EXPLAIN YOUR CHOICE AND OBTAINED YOUR EXPLANATION

81. If price is lowered by law from the market equilibrium value of $5 to a lower value of $4:

a. both producer surplus and consumer surplus will increase.

b. consumer surplus will decrease and there will be some lost total surplus.

c. producer surplus will decrease and there will be some lost total surplus.

d. there will be lost surplus as both producer surplus and consumer surplus decrease.

82. Energy prices increased sharply in late 2004 but consumers in some countries were unaffected. The governments of Thailand and Indonesia, for example, spent several billion dollars to subsidize the price of fuel to keep it from rising. From the point of view of consumer and producer surplus, what is the problem with a fuel subsidy?

a. It hurts the poor and benefits the rich.

b. It leads to less fuel being used than the amount which maximizes consumer surplus.

c. It encourages the consumption of too much fuel at the expense of other goods.

d. It has no effect; consumers gain consumer surplus, but taxpayers lose the same amount because they must finance the subsidy.

83. Cigarette taxes cause dead-weight loss because?

a. Because they are regressive.

b. Because they are progressive.

c. Because they change people's behavior.

d. Because they yield no revenue.

84. Suppose that when you consume the third piece of chicken, total utility rises from 420 to 520. Marginal utility for the third piece of chicken is:

a. 520

b. 420

c. 140

d. 100

85.The underlying psychological foundation of individual choice and economic reasoning is:

a.generosity.

b.focal point equilibrium.

c.bounded rationality.

d.self-interest.

86.The total satisfaction one gets from one's consumption of a product is called:

a.marginal utility.

b.a unit of utility.

c.total utility.

d.minimum utility.

87.Total utility refers to the:

a.total satisfaction one gets for one's consumption of a product.

b.satisfaction one gets from the consumption of an additional unit of a product.

c.maximum satisfaction one can get from the consumption of a good.

d.satisfaction one gets from the consumption of an additional unit of a product times its price.

88.To calculate the total utility of consuming N products:

a.add the additional satisfaction of consuming each product up to N and multiply by its price.

b.add the total satisfactions of consuming each product up to N.

c.multiply the additional satisfaction from consuming the Nth product by its price.

d.multiply total satisfaction from consuming N products by N.

89.The consumption of an additional unit of a good provides additional satisfaction, which is called:

a.total benefit.

b.marginal social benefit.

c.average utility.

d.marginal utility.

90.To calculate the marginal utility of consuming the Nth product:

a.subtract additional satisfaction from consuming the (N-1)th production from the additional satisfaction from consuming the Nth product.

b.subtract total satisfaction from consuming N-1 products from total satisfaction from consuming N products.

c.divide total satisfaction from consuming all N products by the price of the product.

d.divide total satisfaction from consuming all N products by N.