26) A \"reference group" refers to a] the librarians who help you nd reference books for your term papers. b] those above you in society's economic hierarchy. c] those at the same level as you in society's economic hierarchy. d] what you're used to, which you use for comparisons when making consumption choices. e] those other people to which individuals compare themselves. 27) Diminishing marginal utility means that a] the more money a consumer spends, the less is available to purchase other goods. b] money h 11] t n f d from wealthy people to poor people. c] utility cannot be compared across different people. d] additional units of consumption produce less additional utility than previous units. e] utility always increases through additional consumption. 28] Which one of the following statements is false? a] Economic research suggests that having more options to choose from doesn't always result in people making better consumer decisions. b] Economic research indicates that there may be signicant differences between predicted and remembered utility. c] The standard model of consumer behavior accurately explains why people make particular consumer decisions. d] A consumer society is one in which people's identity is found largely through the purchase and use of consumer goods and services. e] Economists have traditionally defined a consumer '5 problem as how to maximize utility given his or her income constraints. 29] If potatoes are a Giffen good, then... a. potatoes are also a normal good. b. potatoes are also a luxury good. c. an increase in the price of potatoes will increase the quantity demanded. d. there will always be a surplus of potatoes. e. potatoes must make up a small portion of consumers' total expenditures. 30) An inferior good in which the income etfect dominates the substitution effect is called... a. a normal good. b. a luxury good. c. a Giffen good. d. a mass-produced good. e. a favored good. 32) Consider the linear demand curve represented in the graph above. If demand is unitary elastic at point A, what is the elasticity of demand at point C? a. Unitary elastic b. Elastic c. Inelastic d. Innitely elastic e. Innitely inelastic 33) Applying the midpoint formula, what is the price elasticity of demand if a drop in the price of energy drinks from $2 to $1 per can leads to an increase in the quantity demanded from 100 million to 150 million cans? a. 0.5 b.06 c. 0.9 d. 1 e. 1.5 34) What are some of the factors that will make the demand for a good price inelastic? a. There are very few close substitutes for the good. b. The good is something that people need, rather than just want. c. The good is something that people merely want, rather than need. d. Both a. and b. e. Both a. and c. 35) Which of the following will make the demand for a good price elastic? a. The existence of close substitutes for the good. b. The good is something that people merely want, rather than need. c. The cost of the gode makes up a large part of a buyers budget. d. Consumers have a long time in which to adjust to a price change. e. All of the above. 36) The price elasticity ofdemand is a measure of a. the sensitivity of the quantity demanded to changes in demand. b. the responsiveness of the quantity demanded to changes in price. c. the slope of the supply curve. d. the sensitivity of the quantity supplied due to a change in price. e. the responsiveness of the quantity demanded to a change in income. 3?] When demand is unit elastic, a. a 1% increase in price results in 1% increase in quantity demanded. b. a 1% increase in price results in a 1% decrease in quantity demanded. c. a 1% increase in price results in no change in quantity demanded. d. a 1% decrease in price results in an increase in quantity demanded of more than 1%. e. any increase in price results in a 1% decrease in quantity demanded. 38] The price elasticity ofdemand for cigarettes has been estimated to be 0.4 in developed countries. If cigarette producers raise their prices by 10%, what will happen to the percent change in quantity demanded? a. It will increase by 4%. b. It will decrease by 0.4% c. It will decrease by 4%. d. It will decrease by 40% e. It won't change. 39) If firm A sells 25 units of good X for $8 each, then total revenue is a. $8 13. $25 c. $200 d. $250 e. None of the above 40] The price elasticity ot'demand for cigarettes has been estimated to be -0.8 in developed countries. If cigarette producers raise 14 their prices by 10 percent, what will happen to their total revenue? a. It will increase. b. It will decrease. c. It won't change. d. It will fall to zero e. None of the above 41] The price elasticity ot'demand for cigarettes has been estimated to be -l.8 in developed countries. If cigarette producers decrease their prices by percent, what will happen to their total revenue? a. It will increase. b. It will decrease. c. It won't change. d. It will fall to zero e. None of the above 42] The price elasticity ot'demand for cigarettes has been estimated to be -l.8 in developed countries. If cigarette producers decrease their prices by 1.8 percent, what will happen to their total revenue? a. It will increase. b. It will decrease. c. It won't change. d. It will fall to zero e. None of the above 43] The price elasticity ot'demand for cigarettes has been estimated to be -1 in developed countries. If cigarette producers decrease their prices by 15 percent, what will happen to their total revenue? a. It will increase. b. It will decrease. c. It won't change. d. It will fall to zero e. None of the above 44) A good or service with a horizontal supply curve is a good with... a. unit-elastic supply. b. perfectly elastic supply. c. perfectly inelastic supply. d. varying elasticity of supply. e. no elasticity. 45] The term for goods with negative income elasticity is ... a. normal goods. b. inferior goods. c. luxury goods. d. complementary goods. e. substitute goods