Question :
11) At all points a demand curve, the
i.consumer’s budget : 1238697
11) At all points on a demand curve, the
i.consumer’s budget has been allocated to maximize total utility.
ii.quantity is the quantity demanded at each price when total utility is maximized.
iii.price represents the marginal benefit the consumer gets from an extra unit of a good.
A) i only
B) ii only
C) i and ii
D) i and iii
E) i, ii, and iii
12) As more of a good is consumed, the marginal utility of an additional unit ________, so consumers are willing to pay ________ for an additional unit.
A) decreases; less
B) increases; less
C) decreases; more
D) increases; more
E) does not change; less
13) The paradox of value refers to the
A) utility maximizing rule.
B) fact that water is vital but cheap while diamonds are relatively useless but expensive.
C) fact that consumers have different preferences and utility schedules.
D) law of demand.
E) issue of why the consumer surplus from water equals the consumer surplus from diamonds.
14) One reason why water is cheap compared to diamonds is because the
A) marginal utility of water is enormous.
B) marginal utility of water is small.
C) total utility of water is enormous.
D) total utility of water is small.
E) total utility of water and diamonds must be equal, but the marginal utility of water is much lower than the marginal utility of diamonds.
15) In the paradox of value between expensive diamonds and inexpensive water, we see that
A) the consumer surpluses are very high for both goods.
B) diamonds have a low consumer surplus while water has a high consumer surplus.
C) diamonds have a high consumer surplus while water has a low consumer surplus.
D) the consumer surpluses are very low for both goods.
E) the consumer surpluses for the two goods cannot be compared.
16) Over the past 10 years, the price of a downloaded song has ________ which has lead to ________.
A) increased; a decrease in consumer surplus
B) increased; an increase in consumer efficiency
C) decreased; an increase in consumer surplus
D) decreased; a decrease in consumer efficiency
E) not changed; no change in consumer surplus
17) ________ in consumer surplus occurs when the price of a good ________.
A) An increase; decreases and consumers can buy more of the good at the lower price
B) A decrease; decreases and consumers buy less of the good at the cheaper price
C) An increase; decreases and consumer efficiency declines
D) A decrease; increases and the paradox of value is no longer valid
E) An increase; increases but the relative price does not change
18) Goods that are valuable will have a ________ consumer surplus because ________ units of the good are consumed at a ________ price.
A) large; more; lower
B) large; less; higher
C) smaller; more; lower
D) smaller; fewer; lower
E) larger; fewer; lower
19) Diamonds have ________ consumer surplus because ________.
A) a smaller; fewer diamonds are sold at higher prices
B) a smaller; there is a lower marginal utility for diamonds
C) a large; diamonds are a rare and valuable stone
D) zero; diamonds have a high price and provide low total utility
E) zero; diamonds are not necessary for life
13.4 Chapter Figures
The figure above shows three budget lines.
1) Based on the figure above, which of the following would lead the consumer’s budget line to shift from BL0 to BL1?
A) a rise in the price of water
B) a fall in the price of water
C) a rise in the price of water and the price of gum
D) a decrease in the consumer’s budget
E) an increase in the consumer’s budget
2) Based on the figure above, which of the following would lead the consumer’s budget line to shift from BL0 to BL2?
A) a rise in the price of water
B) a fall in the price of water
C) a rise in the price of water and the price of gum
D) a decrease in the consumer’s budget
E) an increase in the consumer’s budget
3) Based on the figure above, on which budget line is the relative price of gum the highest?
A) budget line BL2
B) budget line BL0
C) budget line BL1
D) The relative price is the same along all three budget lines.
E) To answer the question, more information is needed about the consumer’s income.
The figure above shows two budget lines.
4) Based on the figure above, which of the following would lead the budget line to change from BL0 to BL1?
A) a rise in the price of water
B) a fall in the price of water
C) a rise in the price of water and the price of gum
D) a decrease in the consumer’s budget
E) an increase in the consumer’s budget
The figure above shows the markets for water and diamonds.
5) Based on the figures above, it is the case that the consumer surplus from water ________ the consumer surplus from diamonds and the marginal utility from water ________ the marginal utility from diamonds.
A) is equal to; is equal to
B) is larger than; is equal to
C) is larger than; is larger than
D) is larger than; is smaller than
E) is smaller than; is smaller than
