuming one cookie each was $8 + $6 + $6 + $5 + $4 + $3 + $3 +$1.If the price of a cookie was $1,what was the consumer surplus in this market?

With respect to the ordinary least-squares technique of estimating an equation, "best fitting" means that the estimated equation line will:

Assume that a market demand curve is constructed from one hundred identical individual demand curves.Assume also that at a price of $4,the elasticity of individual demand is 0.6.Then the elasticity of the market demand curve derived from these individual demand curves must be:

The substitution effect of a price decrease:

A consumer is willing to pay a maximum of $5 for the first pretzel,$4 for the second pretzel,$3 for the third pretzel,$2 for the fourth pretzel,$1 for the fifth pretzel and nothing for the sixth pretzel.If the price per unit of pretzel is $2,calculate the net benefit to the consumer.

Suppose red onions are on the horizontal axis and white onions on the vertical axis.If both are perfect substitutes with two white onions worth one red onion,and the price of red onions falls from four to three times the price of white onions,the consumer:

How does the income effect from the decrease in the price of a good differ from the income effect resulting from an increase in one's income?

A consumer considers apples and oranges to be perfect substitutes,one for one.If apples currently cost $5 per unit and oranges $6 per unit,and if the price of apples increases to $9 per unit:

A consumer's demand function for a good Q is of the form P = 20 - 2Q.Derive the consumer's price elasticity of demand for this good when price decreases to $6 from $8.What can be inferred about the shape of the consumer's price consumption curve?

From which of the following can we derive a consumer's demand curve for a commodity?

Consumer surplus can be depicted as the vertical distance between indifference curves,provided:

If the price-consumption curve is U-shaped then the demand for the commodity is:

If the price-consumption curve is horizontal,then demand elasticity:

To economists,survey data is not always reliable because:

Suppose the total consumer surplus enjoyed by eight people from consuming one hamburger each was $9 + $8 + $7 + $7 + $7 + $6 + $6 + $5.If the price of hamburgers was $2 each,what was the total benefit enjoyed by these consumers?

A case where a consumer buys less of a good when its price falls:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters