Quiz
Econ Exam 1 - Chapter 1 - 7
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Questions in this quiz (100)
1When economists speak of scarcity, they are referring to the
- Acondition in which society is not employing all its resources in an efficient way.
- Bcondition in which people's wants outstrip the limited resources available to satisfy those wants.
- Ceconomic condition that exists in only very poor countries of the world.
- Dcondition in which society produces too many frivolous goods and not enough socially desirable goods.
2Entrepreneurship is
- Athe talent for organizing the use of land, labor and capital, among other things.
- Bskill in influencing government regulators and legislators.
- Caccumulated technical knowledge in using labor and capital.
- Dknowledge of the particular natural resources to be found in a given area.
3The synonym economists commonly use for additional is
- Acapital.
- Brational.
- Cmarginal.
- Deconomic.
4Decision making "at the margin" means making a choice based on __________ of a decision.
- Athe total benefits
- Bthe total costs
- Ccomparing the total benefits and costs
- Dcomparing the additional benefits and costs
5Ceteris paribus means
- Aone variable too many.
- Bthe correct relationship specified.
- Cassuming economic motives.
- Dall other things held constant.
6Through war, many of the factories in country 1 are destroyed and many of its people are killed. As a result, the country's
- Aproduction possibilities frontier (PPF) after the war has probably shifted to the right compared to its PPF prior to the war.
- BPPF after the war has probably shifted to the left compared to its PPF prior to the war.
- CPPF after the war is probably the same PPF as before the war.
- Dability to produce goods and services has increased.
- Eb and d
7An increase in the quantity of resources
- Ashifts the PPF inward.
- Bshifts the PPF outward.
- Cmoves the economy to a new point up along a given PPF.
- Dmoves the economy to a new point down along a given PPF.
8In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is
- A1/3 hour for Andy and 1 hour for John.
- B1 hour for Andy and 1 hour for John.
- C3 loaves of bread for Andy and 1 loaf of bread for John.
- D1/3 loaves of bread for Andy and 1 loaf of bread for John.
9Some of our farm fields are being left unused. Does this have any implications for the economy's PPF diagram (with agricultural products on one axis and electronics products on the other axis)?
- ANo implications, because the PPF deals only with resources in use.
- BThe PPF cannot be drawn if some resources are idle.
- CWith unemployed resources, we are at a point inside the PPF.
- DThe PPF would be upward sloping.
10Country X has a high unemployment rate. It follows that country X is operating
- Abeyond its production possibilities frontier (PPF).
- Bon its PPF.
- Cinside (below) its PPF.
- Dat an efficient point.
- Eb and d
11The latest Lady Gaga album is available to be downloaded for $12.99. Is this price a rationing device?
- ANo, the album will be sold to anyone having the required number of dollars.
- BYes, many will not buy the album because they are unwilling to sacrifice other things $12.99 will buy.
- CNo, for price to be a rationing device, it must be so high that only one unit of the item is sold.
- DYes, since that is a reasonable price.
12In economics, a synonym for utility is
- Ausefulness.
- Bsatisfaction.
- Csacrifice.
- Da service.
13Amy's opportunity cost of going to the movies is
- Athe price of the ticket.
- Bzero, if she has a free pass.
- Cthe price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies.
- Dboth b and c
14In an interview an economist states, "This problem should be of greater concern to the federal government." We can explicitly put this statement in the category of
- Amicroeconomics.
- Bmacroeconomics.
- Cpositive economics.
- Dnormative economics.
15What does it mean if a person makes a "decision at the margin"?
- AThe person compares additional benefits and additional costs when deciding what to do.
- BThe person weighs the good against the bad and then decides what to do.
- CThe person is more likely to say yes than to say no.
- DThe person compares marginal benefits and total costs and then decides what to do.
- EThe person makes a decision based on a condition.
16Productive efficiency implies that
- Ait is impossible to obtain gains in one area without losses in another.
- Bit is possible to obtain gains in one area without losses in another.
- Cthere are too many resources.
- Dthere are too few resources.
17Refer to Exhibit 2-5. The opportunity cost of moving from point D to point C is
- A5,000 televisions.
- B5,000 fax machines.
- C10,000 televisions.
- D10,000 fax machines.
18Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good Y only?
- A1
- B2
- C3
- D4
19Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?
- AA technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z.
- BA technological advance makes it possible to produce less of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing good Y.
- CA technological advance makes it possible to produce more of good X with more labor. As a result, more labor is needed to produce good X. There is less labor available to produce goods Y and Z.
- DA technological advance makes it possible to produce more of good X with less labor. As a result, labor becomes more important to the production of good X. More labor ends up producing good X.
20Refer to Exhibit 2-8. Who has the comparative advantage in the production of good X?
- AMario
- BMaya
- CBoth Mario and Maya
- DNeither Mario nor Maya
21Refer to Exhibit 3-1. At a price of $2 there is a
- Ashortage of 100 units.
- Bshortage of 200 units.
- Cshortage of 150 units.
- Dsurplus of 200 units..
- Esurplus of 150 units.
22An increase in the price of good B caused an increase in the demand for good C. This indicates that
- AB and C are complements.
- BB and C are substitutes.
- CB and C are neither substitutes nor complements.
- DB and C are normal goods.
23Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of
- Aa price reduction.
- Ban increase in population.
- Ca decline in technology.
- Dan increase in the number of buyers.
24If the supply of and demand for a product both decrease, then equilibrium
- Aquantity and equilibrium price must both decline.
- Bquantity must decline, but equilibrium price may either rise, fall, or remain unchanged.
- Cprice must fall, but equilibrium quantity may either rise, fall, or remain unchanged.
- Dquantity must fall and equilibrium price must rise.
25Refer to Exhibit 3-5. In the market shown, if equilibrium was originally at point Z and the new equilibrium is now at point V, this change may have been caused by
- Aa decrease in consumers’ income (assuming that this is an inferior good) and a simultaneous decline in technology in the production of this good.
- Ban increase in consumers’ income (assuming that this is an inferior good) and a simultaneous improvement in technology in the production of this good.
- Ca decrease in consumers’ income (assuming that this is an inferior good) and no change in supply.
- Dan increase in consumers’ income (assuming that this is an inferior good) and no change in supply.
26Refer to Exhibit 3-10. 100 units of X will be exchanged in this market if the price is
- A$30
- B$20
- C$10
- Da and c
27Jerry has $50,000 in his savings account and the average new car price is $23,000. Will Jerry buy a new car?
- AYes, since Jerry can afford a new car.
- BNot necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car.
- CYes, since Jerry's savings is more than double the average new car price.
- Dnone of the above
28One reads the following in a newspaper: "Today the president and Congress agreed to impose new restrictive quotas on Japanese cars coming into the country." As a result, an economist would predict that the
- Asupply of cars in the country will remain the same and the (average) price of cars will fall.
- Bsupply of cars in the country will fall and the (average) price of cars will rise.
- Csupply of cars in the country will rise and the (average) price of cars will fall.
- Ddemand for cars in the country will fall and the (average) price of cars will rise.
- Edemand for cars in the country will rise and the (average) price of cars will rise.
29One point on a market supply curve represents $4 and 100 units quantity supplied. If there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then which of the following combinations of price and quantity supplied might hold for the other two suppliers?
- AAt $4, quantity supplied could be 40 units for one supplier and 27 for the other.
- BAt $4, quantity supplied could be 33 units for one supplier and 27 for the other.
- CAt $4, quantity supplied could be 40 units for one supplier and 37 for the other.
- DAt $4, quantity supplied could be 77 units for one supplier and 10 for the other.
- EThere is not enough information to answer this question.
30At a price of $25, Danielle buys 3 books per month. When the price decreases to $20, Danielle buys 4 books per month. Jason says that Danielle's demand for books has increased. Is Jason correct?
- AYes, Jason is correct.
- BNo, Jason is incorrect. Danielle's demand has decreased.
- CNo, Jason is incorrect. Danielle's quantity demanded has decreased, but her demand has stayed the same.
- DNo, Jason is incorrect. Danielle's quantity demanded has increased, but her demand has stayed the same.
- ENo, Jason is incorrect. Danielle's quantity demanded has increased and her demand has decreased.
31If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are
- Aa bad good.
- Ban inferior good.
- Ca preferential good.
- Da normal good.
- Ea neutral good.
32If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen?
- AThe demand curve for the product the firm produces shifts rightward.
- BThe demand curve for the product the firm produces shifts leftward.
- CThe supply curve of the product the firm produces shifts rightward.
- DThe supply curve of the product the firm produces shifts leftward.
33Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,
- Athe supply curve of new houses would shift leftward, since it now costs $10,000 more for builders to produce a house.
- Bthe demand curve for new houses would shift rightward, since now every family would want to buy a house.
- Cthe demand curve for new houses would shift leftward.
- Dthe supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.
- Ec and d
34Which of the following will not shift a supply curve?
- Aa change in the price of relevant resources
- Ba change in the good's own price
- Ca change in the number of sellers
- Da change in per-unit costs brought about by a change in taxes.
35If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in price and quantity?
- AThe price will increase, but the quantity may increase or decrease.
- BThe price will increase, and the quantity will increase.
- CThe price will decrease, and the quantity will increase.
- DThe price will stay the same, but the quantity will increase.
- EThe price will stay the same, but the quantity will decrease.
36In moving along a demand curve, which of the following is NOT held constant?
- Athe prices of substitute goods
- Bthe prices of complementary goods
- Cconsumer incomes
- Dthe price of the good for which the demand curve is relevant
37A "decrease in demand" means that
- Athe demand curve has shifted to the left.
- Bprice has declined and consumers want to purchase more of the good.
- Cthe demand curve has shifted to the right.
- Dthe price of the good can be expected to decline, assuming supply stays constant.
38A market is said to be in disequilibrium if
- Ait exhibits either a surplus or a shortage.
- Bthe number of units that individuals are willing to buy exceeds the number of units they can afford.
- Cit is a market for an inferior good.
- Dnone of the above
39An increase in the number of sellers will, ceteris paribus,
- Aincrease equilibrium price and quantity.
- Bincrease equilibrium price and decrease equilibrium quantity.
- Cdecrease equilibrium price and increase equilibrium quantity.
- Ddecrease equilibrium price and quantity.
- Eincrease demand.
40There are two universities, A and B, in a city. Tuition rises at University A and, as a result, the demand for attending University B rises. It follows that educational services at the two universities are
- Acomplements.
- Bnormal goods.
- Cinferior goods.
- Dsubstitutes.
41Refer to Exhibit 5-5. If the airline charges price P2 for both aisle seats and middle seats, the result will be
- Aa surplus of middle seats and the equilibrium quantity of aisle seats.
- Ba surplus of aisle seats and the equilibrium quantity of middle seats.
- Ca shortage of middle seats and the equilibrium quantity of aisle seats.
- Da shortage of aisle seats and the equilibrium quantity of middle seats.
42Suppose that television show A is much more popular than television show B. The equilibrium price for a ticket to view the taping of show A is $40 and the equilibrium price for a ticket to view the taping of show B is -$30. If free tickets are offered for the taping of both shows, it is likely that
- Athere will be a shortage of tickets for show A and a surplus of tickets for show B.
- Bthere will be a surplus of tickets for show A and a shortage of tickets for show B.
- Cthere will be a surplus of tickets for both shows.
- Dthere will be a shortage of tickets for both shows.
43Suppose that there are two laws proposed for eviction notices. Plan A requires landlords to give a renter 30 days to vacate an apartment once he has been served an eviction notice. Under Plan B, he has 60 days to vacate an apartment once he has been served an eviction notice. It follows that landlords will find
- APlan A more expensive than Plan B.
- BPlan B more expensive than Plan A.
- Cboth plans equally expensive.
- Dnone of the above
44The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply is fixed. If the university can only charge a single price and wishes to maximize the total number of seats purchased during the day, it should set the price
- Aat equilibrium for 8 a.m. classes.
- Bat equilibrium for 10 a.m. classes.
- Cmidway between the two equilibria.
- Dbelow either 8 a.m. or 10 a.m. equilibrium price.
45Colleges and universities use such things as grade point averages and standardized test scores as
- Aa measure of consumer utility.
- Bnon-price rationing devices.
- Ca means to shift the supply curve for a college education.
- Dsolely to frustrate prospective students.
46When the price of a good rises, the price is transmitting information indicating that the good is relatively
- Ascarcer.
- Bless scarce.
- Cmore plentiful in supply.
- Db and c
47Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $15. The number of units that would be exchanged in this market would be
- A180, since that is the equilibrium price and the price ceiling is above the equilibrium price.
- B80, since that is the number of units demanded at the price ceiling.
- C290, since that is the number of units supplied at the price ceiling.
- D185, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.
48If the minimum wage law sets a wage floor above the equilibrium wage in the unskilled labor market,
- Athe minimum wage will create a surplus of labor.
- Bthe minimum wage will create a shortage of labor.
- Cthe minimum wage will not affect the labor market.
- Dthe labor market will change, but we cannot be certain how.
49Which of the following statements is true?
- APrice ceilings set below the equilibrium price cause shortages.
- BSurpluses cause price ceilings to be imposed.
- CNeither a price ceiling nor a shortage is the cause of the other.
- DPrice ceilings cannot be imposed for longer than a month.
50Jake is an excellent barber. However, all customers who come to him for a haircut must buy a bottle of shampoo. This type of arrangement is known as
- Aa tie-in sale.
- Ba sweetheart deal.
- Can exclusive contract.
- Da cross subsidy.
51Refer to Exhibit 4-1. How many fewer units are exchanged because of the price ceiling than ultimately would be exchanged in a free market?
- A50
- B60
- C65
- D100
52An effective price ceiling will
- Aclear the market.
- Bresult in a shortage.
- Cresult in a surplus.
- Dinduce new firms to enter the industry.
53Situation 4-1
During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo on the West. In the spring of 1974, price controls were abolished.
Refer to Situation 4-1. An economist would predict that the oil embargo imposed in 1974 would result in a- Aleftward shift in the supply (curve) of gasoline.
- Brightward shift in the supply (curve) of gasoline.
- Cleftward shift in the demand (curve) for gasoline.
- Drightward shift in the demand (curve) for gasoline.
- Eboth a and d
54If the absolute price of a car is $40,000 and the relative price of a computer in terms of cars is 1/10 of a car, it follows that the absolute price of a computer is
- A$10,000
- B$1,000
- C$4,000
- D$2,000
- EThere is not enough information to answer the question.
55Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What has happened to the producers’ surplus as a result of the imposition of the price floor?
- AProducers’ surplus has risen by (area 2 + 3)
- BProducers’ surplus has fallen by (area 4 + 5)
- CProducers’ surplus has changed by (area 3 - area 5)
- DProducers’ surplus has changed by (area 2 - area 5)
56If the purchase and sale of marijuana become legalized
- Athe equilibrium price and quantity will both rise.
- Bthe equilibrium price will fall, but the change in equilibrium quantity depends upon whether the demand curve shifts more or the supply curve shifts more.
- Cthe equilibrium quantity will rise, but the change in equilibrium price depends upon whether the demand curve shifts more or the supply curve shifts more.
- Dthe equilibrium price and quantity will both fall.
57A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates equilibrium travel flows at the busiest time of day, it will create a __________ at all other times.
- Asurplus of space
- Bshortage of space
- Czero money price for space
- Dzero opportunity cost for space
58Refer to Exhibit 5-2. If the tuition is set at $70 there will be
- Aa shortage at 10 a.m. and a surplus at 8 a.m.
- Ba surplus at 10 a.m. and a shortage at 8 a.m.
- Cequilibrium at 10 a.m. and a surplus of seats at 8 a.m.
- Dequilibrium at 10 a.m. and a shortage of seats at 8 a.m.
59If patients were allowed to sue their HMO, we would expect
- Athe demand curve for health care services provided by the HMO to shift to the left and the price of HMO-provided health care coverage to fall.
- Bthe supply curve for health care services provided by the HMO to shift to the left and the price of HMO-provided health care coverage to rise.
- Cthe supply curve for health care services provided by the HMO to shift to the right and the price of HMO-provided health care coverage to fall.
- Da and b
60The higher the price of medical care in general, the lower the ____________________________ medical care and the ______________________ specific items that make up medical care (such as, x-rays).
- Aquantity demanded of; higher the demand for
- Bdemand for; higher the demand for
- Cquantity demanded of; lower the demand for
- Ddemand for; higher the quantity demanded of
61If quantity demanded rises by 10 percent as price falls by 7 percent, the price elasticity of demand equals
- A0.70
- B1.43
- C1.07
- D0.43
62Vernon spends the following percentages of his budget on the following goods: 23 percent on good A, 11 percent on good B, 1 percent on good C, and 3 percent on good D. For which good is price elasticity of demand the highest, ceteris paribus?
- Agood A
- Bgood B
- Cgood C
- Dgood D
63If two goods are substitute goods,
- Aan increase in the price of one will cause a decrease in the demand for the other.
- Ban increase in the price of one will cause an increase in the demand for the other.
- Cthe price elasticity of demand for both goods will be greater than 1.
- Dthe price elasticity of demand for both goods will be less than 1.
64If Cassandra bought 16 cotton blouses last year when her income was $40,000 and she buys 14 cotton blouses this year her when income is $35,000, then blouses are
- Aan inferior good.
- Ba normal good.
- Ca substitute good.
- Da complementary good.
65Suppose a producer decides that if the price of his or her product is $10, the quantity supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,100. The supply of the good is
- Aelastic.
- Binelastic.
- Cperfectly elastic.
- Dunit elastic.
- Eperfectly inelastic.
66Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. As a result, the equilibrium price
- Arises from $5.00 to $6.25.
- Bfalls from $5.00 to $4.00.
- Cremains constant at $5.00.
- Dnone of the above
67Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do consumers end up paying?
- A63 percent
- B45 percent
- C70 percent
- D55 percent
- E25 percent
68If the demand for a good is inelastic and the price of the good decreases,
- Atotal revenue increases.
- Btotal revenue decreases.
- Ctotal revenue is not affected.
- Dthe direction of the change in total revenue cannot be determined from the information given.
69Price elasticity of demand is equal to
- Athe change in price divided by the change in quantity demanded.
- Bthe percentage change in quantity demanded divided by the percentage change in income.
- Cthe percentage change in income divided by the percentage change in price.
- Dthe percentage change in quantity demanded divided by the percentage change in price.
70Cross elasticity of demand measures the responsiveness in
- Aquantity demanded of one good to changes in the price of the same good.
- Bquantity demanded of one good to changes in the quantity demanded of another good.
- Cquantity demanded of one good to changes in the price of another good.
- Dthe price of one good to changes in the price of another good.
- Ethe quantity demanded of one good to changes in income.
71Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in
- Ainterest rates.
- Bprice.
- Csupply.
- Ddemand.
72If the percentage change in quantity demanded is greater than the percentage change in price, demand is
- Ainelastic.
- Bunit elastic.
- Celastic.
- Dperfectly inelastic.
73If the cross elasticity of demand for two goods is negative,
- Aone of the goods is a normal good, and the other good is an inferior good.
- Bboth goods are normal goods.
- Cthe goods are substitutes.
- Dthe goods are complements.
74A normal good is
- Aany good that consumers normally buy.
- Bany good for which other goods can substitute.
- Ca good for which the demand rises as income falls.
- Da good for which the demand rises as income rises.
- Ea good for which the quantity demanded rises as its price falls.
75A per-unit tax is placed on the production of good Y. Someone who believes that the producers of the good will end up paying the full tax may be assuming that the good's demand curve is
- Aelastic.
- Bperfectly inelastic.
- Cinelastic.
- Dperfectly elastic.
- Eunit elastic.
76Cross elasticity of demand measures the responsiveness of
- Ademand for one good to changes in the demand for another good.
- Bdemand for one good to changes in the price of another good.
- Cquantity demanded of one good to changes in the quantity demanded of another good.
- Dquantity demanded of one good to changes in the price of another good.
- Eb and d
77Airlines that try to lower fares in order to increase revenue believe the demand for airline service is
- Aprice inelastic.
- Bincome elastic.
- Cincome inelastic.
- Dprice elastic.
- Ecross-price elastic.
78Refer to Exhibit 5-7. Which of the graphs shows a perfectly inelastic demand curve?
- A(1)
- B(2)
- C(3) and (4)
- Dnone of the above
79Which of the following defines elastic demand?
- Apercentage change in price greater than percentage change in quantity demanded
- Bpercentage change in income greater than percentage change in price
- Cpercentage change in quantity demanded greater than percentage change in price
- Dpercentage change in quantity supplied greater than percentage change in price
80Which of the following statements represents a correct and sequentially accurate economic explanation?
- AA tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price rises, equilibrium quantity falls, and buyers pay 100 percent of the tax.
- BA tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price rises, equilibrium quantity stays constant, and buyers pay 100 percent of the tax.
- CA tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price does not change, equilibrium quantity rises, and sellers pay 50 percent of the tax.
- DA tax is placed on the production of good X, the supply curve of good X shifts to the right, equilibrium price falls, equilibrium quantity falls, and sellers pay 100 percent of the tax.
81Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 146, respectively. The marginal utility of the seventh wing is __________ utils.
- A14
- B146
- C10
- D20.9
82Suppose the marginal utility (MU) of paperback books is 40 utils and each costs $5 while the MU of DVD rentals is 20 utils and each rents for $4. If you consume one movie and one book per week, are you attaining consumer equilibrium?
- AYes, so there is no need to change.
- BNo. You need to buy more books and rent fewer DVDs.
- CNo. You need to rent more DVDs and buy fewer books.
- DThere is not enough information to answer the question
83Suppose Valerie is consuming lipstick (L) and eye shadow (E) and nothing else. MUL = 24 and MUE = 40. The price of eye shadow is $5, and the price of lipstick is $4. What should Valerie do?
- AConsume more eye shadow and less lipstick.
- BConsume more lipstick and less eye shadow.
- CConsume less of both.
- DConsume more of both.
- ENot change her consumption of either good.
84Given two goods, X and Y, and their prices, PX and PY a consumer will maximize utility by allocating expenditures such that
- AMUX/PY = MUY/PX.
- BPY/MUX = PX/MUY.
- CMUX/PX = MUY /PY.
- DMUX = PX = MUY = PY = MU$.
- EMUX = MUY = PX = PY = MU$.
85Refer to Exhibit 21-1. The marginal utility of the third plum is
- A17 utils.
- B10 utils.
- C8 utils.
- D3 utils.
86Refer to Exhibit 21-3. Linda spends $5 a week on apples and oranges. If the price of both goods is $1 per unit, how many apples and oranges, respectively, does she purchase per week if she wants to maximize her utility?
- A0 and 5
- B1 and 4
- C2 and 3
- D3 and 2
87Refer to Exhibit 21-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of
- A1 apple and 2 oranges.
- B3 apples and 1 orange.
- C5 apples and no oranges.
- Dnone of the above
88If the MU/P ratio for two goods is the same, then
- Athe slope of the budget constraint between the two goods is equal to the marginal rate of substitution (MRS) between the two goods.
- Bthe indifference curve between the two goods is concave to the origin.
- Cthe prices of the two goods are the same.
- Dit follows that consumers prefer fewer goods to more goods.
- Ea and c
89An indifference curve shows all
- Apossible equilibrium positions on an indifference map.
- Bequilibrium combinations of two products that are obtainable with a given money income.
- Ccombinations of two products that will yield the same utility to a consumer.
- Dpossible combinations of two products that a consumer can purchase, given her income and the prices of the products.
90The budget constraint cuts the horizontal axis at 12 units of good X and it cuts the vertical axis at 20 units of good Y. If the price of good X is $20 and the price of good Y is $12, then what does income equal?
- A$200
- B$240
- C$520
- D$280
- EThere is not enough information to answer the question.
91Total utility is defined as the
- Achange in marginal utility a person derives from the consumption of a good.
- Bchange in total utility a person derives from the consumption of a good divided by the price of that good.
- Cchange in total utility a person derives from the consumption of a good divided by the change in the consumption of that good.
- Dsum of the amounts of satisfaction a person receives from consuming a good.
- Echange in total utility a person derives from the consumption of a good.
92In order for an individual to achieve consumer equilibrium through the consumption of two goods, A and B, that individual must fulfill the condition
- ATUA = TUB.
- BTUA/PA = TUB/PB.
- CMUA = MUB.
- DMUA/PA = MUB/PB.
- EMUB/PA = MUA/PB.
93Suppose that the total utility from consuming one unit of good Z is 100 utils, the total utility from consuming two units of good Z is 150 utils, and the total utility from consuming three units of good Z is 170 utils. The marginal utility received from consuming the third unit of good Z is
- A56.67 utils.
- B20 utils.
- C75 utils.
- D50 utils.
94Refer to Exhibit 21-2. Total utility for the first three units is
- A12 utils.
- B62 utils.
- C49 utils.
- D15 utils
- E42 utils
95Which of the following statements is true?
- AAn extra dollar earned by a millionaire necessarily brings him or her less utility than an extra dollar earned by a poor person.
- BIf marginal utility is constant, then total utility for two units of a good is equal to the marginal utility of the second unit of the good.
- CThe marginal and total utility of a good are the same for the first unit of the good.
- DTotal utility will rise if marginal utility is negative.
- Ea and c
96A person is in consumer equilibrium, and then the price rises for one of the goods she purchases. If she wants to restore herself to consumer equilibrium, she will (most likely)
- Abuy less of the good whose price has risen and more of the relatively lower priced goods.
- Btry to increase the marginal utility she receives from the good whose price has risen.
- Ctry to decrease the marginal utility she receives from the goods whose prices did not rise.
- Dbuy more of both the good whose price has risen and of the goods whose prices have not risen.
- EThere is not enough information to answer the question.
97Refer to Exhibit 21-4. What value goes in blank (B)?
- A95
- B150
- C45
- D100
- EThere is not enough information to answer this question.
98An indifference curve shows
- Athe bundles of two goods that give an individual equal total utility.
- Btwo bundles of two goods each where one bundle gives greater utility to an individual than the other bundle.
- Ctwo bundles of two goods each where one bundle is preferred to the other.
- Dthe bundles of two goods that give an individual equal marginal utility.
99If a person's income falls, his or her budget constraint moves
- Ainward toward the origin, and its slope changes.
- Boutward away from the origin, and its slope remains the same.
- Cinward toward the origin, and its slope remains the same.
- Doutward away from the origin, and its slope changes.
- Enone of the above
100Refer to Exhibit 21-8. If the price of good X falls, the budget constraint moves from budget constraint
- A1 to 2.
- B3 to 2.
- C3 to 1.
- D1 to 3.
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- 2 Micro Economics 202 Quiz on Econ Exam 1 - Chapter 1 - 7, created by jlb2153 on 04/02/2016.
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- jlb2153
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- Created on 4 Feb 2016 · updated on 6 Apr 2018
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