Question 1

Total utility derived from consuming one good declines when

Group of answer choices

there is an opportunity cost associated with consuming more of the good.

the consumer receives a discounted price for the good.

marginal utility is positive.

marginal utility is negative.

Question 2

When total utility is maximized,

Group of answer choices

marginal utility is negative.

marginal utility is zero.

marginal utility is equal to total utility.

marginal utility is minimized.

Question 3

Table 4.6

Slices of Pizza	Total Utility	Marginal Utility
1	50
2	90
3	120
4	130
5	137
6	120

In Table 4.1, what is the marginal utility of the second slice of pizza consumed?

Group of answer choices

40

20

10

30

Question 4

Diminishing marginal utility means that

Group of answer choices

as more and more of a good is consumed the rate at which total utility increases stays the same.

as more and more of a good is consumed the rate at which total utility increases starts to increase.

as more and more of a good is consumed there is no impact on the rate of change of total utility.

as more and more of a good is consumed the rate at which total utility increases starts to diminish.

Question 5

What do you have to know in order to calculate the price elasticity of demand?

Group of answer choices

How much marginal utility the average consumer derives from the good

How many consumers would like to buy the good but don't because of the price

How much of the good was purchased at each of two different prices

How much was spent on advertising for the good

Question 6

If the price of a cola increased by 16% and consumers responded by purchasing 20% less cola, the price elasticity of demand for cola would be

Group of answer choices

0.80.

1.80.

1.25.

0.16.

Question 7

If the price elasticity of demand is 2, a 10 percent increase in the price will cause

Group of answer choices

the quantity demanded to decrease by 20 percent.

the quantity demanded to decrease by 0.2 percent.

the quantity demanded to decrease by 2 percent.

the quantity demanded to decrease by 5 percent.

Question 8

No matter what the price of coffee is in the cafeteria, Jim spends $20 a week on coffee. We can conclude that

Group of answer choices

Jim's demand for coffee is perfectly elastic.

Jim's demand for coffee is perfectly inelastic.

Jim buys fewer cups of coffee when the price is higher.

Jim buys fewer cups of coffee when the price is lower.

Question 9

When the price elasticity of demand is less than one,

Group of answer choices

the demand is elastic.

consumers do not respond to price changes.

the percentage change in quantity demanded is of a greater magnitude than the percentage change in price.

the percentage change in quantity demanded is of a smaller magnitude than the percentage change in price.

Question 10

If the price elasticity of demand for a product is 1.5, and the price of a product increased 30 percent, then the quantity demanded will change by

Group of answer choices

10 percent.

5 percent.

20 percent.

45 percent.

Question 11

When demand is perfectly elastic,

Group of answer choices

the demand curve is horizontal.

consumers do not respond to price changes.

quantity demanded is the same regardless of the price.

the demand curve is vertical.

Question 12

A price increase will cause a relatively large drop in quantity demanded when

Group of answer choices

the price elasticity of demand is 0.

there is very little time allowed for consumers to react.

demand is perfectly inelastic.

the consumer has easy access to a number of substitute goods.

Question 13

If consumers respond to a car dealer's 10 percent price cut by increasing the number of cars demanded by 20 percent, we would conclude that

Group of answer choices

that demand for cars is inelastic.

that the car dealer lost sales revenue as a result of the price cut.

that the price elasticity of demand is 0.5.

that the price elasticity of demand is 2.

Question 14

The more sensitive people are to a change in price, the

Group of answer choices

less the income elasticity of demand.

greater the price elasticity of demand.

greater a change in price must be to induce a certain change in quantity demanded.

less the price elasticity of demand.

Question 15

The law of diminishing marginal utility implies that

Group of answer choices

the demand for all goods will be inelastic.

the demand for all goods will be elastic.

people become worse off as they consume more.

people will consume a variety of goods rather than just one good.

Question 16

Utility is a term economists use to refer to

Group of answer choices

rationality.

satisfaction.

expectation.

affordability.

Question 17

The price elasticity of demand is affected by

Group of answer choices

the wages paid to workers who provide the service or produce the good.

the costs of producing the good.

the transportation costs of getting the good to market.

the number of substitutes consumers can find for the good.

Question 18

The price elasticity of demand measures

Group of answer choices

changes in the cost of production in response to changes in the number of customers.

changes in the quantity demanded in response to changes in price.

changes in the wage rate in response to changes in the number of workers hired.

changes in the cost of production in response to changes in the volume of production.

Question 19

Which one of the following would make the demand for airline travel relatively more elastic?

Group of answer choices

There is a widespread reduction in airline fares.

Airline employees grant wage concessions in an attempt to cut operating costs.

Budget cuts for highway maintenance lead to a deterioration of the interstate freeway system.

A reliable network of long-distance high-speed trains is established.

Question 20

Table 4.6

Price	Quantity Demanded
$20	90
$16	110
$12	130
$8	150

According to the data in Table 4.6, what is the elasticity of demand between a price of $20 and a price of $16?

Group of answer choices

0.75

1.25

0.60

0.90

Question 21

Table 4.6

Price	Quantity Demanded
$20	90
$16	110
$12	130
$8	150

According to the data in Table 4.6, what is the elasticity of demand between a price of $12 and a price of $8?

Group of answer choices

0.75

0.63

0.36

0.90

Question 22

If the elasticity of demand for paperback books is - 1.7 in the range between $6 and $8, what happens to total consumer expenditures on paperback books when the price rises from $6 to $8?

Group of answer choices

Total consumer expenditures will increase.

We cannot determine what will happen to total consumer expenditures unless we also know something about the publishers' costs.

Total consumer expenditures will decrease.

Total consumer expenditures will remain unchanged.

Question 23

Generally, toothpaste is a small part of a consumer's income and is a necessity. Therefore, the demand for toothpaste

Group of answer choices

is elastic.

is inelastic.

is perfectly elastic.

is unit-elastic.

Question 24

An electric utility announced an increase in rates for residential customers. The announcement contained a statement saying that customers could conserve their energy usage and likely would not see any increase in their total monthly electric bill. What is the implication of this statement?

Group of answer choices

That the demand for electricity is perfectly elastic.

That the demand for electricity is inelastic within the range of the rate increase.

That the demand for electricity is elastic within the range of the rate increase.

That the demand for electricity is unit-elastic within the range of the rate increase.

Question 25

Lucy gets a bad haircut and afterwards is heard to say, "This haircut was a waste of money." Which of the following is an accurate restatement of Lucy's comment?

Group of answer choices

"The marginal utility I derived from the haircut is less than I thought it would be."

"There is no opportunity cost associated with the money I spent on the haircut."

"The hair stylist should be fired."

"I derived no marginal utility from the haircut."