1.Why does the demand curve slope downward?

Select one:

a. Lower prices mean a lower consumer surplus which will encourage increased consumption.

b.Since the marginal utility increases with increased consumption, people will be eager to buy more at lower prices.

c. Since total utility increases with increased consumption, a lower price is necessary to encourage increased production.

d. Since the marginal utility decreases with increased consumption, the price must fall in order to induce people to buy more.

2.If a sales tax is imposed on a product, which of the following statements is correct?

Select one:

a.If the demand for the product is elastic, the seller will pay a smaller percentage of the product than will the consumer.

b. The consumer will pay 100% of the tax.

c. If the demand for the product is inelastic, the consumer will pay a larger percentage of the tax than will the seller.

d. If the demand for the product is inelastic, the seller will pay a larger percentage of the tax than will the consumer.

3.If the MU per dollar spent on product A is greater than on product B, then a rational consumer should consume more of product B to compensate.

Select one:

True

False

4.An accounting profit is higher than an economic profit by the amount of explicit costs.

Select one:

True

False

5.Which one of the following statement is the most appropriate?

Select one:

a. Scarcity forces choice which involves opportunity costs

b. Choice causes scarcity which involves increasing costs

c. Choice causes scarcity which involves opportunity costs

d. Scarcity forces choice which involves increasing costs