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QUESTION 1 If Jackie needs special film to go with her new
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1. If Jackie needs special film to go with her new camera, then for her these two goods have what type of relationship?
CHAPTER 5 6 7 TEST Save and Submit

QUESTION 1 1. If Jackie needs special film to go with her new camera, then for her these two goods have what

type of relationship?

a

. Complementary. c

. Reversed. d

. Insensitive. e

. Substitute.

3 points QUESTION 2 1. The value of cross elasticity of demand between orange soda and grape soda is:

a

. between ?1 and 0. b

. less than ?1. c

. negative. d

. positive. e

. 0.

3 points QUESTION 3 1. Exhibit 5-8 Supply and demand curves for good X As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other

factors held constant, will move the equilibrium from point E to point:

a

W.

.

b

. X. c

. Y. d

. Z.

3 points QUESTION 4 1. Which of the following goods is likely to have the most elastic demand curve?

a

. Honda automobiles. b

. Medical care. c

. Tobacco products. d

. Gasoline.

3 points QUESTION 5 1. Suppose you are the manager of a local water company, and you are instructed to get consumers

to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by

how much would you have to raise the price of water?

a

. 25 percent b

. 10 percent c

. 100 percent d

. 40 percent

3 points QUESTION 6 1. You are on a campus committee which sets the ticket prices for basketball games. The committee

wants to increase the total money generated from ticket sales. When should the committee choose to

lower its ticket prices?

a

. When demand for basketball tickets is inelastic. b

. When demand for basketball tickets is elastic. c

. Never. d

. Always.

3 points QUESTION 7 1. Along the elastic range of a demand curve, a price change causes:

a

. a change in total revenue in the same direction. b

. an unpredictable change in the total revenue. c

. no change in total revenue. d

. a change in total revenue in the opposite direction.

3 points QUESTION 8 1. If the value of the price elasticity of demand is 0.2, this means that:

a

. a 20 percent decrease in price causes a 1 percent increase in quantity demanded. b

. a 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded. c

. a 100 percent decrease in price causes a 200 percent increase in quantity demanded. d

. a 0.2 percent decrease in price causes a 1 percent increase in quantity demanded. e

. a 5 percent decrease in price causes a 1 percent increase in quantity demanded.

3 points QUESTION 9 1. Over the elastic portion of a demand curve, a decrease in price causes:

a

. a decrease in total revenue. b

. an increase in quantity demanded, but anything can happen to revenue. c

. an increase in total revenue. d

. no change in total revenue.

3 points QUESTION 10 1. Exhibit 5-5 Demand curve for computers In Exhibit 5-5, the total revenue at point E on the demand curve equals:

a

OD.

.

b

. FE. c

. DE. d

. ODEF. e

. None of these.

3 points QUESTION 11 1. If I buy 3 cups of coffee, paying \$1 for each cup, and I would have been willing to pay up to \$3

for the first cup, up to \$2 for the second cup, and up to \$1 for the third cup, then my consumer surplus is:

a

. \$5. b

. \$2. c

. \$3. d

. \$1. e

. \$6.

4 points QUESTION 12 1. When total utility is at a maximum, marginal utility is:

a

. infinite. b

. positive. c

. negative. d

. one. e

. zero.

4 points QUESTION 13 1. Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn Total Utility

from Multiplex Tickets Total Utility

from Video Rentals Total Utility

from Popcorn 1 movie (30 utils) 1 video (14 utils) 1 bag (8 utils) 2 movies (54 utils) 2 videos (24 utils) 2 bags (13 utils) 3 movies (72 utils) 3 videos (30 utils) 3 bags (15 utils) 4 movies (84 utils) 4 videos (32 utils) 4 bags (16 utils) 2.

3. In Exhibit 6-4, assume the Multiplex tickets cost \$6 each, video rentals cost \$2 each, and bags of

popcorn cost \$1 each. Suppose the consumer has \$12 per week to spend on multiplex tickets, video

rentals, and popcorn. What combination of goods will give the consumer the most utility?

a

2 movies, no videos, and no bags of popcorn.

.

b

. 1 movie, 3 videos, and no popcorn. c

. 1 movie, 2 videos, and 2 bags of popcorn. d

. 1 movie, 1 video, and 4 bags of popcorn.

4 points QUESTION 14 1. When the price of a good falls, consumers buy more of the good because it is cheaper relative to

competing goods. This statement describes the:

a

. price effect. b

. substitution effect. c

. consumer equilibrium effect. d

. income effect.

4 points QUESTION 15 1. Consumers tend to maximize:

a

. money holdings. b

. marginal utility. c

. consumer surplus. d

. total utility. e

. marginal utility per dollar.

4 points QUESTION 16 1. Which of the following statements is true about the total utility provided by a good?

a

. Total utility is maximized when marginal utility is zero (for total utility &lt; 0). b

. Total utility can never be negative. c

. Total utility is maximized when marginal utility is zero (for total utility &gt; 0). d

. Total utility continues to increase as more of the good is consumed. e

. Total utility is maximized when marginal utility is maximized. 4 points QUESTION 17 1. The law of diminishing marginal utility is the principle that the marginal utility curve ____ as

people consume more of a product in a given period.

a

. rises. b

. first falls and then rises. c

. remains unchanged. d

. falls.

4 points QUESTION 18 1. On Thanksgiving, Jake's mother gives him a huge platter of food. If Jake were to keep eating just

to please his mother (even when he really wanted to stop), his marginal utility would be:

a

. minus one. b

. the same as his total utility. c

. positive. d

. negative. e

. large.

4 points QUESTION 19 1. If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent

on cola, and Smith is a utility-maximizing consumer, he should:

a

. decrease his spending on cola. b

. decrease his spending on cola and increase his spending on shirts. c

. increase his spending on cola and decrease his spending on shirts. d

. increase his spending on shirts.

4 points QUESTION 20 1. Suppose that an individual consumes just two goods: Big Macs and milkshakes. In order to reach

consumer equilibrium, the individual must arrange the consumption of Big Macs and milkshakes so that

the:

a

. marginal utility of the two goods is equal for the last dollar spent on each good. b

. ratio of marginal utility of milkshakes to the marginal utility of Big Macs is 1 for the last dollar

spent on each good.

c

ratio of marginal utility to price is the same for both goods for the last dollar spent on each good.

.

d

. price paid for the two goods is the same.

4 points QUESTION 21 1. Suppose a consumer is spending his or her entire budget. In order to obtain the most satisfaction

from his or her purchases, all goods should:

a

. be consumed in equal quantities. b

. give the consumer matching amounts of total utility. c

. have identical marginal utilities. d

. provide the same marginal utility per dollar.

4 points QUESTION 22 1. Assume the total utilities corresponding to the first four units of a product consumed are 8, 12,

14, 15, respectively. The marginal utility of the third unit consumed is:

a

. 14. b

. 3 c

. 2. d

. 34.

4 points QUESTION 23 1. Utility theory assumes that marginal utility:

a

. decreases as an individual consumes more of a product. b

. is constant as long as the individual derives utility from the product. c

. increases as an individual consumes more of a product. d

. is zero as long as the individual derives utility from the product. e

. is constant as long as the individual derives satisfaction from the product.

4 points QUESTION 24 1. If marginal utility is positive, then total utility is:

a

. decreasing. b

. constant. c

. negative. d

. zero. e

. increasing.

4 points QUESTION 25 1. According to the income effect, when the price of automobiles rises, people buy fewer

automobiles because:

a

. their demand for automobiles is very elastic. b

. the nominal amount of their paychecks is smaller. c

. they substitute other forms of transportation for

driving.

d

the purchasing power of their income is reduced.

.

4 points QUESTION 26 1. Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn Total Utility

from Multiplex Tickets Total Utility

from Video Rentals Total Utility

from Popcorn 1 movie (30 utils) 1 video (14 utils) 1 bag (8 utils) 2 movies (54 utils) 2 videos (24 utils) 2 bags (13 utils) 3 movies (72 utils) 3 videos (30 utils) 3 bags (15 utils) 4 movies (84 utils) 4 videos (32 utils) 4 bags (16 utils) 2.

3. In Exhibit 6-4, assume the Multiplex tickets cost \$6 each, video rentals cost \$2 each, and bags of

popcorn cost \$1 each. Suppose the consumer has \$12 per week to spend on multiplex tickets, video

rentals, and popcorn. In the consumer equilibrium, what is the marginal utility per dollar for each of the

three goods?

a

5 utils per dollar.

.

b

. 13 utils per dollar. c

. 22 utils per dollar. d

. 9 utils per dollar.

4 points QUESTION 27 1. Exhibit 6A-3 Consumer equilibrium Given the budget line and indifference curves shown in Exhibit 6A-3, at point Z:

a

MUx = MUy.

.

b

. MRS = Py /

Px.

c

MRS = Px /

.

Py. d

. Px exceeds Py.

4 points QUESTION 28 1. Exhibit 6A-7 Consumer equilibrium As shown in Exhibit 6A-7, the total utility a consumer receives at point B is ____ the total utility at point

A.

a

greater than

.

b

. equal to c

. less than d

. equal to the marginal rate of substitution (MRS) plus

4 points QUESTION 29 1. At the unique point of consumer equilibrium, the:

a

. marginal rate of substitution (MRS) equals the slope of the budget line. b

. marginal utility ratio of the two goods is equal. c

. distance between indifference curves is maximum. d

. distance between the budget line and the indifference curve is maximum.

4 points QUESTION 30 1. Exhibit 6A-3 Consumer equilibrium Given the budget line and indifference curves shown in Exhibit 6A-3, consumer equilibrium occurs at

point:

a

Y.

.

b

. X. c

. W. d

. V. e

. Z.

4 points QUESTION 31 1. If total cost is \$1,000 when output is zero, and total cost is \$1,200

when output is one, and total cost is \$1,500 when output is two, then which

of the following is true?

a

. The marginal cost of producing the first unit of output is

\$1,200.

b

. Total fixed cost is \$1,500.

c

. The average fixed cost is \$750 when two units of

output are produced.

d

. The marginal cost of producing the second unit of

output is \$300.

4 points QUESTION 32 1. Each potential short-run average total cost curve is tangent to the long-run average cost curve at:

a

. the minimum point of the long-run average cost curve. b

. a single point on the short-run average total cost curve. c

. the minimum point of the average total cost curve. d

. the level of output that minimizes short-run average total cost.

4 points QUESTION 33 1. Exhibit 7-12 Cost schedule for producing pizza

Pizzas Fixed

Cost 0 Variable

Cost \$ \$ Total

Cost

\$ 1 48 2 17 3 27 4 78 5 40 6 64 7 80 2.

3.

a

. By filling in the blanks in Exhibit 7-12, the ATC of 4 pizzas is shown to be equal to:

\$19.50. b

. \$40. c

. \$9.50. d

. \$78. e

. \$10.

4 points QUESTION 34 1. The total fixed cost curve:

a

. increases with output. b

. varies with the quantity of inputs used. c

. decreases with output. d

. remains constant regardless of output.

4 points QUESTION 35 1. Exhibit 7-10 Short-run cost schedule for book publisher's hourly production

Total

Output

0 cases of books Total

Variable Cost

\$ Total

Cost 0 \$200 1 100 300 2 150 350 3 250 450 4 450 650 2.

3.

a

. In Exhibit 7-10, the publisher's fixed cost is equal to:

\$50. b

. \$200. c

. \$300. d

. \$100.

4 points QUESTION 36 1. If a firm's long-run average cost curve is rising, it is experiencing:

a

. economies of scale. c

. diseconomies of scale. d

. none of these.

4 points QUESTION 37 1. Which of the following is considered to be a fixed cost of operating an automobile?

a

. Oil change. b

. Registration fees. c

. Maintenance. d

. Tires. e

. Gasoline.

4 points QUESTION 38 1. If a firm has total revenue of \$200 million, explicit costs of \$190 million, and implicit costs of

\$30 million, its economic profit is:

a

. \$10 million. b

. \$70 million. c

?\$20

. million. d

?\$10

. million. e

. \$200 million.

4 points QUESTION 39 1. Variable inputs are defined as any resource that:

a

. varies with the size of the firm's plant. b

. can be changed as output changes. c

. can be increased or decreased hourly. d

. cannot be changed as output changes. 4 points QUESTION 40 1. The short run is a period of time:

a

. in which a firm uses at least one fixed input. b

. in which production occurs within one year. c

. in which production occurs within six months. d

. that is long enough to permit changes in the firm's plant size

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This question was answered on: Feb 21, 2020

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