Question 1

Consumer surplus increases as price decreases.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the price of a good

Accepted Answer

A) increases the quantity of the good demanded by a consumer. 
B) decreases the total utility of the consumer. 
C) changes the consumer's preferences. 
D) increases the number of combinations of goods a consumer can purchase. 
E) has no effect on the maximum combinations of goods the consumer can purchase. 
A) increases the quantity of the good demanded by a consumer. 
B) decreases the total utility of the consumer. 
C) changes the consumer's preferences. 
D) increases the number of combinations of goods a consumer can purchase. 
E) has no effect on the maximum combinations of goods the consumer can purchase.

Question 3

The market demand curve is derived graphically by

Accepted Answer

A) adding the prices paid by all individuals in the market at each quantity demanded. 
B) adding the quantity demanded by all individuals in the market at each specific price. 
C) adding the marginal utilities for all individuals in the market at each specific price. 
D) the process of vertical summation. 
E) adding the prices all individuals are willing to pay at each specific quantity demanded. 
A) adding the prices paid by all individuals in the market at each quantity demanded. 
B) adding the quantity demanded by all individuals in the market at each specific price. 
C) adding the marginal utilities for all individuals in the market at each specific price. 
D) the process of vertical summation. 
E) adding the prices all individuals are willing to pay at each specific quantity demanded.

Question 4

As tastes and preferences differ from person to another,so too is marginal utility.

Accepted Answer

A) True 
 B)False

Question 5

A change in the price of a good causes a change in the combination of goods consumed within the budget constraint.

Accepted Answer

A) True 
 B)False

Question 6

Marginal utility is the

Accepted Answer

A) utility that an individual gains from consuming an additional unit of a good. 
B) minimum utility that a person must receive from a good in order to consume it. 
C) cost that an individual bears in consuming another unit of a good. 
D) total opportunity cost of consuming a good. 
E) amount of utility that an individual gains from consuming a good. 
A) utility that an individual gains from consuming an additional unit of a good. 
B) minimum utility that a person must receive from a good in order to consume it. 
C) cost that an individual bears in consuming another unit of a good. 
D) total opportunity cost of consuming a good. 
E) amount of utility that an individual gains from consuming a good.

Question 7

The budget constraint cannot be affected by an individual's preferences.

Accepted Answer

A) True 
 B)False

Question 8

A consumer will consume such that price equals marginal benefit for every good consumed because

Accepted Answer

A) income is maximized. 
B) of the substitution effect. 
C) utility is maximized. 
D) price is maximized. 
E) wealth is maximized. 
A) income is maximized. 
B) of the substitution effect. 
C) utility is maximized. 
D) price is maximized. 
E) wealth is maximized.

Question 9

Water is cheaper than diamonds because

Accepted Answer

A) water is a less useful resource. 
B) markets fail to reflect value. 
C) water yields lower total utility. 
D) the last drop of water consumed yields lower marginal utility. 
E) people receive negative utility from water. 
A) water is a less useful resource. 
B) markets fail to reflect value. 
C) water yields lower total utility. 
D) the last drop of water consumed yields lower marginal utility. 
E) people receive negative utility from water.

Question 10

Exhibit 5-8  
-Refer to Exhibit 5-8.If Stephanie and Roger are the only consumers,at a price of $3,the total consumer surplus is

Accepted Answer

A) $4. 
B) $3. 
C) $1. 
D) $11. 
E) $2. 
A) $4. 
B) $3. 
C) $1. 
D) $11. 
E) $2.

Question 11

The marginal benefit of a good increases as its price decreases.

Accepted Answer

A) True 
 B)False

Question 12

The diamond-water paradox is based on the assumption of increasing marginal utility.

Accepted Answer

A) True 
 B)False

Question 13

The height of the demand curve is the amount of marginal benefit.

Accepted Answer

A) True 
 B)False

Question 14

Suppose Austin is willing to pay $5 for one more burger but he actually pays $2 for it.The consumer surplus for Austin to consume that additional burger is

Accepted Answer

A) -$7. 
B) -$2. 
C) $0. 
D) $3. 
E) $7. 
A) -$7. 
B) -$2. 
C) $0. 
D) $3. 
E) $7.

Question 15

Marginal benefit is dependent on

Accepted Answer

A) which country's currency is used to measure it. 
B) preferences. 
C) the law of demand. 
D) total utility. 
E) production costs. 
A) which country's currency is used to measure it. 
B) preferences. 
C) the law of demand. 
D) total utility. 
E) production costs.

Question 16

Consumer surplus applies only to market demand,not individual demand.

Accepted Answer

A) True 
 B)False

Question 17

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14,then

Accepted Answer

A) you receive a consumer surplus of $4. 
B) you experience a paradox of value. 
C) you receive a consumer surplus of $2. 
D) you do not have consumer sovereignty. 
E) your demand factor is $2 per unit. 
A) you receive a consumer surplus of $4. 
B) you experience a paradox of value. 
C) you receive a consumer surplus of $2. 
D) you do not have consumer sovereignty. 
E) your demand factor is $2 per unit.

Question 18

Which of the following statements regarding the consumption of more than one good is true?

Accepted Answer

A) Utility initially increases when consumption of one or more goods increases. 
B) Utility increases when less of only one good is consumed. 
C) Utility decreases when more of only one good is consumed. 
D) Utility does not necessarily increase if more of all goods are consumed. 
E) If less of all goods is consumed,utility might increase,decrease,or stay the same. 
A) Utility initially increases when consumption of one or more goods increases. 
B) Utility increases when less of only one good is consumed. 
C) Utility decreases when more of only one good is consumed. 
D) Utility does not necessarily increase if more of all goods are consumed. 
E) If less of all goods is consumed,utility might increase,decrease,or stay the same.

Question 19

Marginal utility is

Accepted Answer

A) always greater than total utility. 
B) utility that is not as good as normal utility. 
C) not related to total utility. 
D) always positive. 
E) the extra utility derived from consuming one additional unit of a good or service. 
A) always greater than total utility. 
B) utility that is not as good as normal utility. 
C) not related to total utility. 
D) always positive. 
E) the extra utility derived from consuming one additional unit of a good or service.

Question 20

Suppose Kim is willing to pay $5 for her first ice cream sundae,$4 for a second ice cream sundae,and $2 for a third.If Kim is able to buy all three ice cream sundaes for $2 each,she has realized a consumer surplus of

Accepted Answer

A) $3. 
B) $5. 
C) $2. 
D) $1. 
E) $4. 
A) $3. 
B) $5. 
C) $2. 
D) $1. 
E) $4.

Exam 5: The Demand Curve and the Behavior of Consumers

Consumer surplus increases as price decreases.

An increase in the price of a good

The market demand curve is derived graphically by

As tastes and preferences differ from person to another,so too is marginal utility.

A change in the price of a good causes a change in the combination of goods consumed within the budget constraint.

Marginal utility is the

The budget constraint cannot be affected by an individual's preferences.

A consumer will consume such that price equals marginal benefit for every good consumed because

Water is cheaper than diamonds because

Exhibit 5-8 -Refer to Exhibit 5-8.If Stephanie and Roger are the only consumers,at a price of $3,the total consumer surplus is

The marginal benefit of a good increases as its price decreases.

The diamond-water paradox is based on the assumption of increasing marginal utility.

The height of the demand curve is the amount of marginal benefit.

Suppose Austin is willing to pay $5 for one more burger but he actually pays $2 for it.The consumer surplus for Austin to consume that additional burger is

Marginal benefit is dependent on

Consumer surplus applies only to market demand,not individual demand.

If you pay a total of $10 to purchase 2 units of a good and you would have been willing to pay $14,then

Which of the following statements regarding the consumption of more than one good is true?

Marginal utility is

Suppose Kim is willing to pay $5 for her first ice cream sundae,$4 for a second ice cream sundae,and $2 for a third.If Kim is able to buy all three ice cream sundaes for $2 each,she has realized a consumer surplus of

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

Filters