Question 1

A point on the budget constraint represents the fact that the consumer spends less than her or his income.

Accepted Answer

A) True 
 B)False

Question 2

A change in the price of a good changes a consumer's budget constraint and causes a shift of the demand curve.

Accepted Answer

A) True 
 B)False

Question 3

Suppose Monica has $20 to spend on pizza and soda.The price of a slice of pizza is $1.00 and the price of a can of soda is $.75.Which of the following is the most affordable bundle for maximizing her utility?

Accepted Answer

A) 20 slices of pizza and 10 cans of soda 
B) 10 slices of pizza and 20 cans of soda 
C) 4 slices of pizza and 17 cans of soda 
D) 7 slices of pizza and 17 cans of soda 
E) 20 slices of pizza and 25 cans of soda 
A) 20 slices of pizza and 10 cans of soda 
B) 10 slices of pizza and 20 cans of soda 
C) 4 slices of pizza and 17 cans of soda 
D) 7 slices of pizza and 17 cans of soda 
E) 20 slices of pizza and 25 cans of soda

Question 4

An individual's demand curve is not continuous mainly because

Accepted Answer

A) total utility is not continuous. 
B) marginal benefit is not continuous. 
C) quantity is not continuous. 
D) marginal utility is not continuous. 
E) price is not continuous. 
A) total utility is not continuous. 
B) marginal benefit is not continuous. 
C) quantity is not continuous. 
D) marginal utility is not continuous. 
E) price is not continuous.

Question 5

Consumer surplus is

Accepted Answer

A) equivalent to value in use. 
B) equivalent to value in exchange. 
C) the difference between total expenditure and what consumers have to pay per unit. 
D) total expenditure divided by the price per unit. 
E) the difference between what consumers would be willing to pay and what they have to pay. 
A) equivalent to value in use. 
B) equivalent to value in exchange. 
C) the difference between total expenditure and what consumers have to pay per unit. 
D) total expenditure divided by the price per unit. 
E) the difference between what consumers would be willing to pay and what they have to pay.

Question 6

The change in total benefit as measured by willingness to pay for one more unit of a good is called

Accepted Answer

A) marginal benefit. 
B) marginal cost. 
C) marginal utility. 
D) total utility. 
E) product price. 
A) marginal benefit. 
B) marginal cost. 
C) marginal utility. 
D) total utility. 
E) product price.

Question 7

The height of a demand curve represents the

Accepted Answer

A) value that a consumer is willing to pay for a good. 
B) price that a producer wishes to charge for a good. 
C) price that a consumer must pay the producer of a good. 
D) minimum value that consumers consider about a good. 
E) total volume of exchange in a market. 
A) value that a consumer is willing to pay for a good. 
B) price that a producer wishes to charge for a good. 
C) price that a consumer must pay the producer of a good. 
D) minimum value that consumers consider about a good. 
E) total volume of exchange in a market.

Question 8

Marginal benefit is the

Accepted Answer

A) change in total expenditures as a result of buying one more unit of a good. 
B) maximum amount a consumer is willing to pay for one more unit of a good. 
C) change in total utility that results from consuming one more unit of a good. 
D) same as total benefit. 
E) price of a good. 
A) change in total expenditures as a result of buying one more unit of a good. 
B) maximum amount a consumer is willing to pay for one more unit of a good. 
C) change in total utility that results from consuming one more unit of a good. 
D) same as total benefit. 
E) price of a good.

Question 9

On a supply and demand diagram,consumer surplus is the area

Accepted Answer

A) between the supply and demand curves 
B) below the supply curve and below price. 
C) below the demand curve and above price. 
D) below the entire demand curve. 
E) above the entire demand curve. 
A) between the supply and demand curves 
B) below the supply curve and below price. 
C) below the demand curve and above price. 
D) below the entire demand curve. 
E) above the entire demand curve.

Question 10

Why does water,which is essential to our health,cost so much less than diamonds,which are far less useful?

Accepted Answer

This water-diamond paradox is based on t

Question 11

Suppose a consumer can spend $1,000 on food and clothing.The price of food is $5 per unit and the price of clothing is $20 per unit.Also suppose the consumer was consuming 100 units of food and 25 units of clothing,and then the price of food rose to $10.Which of the following statements is true?

Accepted Answer

A) The maximum amount of food the consumer can buy is 100 units. 
B) The maximum amount of clothing the consumer can buy is 25 units. 
C) The maximum amount of food the consumer can buy is 50 units. 
D) If the consumer does not reduce food consumption,clothing consumption can be 12.5 units,at best. 
E) The consumer can consume 50 units of clothing. 
A) The maximum amount of food the consumer can buy is 100 units. 
B) The maximum amount of clothing the consumer can buy is 25 units. 
C) The maximum amount of food the consumer can buy is 50 units. 
D) If the consumer does not reduce food consumption,clothing consumption can be 12.5 units,at best. 
E) The consumer can consume 50 units of clothing.

Question 12

The area between the demand curve and the price line is called

Accepted Answer

A) shortage. 
B) the budget constraint. 
C) marginal benefit. 
D) consumer surplus. 
E) marginal utility. 
A) shortage. 
B) the budget constraint. 
C) marginal benefit. 
D) consumer surplus. 
E) marginal utility.

Question 13

Economists refer to utility as the

Accepted Answer

A) satisfaction that a producer receives from selling a good. 
B) satisfaction that a consumer receives from consuming a good. 
C) revenue that a seller receives from selling a good. 
D) price that a consumer pays for a good. 
E) difference between the value and the price of a good. 
A) satisfaction that a producer receives from selling a good. 
B) satisfaction that a consumer receives from consuming a good. 
C) revenue that a seller receives from selling a good. 
D) price that a consumer pays for a good. 
E) difference between the value and the price of a good.

Question 14

Economists assume that marginal utility cannot be negative.

Accepted Answer

A) True 
 B)False

Question 15

The data below show Paula and Susan's willingness to pay for compact discs.   
(A)Calculate the marginal benefits for both people.
(B)Draw Paula's and Susan's individual demand curves for compact discs.Draw the market demand curve for a market consisting only of these two people.
(C)Suppose the price of compact discs is $15.How many will Paula and Susan buy? Calculate the consumer surplus for each person.Show the area of consumer surplus in your diagram.
(D)What is the consumer surplus for the market as a whole? Does this equal the sum of the two individual consumer surpluses?

Accepted Answer

(A) @#IMG-DLM& (B) @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& (C)
At a price of $15 for co

Question 16

The budget constraint

Accepted Answer

A) is the lower limit on a consumer's spending. 
B) is the maximum utility an individual can achieve. 
C) has to do with a consumer's willingness to spend. 
D) expresses a consumer's preferences. 
E) is the maximum a consumer can spend on goods and services. 
A) is the lower limit on a consumer's spending. 
B) is the maximum utility an individual can achieve. 
C) has to do with a consumer's willingness to spend. 
D) expresses a consumer's preferences. 
E) is the maximum a consumer can spend on goods and services.

Exam 5: The Demand Curve and the Behavior of Consumers

A point on the budget constraint represents the fact that the consumer spends less than her or his income.

A change in the price of a good changes a consumer's budget constraint and causes a shift of the demand curve.

Suppose Monica has $20 to spend on pizza and soda.The price of a slice of pizza is $1.00 and the price of a can of soda is $.75.Which of the following is the most affordable bundle for maximizing her utility?

An individual's demand curve is not continuous mainly because

Consumer surplus is

The change in total benefit as measured by willingness to pay for one more unit of a good is called

The height of a demand curve represents the

Marginal benefit is the

On a supply and demand diagram,consumer surplus is the area

Why does water,which is essential to our health,cost so much less than diamonds,which are far less useful?

Suppose a consumer can spend $1,000 on food and clothing.The price of food is $5 per unit and the price of clothing is $20 per unit.Also suppose the consumer was consuming 100 units of food and 25 units of clothing,and then the price of food rose to $10.Which of the following statements is true?

The area between the demand curve and the price line is called

Economists refer to utility as the

Economists assume that marginal utility cannot be negative.

The budget constraint

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

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