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Economics Ch. 6 Quiz

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Mid Term II
mil8435
Quiz by mil8435, updated more than 1 year ago
mil8435
Created by mil8435 over 8 years ago
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Question 1

Question
Marginal utility is a measure
Answer
  • of total utility derived from consuming a given amount of a good
  • of the total utility gained from consuming an extra unit of a good
  • computed by dividing total utility by the amount of a good consumed
  • determined by a production condition in a market

Question 2

Question
"the second glass of Evian water was very good. May I have another?" which of the following is necessarily true regarding this statement?
Answer
  • the marginal utility of the second glass is negative
  • the marginal utility of the second glass is less than the marginal utility of the first glass
  • the marginal utility of the second glass is positive
  • the water is free

Question 3

Question
Total utility can be calculated as the
Answer
  • sum of all marginal utilities
  • price paid for one unit of a good
  • product of all marginal utilities
  • total expenditure on all units of a good the consumer buys

Question 4

Question
Demand curves usually slope downward because of the income and substitution effects, and because of the law of diminishing marginal utility
Answer
  • True
  • False

Question 5

Question
Newspaper vending machines illustrate that publishers believe
Answer
  • the average utility of 2 identical papers is 0 or less
  • the total utility from 2 identical newspapers is 0 or less
  • the marginal utility of a second identical newspaper is 0 or less
  • the marginal utility of a second identical newspaper is greater than the marginal utility of the first newspaper

Question 6

Question
Diminishing marginal utility means that
Answer
  • as you consume more of a good, other things constant, the total satisfaction you obtain from consuming this good tends to fall
  • as you hire more labor, other things constant, the total amount produced begins to fall
  • as you hire more labor, other things constant, the marginal product begins to fall
  • as you consume more of a good, other things constant, the additional satisfaction you obtain from each additional unit of the good tends to fall
  • as you consume more of a good, other things constant, the extra satisfaction you obtain from each extra good becomes negative

Question 7

Question
The marginal utility of a second copy of today's New York Times is
Answer
  • infinite
  • practically zero
  • positive and greater than the marginal of the first copy
  • equal to the marginal utility of the first copy

Question 8

Question
Which of the following sayings describes the concept of diminishing marginal utility?
Answer
  • time is money
  • penny wise and pound foolish
  • absence makes the heart grow founder
  • a penny saved is a penny earned

Question 9

Question
the reason you don't drink 5 cups of coffee at breakfast is that
Answer
  • the marginal utility of extra cups of coffee eventually diminishes
  • most people cannot afford 5 cups
  • the total utility of coffee rises as you consume more cups
  • the price of coffee rises as you consume more cups

Question 10

Question
Joe the economist tells his wife, Jane, that he wants to spend a weekend fishing with friends. She replies "you don't love me anymore". Just before she hits Joe with a croquet mallet, Joe explains to her that she has confused the concepts of
Answer
  • marginal utility and price
  • income and price
  • marginal utility and total utility
  • love and death

Question 11

Question
In exhibit 6-12, consumer surplus at a price of $2 is the difference between what consumers are willing to
Image:
eb1546fb-9301-41d2-a40c-978af07a4a59 (image/jpeg)
Answer
  • pay for a quantity of goods and what they actually pay, represented by triangle abc
  • pay for a quantity of goods and what they actually pay, represented by triangle dcb
  • pay for a quantity of goods and what they actually pay, represented by triangle adc
  • receive for a good and what they actually get, represented by triangle abc

Question 12

Question
Which area in exhibit 6-13 represents consumer surplus at market equilibrium?
Image:
40700bfc-54d3-41f0-b884-eda22ea37aeb (image/jpeg)
Answer
  • area a
  • area b
  • area c
  • area a+b+c
  • area a+b

Question 13

Question
Suppose I am willing to pay $300 for roller blades and I purchase them on sale for $200. My consumer surplus is
Answer
  • $300
  • 3/2
  • $100
  • $200
  • $0

Question 14

Question
The consumers' surplus derived from the last unit of a good purchased
Answer
  • tends to be less than 0
  • tends to be equal to 0
  • tends to be equal to the price of the good
  • tends to be greater than the price of the good

Question 15

Question
The market demand curve is
Answer
  • any individual's demand curve multiplied by the number of consumers in the market
  • the relationship between income and quantity demanded
  • the horizontal sum of the individual demand curve for all consumers in the market
  • the vertical summation of all individual demand curves

Question 16

Question
A measure of consumer surplus in any market is
Answer
  • total expenditure on the good
  • the area above the supply curve and below the price
  • the area beneath the demand curve
  • the area beneath the demand curve and above the price

Question 17

Question
Consumers derive consumer surplus whenever
Answer
  • the monetary value of total utility equal total expenditure
  • the monetary value of total utility is greater than total expenditure
  • The monetary value of total utility is less than total expenditure
  • marginal utility is greater than total utility

Question 18

Question
For any given price, the more elastic the demand for a product is, the greater will be the consumer surplus
Answer
  • True
  • False

Question 19

Question
When a service, such as medical care, is provided free of charge,
Answer
  • most people consume an infinite amount of it
  • most people do not much care about getting good value for their money
  • people do not derive any consumer surplus from it
  • we say that the demand for it is perfectly elastic

Question 20

Question
Refer to exhibit 6-17. If D, D', and D" represents the demand curves for the only 3 consumers in the market, then the market quantity demanded at a price of $15 will be
Image:
d580fa75-dfc9-4dbf-a01a-8f435a4f3e90 (image/jpeg)
Answer
  • 150
  • 120
  • 90
  • 60
  • 30

Question 21

Question
refer to exhibit 6-17. If D, D', and D" represents the demand curves for the only 3 consumers in the market, then the market quantity demanded at a price of $45 will be
Image:
4dc9d8af-93e3-48d2-8e98-d1bbc2a9a190 (image/jpeg)
Answer
  • 50
  • 70
  • 90
  • 110
  • 130

Question 22

Question
Refer to exhibit 6-17. If D, D', and D" represent the demand curves for the only 3 consumers in the market, then the market quantity demanded at a price of $30 will be
Image:
1ca75805-9b7a-4e23-b831-80d646bef02b (image/jpeg)
Answer
  • 40
  • 60
  • 80
  • 100
  • 120

Question 23

Question
refer to exhibit 6-17. If D, D', and D" represent the demand curve for the only 3 consumers in the market, then the market demand curve will be more ____ than each of the 3 individual demand curves
Image:
096e364e-057f-445d-8d71-628285fedf25 (image/jpeg)
Answer
  • steep (slope will be more negative)
  • elastic
  • flat (slope will be less negative)
  • inelastic

Question 24

Question
Suppose Jerry consumers 3 hamburgers at McDonald's one evening. He figured the last one was just worth the price he paid for it. If the hamburgers he buys have a price of $1. then
Answer
  • her earned no consumer surplus
  • he would have earned consumer surplus if he had eaten one more hamburger
  • he was irrational
  • he may have earned consumer surplus on the first 2 hamburgers

Question 25

Question
If you buy a good, its expected marginal value to you
Answer
  • may be greater than or equal to but not less than its price
  • may be less than or equal to but not greater than its price
  • is less than its price
  • is greater than its price

Question 26

Question
When the price is P in exhibit 6-11, the shaded area represents
Image:
4c94a188-8c83-4336-a3f4-af94332b6433 (image/jpeg)
Answer
  • a shortage
  • producer surplus
  • a price floor
  • consumer surplus

Question 27

Question
Consumer surplus is
Answer
  • the difference between the maximum amount that a consumer is willing to pay for a given amount of a good and the amount that the consumer actually pays
  • the difference between the price of the good paid by the consumer and the costs of production to the seller
  • the amount by which quantity supplied exceeds quantity demanded at the current market price
  • the amount by which quantity demanded exceeds quantity supplied at the current market price

Question 28

Question
At point b in exhibit 6-9, total utility is valued at
Image:
1add6dfa-5a09-46dc-bf34-a83ad4c1678a (image/jpeg)
Answer
  • $30, consumer expenditure is $20, and consumer surplus is $10
  • $26, consumer expenditure is $20, and consumer surplus is $6
  • $20, consumer expenditure is $20, and consumer surplus is $0
  • $30, consumer expenditure is $4, and consumer surplus is $26

Question 29

Question
What happens to consumer surplus as price falls along a given demand curve?
Answer
  • it always increases
  • it always decreases
  • it never changes
  • it only increases if price increases just a little

Question 30

Question
when price decreases, consumer surplus
Answer
  • increases
  • remains constant
  • decreases
  • becomes negative

Question 31

Question
at point a in exhibit 6-9, consumer surplus is
Image:
88f2b138-df85-4575-8174-8345d512dd47 (image/jpeg)
Answer
  • $0
  • $5
  • $6
  • $20
  • $26

Question 32

Question
Elvis values the first gravy sandwich at $5, the second at $4.50, and the third at $4. If he buys three for $4 each, his consumer surplus is
Answer
  • $5
  • $4
  • $1.50
  • $9.50
  • $12

Question 33

Question
On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in exhibit 6-15. On a day when the high temperature does not get above zero degrees, her demand curve increases to D'. At price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day
Image:
c904cd77-0a7d-4567-bfa6-fb22a3232b29 (image/jpeg)
Answer
  • cannot be determined without calculating an exact marginal valuation
  • increases a great deal over her consumer surplus on a normal day
  • will vary depending on whether hot chocolate is a normal or an inferior good
  • increases only if her demand curve is unit elastic
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