Question 1

The benefit that consumers get when they buy goods at the equilibrium price but were willing to pay more is called

Accepted Answer

A) Marginal utility. 
B) The law of demand. 
C) Consumer surplus. 
D) Maximum price. 
A) Marginal utility. 
B) The law of demand. 
C) Consumer surplus. 
D) Maximum price.

Question 2

The point where the budget constraint and an indifference curve are tangent

Accepted Answer

A) Represents maximum total revenue. 
B) Indicates the optimal level of production. 
C) Represents the optimal consumption point. 
D) Indicates profit maximization. 
A) Represents maximum total revenue. 
B) Indicates the optimal level of production. 
C) Represents the optimal consumption point. 
D) Indicates profit maximization.

Question 3

Refer to Figure 19.2.The total utility of five apples is

Accepted Answer

A) 1 utils. 
B) 17 utils. 
C) 18 utils. 
D) 20 utils. 
A) 1 utils. 
B) 17 utils. 
C) 18 utils. 
D) 20 utils.

Question 4

As more satisfaction is achieved from consuming a good with diminishing marginal utility, then total utility

Accepted Answer

A) Increases at a decreasing rate. 
B) Decreases as long as marginal utility is negative. 
C) Decreases as long as marginal utility is positive. 
D) Is negative as long as marginal utility is decreasing. 
A) Increases at a decreasing rate. 
B) Decreases as long as marginal utility is negative. 
C) Decreases as long as marginal utility is positive. 
D) Is negative as long as marginal utility is decreasing.

Question 5

If a product has a high marginal utility, then

Accepted Answer

A) Consumers will not purchase any more of the good. 
B) The demand curve will be downward-sloping. 
C) A consumer is willing to pay a high price for it. 
D) Consumers will also have a low total utility. 
A) Consumers will not purchase any more of the good. 
B) The demand curve will be downward-sloping. 
C) A consumer is willing to pay a high price for it. 
D) Consumers will also have a low total utility.

Question 6

Car dealers can easily price discriminate because

Accepted Answer

A) Buyers do not know the car's price. 
B) Sellers negotiate a separate price agreement with each individual buyer. 
C) Each seller knows the price but the buyer does not. 
D) Buyers get together to collectively negotiate a price. 
A) Buyers do not know the car's price. 
B) Sellers negotiate a separate price agreement with each individual buyer. 
C) Each seller knows the price but the buyer does not. 
D) Buyers get together to collectively negotiate a price.

Question 7

The law of diminishing marginal utility suggests that

Accepted Answer

A) People are willing to buy additional quantities of a good only if its price falls. 
B) People will substitute lower-priced goods for more expensive goods, ceteris paribus. 
C) Price and quantity demanded are directly related. 
D) As marginal utility decreases, the willingness to pay increases. 
A) People are willing to buy additional quantities of a good only if its price falls. 
B) People will substitute lower-priced goods for more expensive goods, ceteris paribus. 
C) Price and quantity demanded are directly related. 
D) As marginal utility decreases, the willingness to pay increases.

Question 8

The law of diminishing marginal utility states that

Accepted Answer

A) The total utility of consuming the next unit of a good falls. 
B) As a consumer enjoys successive units of a good, eventually marginal utility will fall. 
C) Marginal utility always falls to zero after two or three units of a good consumed. 
D) The total utility of a good rises at a fast rate as more units of a good are consumed. 
A) The total utility of consuming the next unit of a good falls. 
B) As a consumer enjoys successive units of a good, eventually marginal utility will fall. 
C) Marginal utility always falls to zero after two or three units of a good consumed. 
D) The total utility of a good rises at a fast rate as more units of a good are consumed.

Question 9

The total consumer surplus is shown on a graph as

Accepted Answer

A) The area under the demand curve and below the actual price. 
B) The area under the demand curve and above the actual price. 
C) The area above the demand curve and above the actual price. 
D) The area above the demand curve and below the actual price. 
A) The area under the demand curve and below the actual price. 
B) The area under the demand curve and above the actual price. 
C) The area above the demand curve and above the actual price. 
D) The area above the demand curve and below the actual price.

Question 10

Price discrimination occurs with products that consumers buy regularly.

Accepted Answer

A) True 
 B)False

Question 11

Under what conditions can sellers engage in price discrimination?

Accepted Answer

Price discrimination occurs when sellers

Question 12

A successful advertising campaign will

Accepted Answer

A) Increase the demand for the advertised good. 
B) Increase the absolute value of the price elasticity of demand for the advertised good. 
C) Cause the quantity supplied of the advertised good to increase. 
D) Reduce the perceived utility of the good. 
A) Increase the demand for the advertised good. 
B) Increase the absolute value of the price elasticity of demand for the advertised good. 
C) Cause the quantity supplied of the advertised good to increase. 
D) Reduce the perceived utility of the good.

Question 13

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit.
  Refer to Table 19.3.If Michael has $28 dollars to spend, why will three colas and four pretzels not be optimal?

Accepted Answer

A) This combination has less total utility. 
B) This combination is affordable but does not maximize utility. 
C) This combination is not affordable. 
D) This combination has less marginal utility per dollar. 
A) This combination has less total utility. 
B) This combination is affordable but does not maximize utility. 
C) This combination is not affordable. 
D) This combination has less marginal utility per dollar.

Question 14

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit.
  In Table 19.3, what is the total utility of two units of cola?

Accepted Answer

A) 32. 
B) 40. 
C) 72. 
D) 96. 
A) 32. 
B) 40. 
C) 72. 
D) 96.

Question 15

Graphically, as a consumer buys more of a good, the marginal utility line will

Accepted Answer

A) Increase as more goods are consumed. 
B) Increase steadily and then decline. 
C) Continuously decline if diminishing returns are present. 
D) Follow the same shape as the total utility line. 
A) Increase as more goods are consumed. 
B) Increase steadily and then decline. 
C) Continuously decline if diminishing returns are present. 
D) Follow the same shape as the total utility line.

Question 16

The rational consumer chooses a combination of two goods that is on the budget constraint and is tangent to the highest indifference curve possible.

Accepted Answer

A) True 
 B)False

Question 17

The farther an indifference curve is from the origin, the more total utility it yields.

Accepted Answer

A) True 
 B)False

Question 18

A successful advertising campaign will make demand for a product less price-elastic.

Accepted Answer

A) True 
 B)False

Question 19

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit.
  The marginal utility per dollar of the third pretzel is

Accepted Answer

A) 4. 
B) 5. 
C) 6. 
D) 12. 
A) 4. 
B) 5. 
C) 6. 
D) 12.

Question 20

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume the price of Y is $1 per unit.Point D on the graph

Accepted Answer

A) Is not affordable. 
B) Is affordable but does not yield the highest utility possible. 
C) Is affordable and is the optimal consumption bundle for this individual. 
D) Lies on an indifference curve that is not obtainable. 
A) Is not affordable. 
B) Is affordable but does not yield the highest utility possible. 
C) Is affordable and is the optimal consumption bundle for this individual. 
D) Lies on an indifference curve that is not obtainable.

Exam 5: Consumer Choice

The benefit that consumers get when they buy goods at the equilibrium price but were willing to pay more is called

The point where the budget constraint and an indifference curve are tangent

Refer to Figure 19.2.The total utility of five apples is

As more satisfaction is achieved from consuming a good with diminishing marginal utility, then total utility

If a product has a high marginal utility, then

Car dealers can easily price discriminate because

The law of diminishing marginal utility suggests that

The law of diminishing marginal utility states that

The total consumer surplus is shown on a graph as

Price discrimination occurs with products that consumers buy regularly.

Under what conditions can sellers engage in price discrimination?

A successful advertising campaign will

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Refer to Table 19.3.If Michael has $28 dollars to spend, why will three colas and four pretzels not be optimal?

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. In Table 19.3, what is the total utility of two units of cola?

Graphically, as a consumer buys more of a good, the marginal utility line will

The rational consumer chooses a combination of two goods that is on the budget constraint and is tangent to the highest indifference curve possible.

The farther an indifference curve is from the origin, the more total utility it yields.

A successful advertising campaign will make demand for a product less price-elastic.

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. The marginal utility per dollar of the third pretzel is

Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question.Assume the price of Y is $1 per unit.Point D on the graph

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