Question 1

If the price elasticity of demand for a product is greater than 1, then

Accepted Answer

A)  higher prices will increase the quantity demanded. 
B)  higher prices will increase demand for the good. 
C)  higher prices will reduce demand for the good. 
D)  consumers are relatively responsive to price changes.

Question 2

Table 4.4
 
-What is true of the consumer whose utility values are given in Table 4.4?

Accepted Answer

A)  Her price elasticity of demand for CDs is zero. 
B)  The number of CDs she chooses to purchase will not change as the price of CDs changes. 
C)  Her consumption of CDs is characterized by diminishing marginal utility. 
D)  The marginal utility derived from each CD is constant regardless of the number purchased.

Question 3

If the price elasticity of demand is -0.20, what will happen to quantity demanded when the price rises by 20 percent?

Accepted Answer

The answer of If the price elasticity of demand is...

Question 4

When there are a variety of substitute goods easily available, then demand for the good in question is relatively _________ elastic.

Accepted Answer

The answer of When there are a variety of substitute...

Question 5

Which one of the following would make the demand for satellite subscription TV relatively less elastic?

Accepted Answer

A)  The cost of transmitting satellite signals is lowered. 
B)  The cost of administering the satellite service is lowered. 
C)  Cable TV service becomes less widely available. 
D)  Other networks of wireless entertainment become more widely available.

Question 6

The law of diminishing marginal utility asserts that total utility becomes negative when marginal utility begins to diminish.

Accepted Answer

A) True 
 B)False

Question 7

When expenditures on the good in question are a relatively small portion of your income, then your demand for the good in question will be relatively _________ elastic.

Accepted Answer

The answer of When expenditures on the good in question...

Question 8

When demand is perfectly inelastic,

Accepted Answer

A)  the price elasticity of demand is greater than 1. 
B)  the demand curve is vertical. 
C)  the demand curve is horizontal. 
D)  small changes in price lead to large changes in the quantity demanded.

Question 9

If the price of movie admission declines and in response you attend twice as many movies as you would otherwise, then your expected marginal utility from the last movie you choose to see will be zero.

Accepted Answer

A) True 
 B)False

Question 10

Utility is a term economists use to refer to

Accepted Answer

A)  affordability. 
B)  rationality. 
C)  expectation. 
D)  satisfaction.

Question 11

What happens to total consumer spending on a good when there is a price increase in the range in which demand is unit-elastic?

Accepted Answer

The answer of What happens to total consumer spending on...

Question 12

What happens to total consumer spending on a good when there is a price increase in the range in which demand is inelastic?

Accepted Answer

The answer of What happens to total consumer spending on...

Question 13

If your total utility in consuming 2 pieces of pizza is 25 utils and your total utility in consuming 3 pieces of pizza is 30 utils, what is the marginal utility provided by the third piece?

Accepted Answer

The answer of If your total utility in consuming 2...

Question 14

If the numeric value of elasticity is less than one, we say that demand for the good in question is _________.

Accepted Answer

The answer of If the numeric value of elasticity is...

Question 15

What happens to total consumer spending on a good when there is a price decrease in the range in which demand is unit-elastic?

Accepted Answer

The answer of What happens to total consumer spending on...

Question 16

Table 4.5
 
-Using Table 4.5, diminishing marginal utility begins after the _____________ glass of water is consumed.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth

Question 17

How does the time allowed for adjustment affect the price elasticity of demand for a good?

Accepted Answer

The answer of How does the time allowed for adjustment...

Question 18

Economic theory asserts that

Accepted Answer

A)  when marginal utility is positive, total utility is negative. 
B)  when total utility is positive, marginal utility is negative. 
C)  a lower price of a good allows consumers to purchase a quantity at which the marginal utility of the last unit purchased will be lower. 
D)  a lower price of a good allows consumers to purchase a quantity at which the marginal utility of the last unit purchased will be higher.

Question 19

If an increase in price decreases total consumer expenditures on a good, then we know that the demand is _________ within that price range.

Accepted Answer

The answer of If an increase in price decreases total...

Question 20

If the elasticity of demand for dry cleaning is -0.85 in the range between $3 and $2 per item, how will total consumer expenditures on dry cleaning be affected when dry cleaners lower prices from $3 to $2?

Accepted Answer

A)  Total consumer expenditures will increase. 
B)  Total consumer expenditures will decrease. 
C)  Total consumer expenditures will remain unchanged. 
D)  We cannot determine what will happen to total consumer expenditures unless we also know something about the dry cleaners' costs.

Exam 4: Consumer Decision Making and Consumer Reaction to Price Changes

If the price elasticity of demand for a product is greater than 1, then

Table 4.4 -What is true of the consumer whose utility values are given in Table 4.4?

If the price elasticity of demand is -0.20, what will happen to quantity demanded when the price rises by 20 percent?

When there are a variety of substitute goods easily available, then demand for the good in question is relatively _________ elastic.

Which one of the following would make the demand for satellite subscription TV relatively less elastic?

The law of diminishing marginal utility asserts that total utility becomes negative when marginal utility begins to diminish.

When expenditures on the good in question are a relatively small portion of your income, then your demand for the good in question will be relatively _________ elastic.

When demand is perfectly inelastic,

If the price of movie admission declines and in response you attend twice as many movies as you would otherwise, then your expected marginal utility from the last movie you choose to see will be zero.

Utility is a term economists use to refer to

What happens to total consumer spending on a good when there is a price increase in the range in which demand is unit-elastic?

What happens to total consumer spending on a good when there is a price increase in the range in which demand is inelastic?

If your total utility in consuming 2 pieces of pizza is 25 utils and your total utility in consuming 3 pieces of pizza is 30 utils, what is the marginal utility provided by the third piece?

If the numeric value of elasticity is less than one, we say that demand for the good in question is _________.

What happens to total consumer spending on a good when there is a price decrease in the range in which demand is unit-elastic?

Table 4.5 -Using Table 4.5, diminishing marginal utility begins after the _____________ glass of water is consumed.

How does the time allowed for adjustment affect the price elasticity of demand for a good?

Economic theory asserts that

If an increase in price decreases total consumer expenditures on a good, then we know that the demand is _________ within that price range.

If the elasticity of demand for dry cleaning is -0.85 in the range between $3 and $2 per item, how will total consumer expenditures on dry cleaning be affected when dry cleaners lower prices from $3 to $2?