Question 1

Why does an individual consume a good so that marginal benefit is equal to price?

Accepted Answer

Marginal benefit reflects willingness to

Question 2

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

Accepted Answer

A) True 
 B)False

Question 3

If a consumer is already consuming a good and is willing to pay a maximum of $100 for one more unit of it,then the total benefit from consuming the good is $100.

Accepted Answer

A) True 
 B)False

Question 4

To obtain utility,a consumer must

Accepted Answer

A) do unto others as he or she would have them do unto him or her. 
B) save. 
C) consume. 
D) work. 
E) be happy. 
A) do unto others as he or she would have them do unto him or her. 
B) save. 
C) consume. 
D) work. 
E) be happy.

Question 5

Exhibit 5-9  
-Refer to Exhibit 5-9.At a price of P1,what labeled area(s)represent(s)consumer surplus?

Accepted Answer

A) 1 + 2 + 3 + 4 
B) 1 + 2 + 3 + 4 + 5 + 6 
C) 1 + 2 
D) 1 + 2 + 3 + 5 
E) 1 
A) 1 + 2 + 3 + 4 
B) 1 + 2 + 3 + 4 + 5 + 6 
C) 1 + 2 
D) 1 + 2 + 3 + 5 
E) 1

Question 6

Exhibit 5-5  
-Refer to Exhibit 5-5.The maximum amount that a consumer is willing to pay for the tenth unit of the good is

Accepted Answer

A) $0. 
B) $2.5. 
C) $5.0. 
D) $7.5. 
E) impossible to determine given the available information. 
A) $0. 
B) $2.5. 
C) $5.0. 
D) $7.5. 
E) impossible to determine given the available information.

Question 7

Economists assume that people

Accepted Answer

A) act to maximize marginal utility. 
B) experience diminishing marginal utility of income. 
C) act to increase utility. 
D) cannot compare the value of goods. 
E) prefer less to more. 
A) act to maximize marginal utility. 
B) experience diminishing marginal utility of income. 
C) act to increase utility. 
D) cannot compare the value of goods. 
E) prefer less to more.

Question 8

Suppose an individual's income is $1,000,and all of it is spent on food and clothing.If the price of food is $10 and the price of clothing is $25,calculate the maximum amount of food that can be consumed.Do the same for clothing.Finally,calculate how much food and clothing can be consumed if half of the income is spent on each.

Accepted Answer

Maximum food = $1,000/$10 = 10

Question 9

Which of the following statements about market demand curves is true?

Accepted Answer

A) Only similar demand curves can be summed to make market demand. 
B) Market demand curves are usually shaped similar to individual demand curves. 
C) The inclusion of many individuals' demand curves makes market demand smooth. 
D) Market demand shifts upward as each additional individual demand curve is added. 
E) Market demand shifts downward as each additional individual demand curve is added. 
A) Only similar demand curves can be summed to make market demand. 
B) Market demand curves are usually shaped similar to individual demand curves. 
C) The inclusion of many individuals' demand curves makes market demand smooth. 
D) Market demand shifts upward as each additional individual demand curve is added. 
E) Market demand shifts downward as each additional individual demand curve is added.

Question 10

The income effect of a change in the price of a good is illustrated by a shift of the demand curve.

Accepted Answer

A) True 
 B)False

Question 11

Utility maximization implies that the total utility of the consumer can be maximized only when the price of a good increases.

Accepted Answer

A) True 
 B)False

Question 12

If the marginal utility of consuming one pound of apples is 200 units for John and 50 units for Jane,we can conclude

Accepted Answer

A) that John will eat four times more apples than Jane. 
B) that John will eat the same amount of apples as Jane. 
C) that John will eat four times fewer apples than Jane. 
D) that John and Jane will not eat any apples. 
E) nothing about how many apples John will eat compared to Jane. 
A) that John will eat four times more apples than Jane. 
B) that John will eat the same amount of apples as Jane. 
C) that John will eat four times fewer apples than Jane. 
D) that John and Jane will not eat any apples. 
E) nothing about how many apples John will eat compared to Jane.

Question 13

Exhibit 5-7  
-Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte.If the market price of one cup of latte is $2,which of the following is true?

Accepted Answer

A) Monet will consume 3 cups of latte,and Andrew will consume 4 cups. 
B) Monet will consume 4 cups of latte,and Andrew will consume 3 cups. 
C) Both Monet and Andrew will consume 3 cups of latte. 
D) Both Monet and Andrew will consume 4 cups of latte. 
E) Monet will consume no latte,and Andrew will consume 7 cups. 
A) Monet will consume 3 cups of latte,and Andrew will consume 4 cups. 
B) Monet will consume 4 cups of latte,and Andrew will consume 3 cups. 
C) Both Monet and Andrew will consume 3 cups of latte. 
D) Both Monet and Andrew will consume 4 cups of latte. 
E) Monet will consume no latte,and Andrew will consume 7 cups.

Question 14

Utility is easily measured by economists using a unit of measure called a util.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 5-2  
-Refer to Exhibit 5-2.Which of the following statements is true?

Accepted Answer

A) The equation to obtain the marginal utility of the third unit is 89 - 35. 
B) The marginal utility for the first unit cannot be calculated. 
C) The marginal utility of the fourth unit is 28 units of utility. 
D) The marginal utility of the sixth unit is 20 units of utility. 
E) Total utility is increasing faster with each additional unit. 
A) The equation to obtain the marginal utility of the third unit is 89 - 35. 
B) The marginal utility for the first unit cannot be calculated. 
C) The marginal utility of the fourth unit is 28 units of utility. 
D) The marginal utility of the sixth unit is 20 units of utility. 
E) Total utility is increasing faster with each additional unit.

Question 16

Exhibit 5-1  
-Refer to Exhibit 5-1.At 4 cans of soda,total utility is

Accepted Answer

A) 27 units. 
B) 9 units. 
C) 189 units. 
D) 135 units. 
E) 162 units. 
A) 27 units. 
B) 9 units. 
C) 189 units. 
D) 135 units. 
E) 162 units.

Question 17

What is the difference between the income effect and substitution effect of a change in the price of a good?

Accepted Answer

The income effect is the amount by which

Question 18

Refer to the table below.Calculate the total utility of 4 cans of Coca-Cola.

Accepted Answer

Add the marginal uti

Question 19

Exhibit 5-2  
-Refer to Exhibit 5-2.The marginal utility of the third unit is

Accepted Answer

A) smaller than the marginal utility of the second unit. 
B) smaller than the marginal utility of the fourth unit. 
C) smaller than the marginal utility of the fifth unit. 
D) smaller than the marginal utility of the sixth unit. 
E) impossible to calculate given the available information. 
A) smaller than the marginal utility of the second unit. 
B) smaller than the marginal utility of the fourth unit. 
C) smaller than the marginal utility of the fifth unit. 
D) smaller than the marginal utility of the sixth unit. 
E) impossible to calculate given the available information.

Question 20

Total utility is the

Accepted Answer

A) change in utility a person receives from consuming a good. 
B) change in utility a person receives from consuming a good divided by the price of that good. 
C) total amount of satisfaction a person receives from consuming a good. 
D) price a person pays for consuming a good. 
E) total amount of satisfaction a person receives from consuming a good divided by the price of that good. 
A) change in utility a person receives from consuming a good. 
B) change in utility a person receives from consuming a good divided by the price of that good. 
C) total amount of satisfaction a person receives from consuming a good. 
D) price a person pays for consuming a good. 
E) total amount of satisfaction a person receives from consuming a good divided by the price of that good.

Exam 5: The Demand Curve and the Behavior of Consumers

Why does an individual consume a good so that marginal benefit is equal to price?

Individual demand indicates the maximum amount a consumer is willing to pay for any given quantity of a good.

If a consumer is already consuming a good and is willing to pay a maximum of $100 for one more unit of it,then the total benefit from consuming the good is $100.

To obtain utility,a consumer must

Exhibit 5-9 -Refer to Exhibit 5-9.At a price of P1,what labeled area(s)represent(s)consumer surplus?

Exhibit 5-5 -Refer to Exhibit 5-5.The maximum amount that a consumer is willing to pay for the tenth unit of the good is

Economists assume that people

Which of the following statements about market demand curves is true?

The income effect of a change in the price of a good is illustrated by a shift of the demand curve.

Utility maximization implies that the total utility of the consumer can be maximized only when the price of a good increases.

If the marginal utility of consuming one pound of apples is 200 units for John and 50 units for Jane,we can conclude

Exhibit 5-7 -Exhibit 5-7 shows the willingness of Monet and Andrew to pay for latte.If the market price of one cup of latte is $2,which of the following is true?

Utility is easily measured by economists using a unit of measure called a util.

Exhibit 5-2 -Refer to Exhibit 5-2.Which of the following statements is true?

Exhibit 5-1 -Refer to Exhibit 5-1.At 4 cans of soda,total utility is

What is the difference between the income effect and substitution effect of a change in the price of a good?

Refer to the table below.Calculate the total utility of 4 cans of Coca-Cola.

Exhibit 5-2 -Refer to Exhibit 5-2.The marginal utility of the third unit is

Total utility is the

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

Exhibit 5-9 -Refer to Exhibit 5-9.At a price of P₁,what labeled area(s)represent(s)consumer surplus?