Question;1. The price elasticity of demand coefficient measures:A. buyer responsiveness to price changes.?B. the extent to which a demand curve shifts as incomes change.?C. the slope of the demand curve.?D. how far business executives can stretch their fixed costs.2. A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the:?A. more elastic the supply curve.?B. larger the elasticity of demand coefficient.?C. more elastic the demand for the product.?D. more inelastic the demand for the product.3. The concept of price elasticity of demand measures:?A. the slope of the demand curve.?B. the number of buyers in a market.?C. the extent to which the demand curve shifts as the result of a price decline.?D. the sensitivity of consumer purchases to price changes.4. If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then:?A. demand is elastic.?B. demand is inelastic.?C. demand is of unit elasticity.?D. not enough information is given to make a statement about elasticity.5. When the percentage change in price is greater than the resulting percentage change in quantity demanded:?A. a decrease in price will increase total revenue.?B. demand may be either elastic or inelastic.?C. an increase in price will increase total revenue.?D. demand is elastic.6. In which of the following cases will total revenue increase??A. price falls and demand is inelastic?B. price falls and supply is elastic?C. price rises and demand is inelastic?D. price rises and demand is elastic7. The coefficient of price elasticity is 0.2. Demand is thus:?A. perfectly inelastic.?B. perfectly elastic.?C. relatively inelastic.?D. relatively elastic.8. The main determinant of elasticity of supply is the:?A. number of close substitutes for the product available to consumers.?B. amount of time the producer has to adjust inputs in response to a price change.?C. urgency of consumer wants for the product.?D. number of uses for the product.9. We would expect the cross elasticity of demand between Pepsi and Coke to be:?A. positive, indicating normal goods.?B. positive, indicating inferior goods.?C. positive, indicating substitute goods.?D. negative, indicating substitute goods.10. Consumer surplus:?A. is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price.?B. the difference between the maximum prices consumers are willing to pay for a product and the minimum prices producers are willing to accept.?C. the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price.?D. rises as equilibrium price rises.11. Marginal utility can be:?A. positive, but not negative.?B. positive or negative, but not zero.?C. positive, negative, or zero.?D. decreasing, but not negative.12. The law of diminishing marginal utility states that:?A. total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed.?B. beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.?C. price must be lowered to induce firms to supply more of a product.?D. it will take larger and larger amounts of resources beyond some point to produce successive units of a product.13. The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is:?A. 26 units of utility.?B. 6 units of utility.?C. 8 units of utility.?D. 38 units of utility.14. Total utility may be determined by:?A. multiplying the marginal utility of the last unit consumed by the number of units consumed.?B. summing the marginal utilities of each unit consumed.?C. multiplying the marginal utility of the last unit consumed by product price.?D. multiplying the marginal utility of the first unit consumed by the number of units consumed.15. If total utility is increasing, marginal utility:?A. is positive, but may be either increasing or decreasing.?B. must also be increasing.?C. may be either positive or negative.?D. will be increasing at an increasing rate.16. The theory of consumer behavior assumes that:?A. consumers behave rationally, attempting to maximize their satisfaction.?B. consumers have unlimited money incomes.?C. consumers do not know how much marginal utility they obtain from successive units of various products.?D. marginal utility is constant.17. Suppose you have a limited money income and you are purchasing products A and B whose prices happen to be the same. To maximize your utility you should purchase A and B in such amounts that:?A. their marginal utilities are the same.?B. their total utilities are the same.?C. their marginal and total utilities are proportionate.?D. the income and substitution effects associated with each are equal.18. Assume that a consumer purchases products A, B, and C in quantities such that the last dollar spent on each yields the same marginal utility and the consumer's income is totally spent. We can conclude that:?A. total utility is being minimized.?B. production costs are being minimized.?C. marginal utility exceeds total utility.?D. total utility is being maximized.19. Suppose that Dave normally orders two tacos, but on seeing they are on sale, decides to buy three. Dave's decision is best explained by the:?A. law of increasing opportunity costs.?B. law of supply.?C. principle of comparative advantage.?D. the principle of utility maximization.20. What do the income effect, the substitution effect, and diminishing marginal utility have in common??A. All are required to explain the utility-maximizing position of a consumer.?B. They are all empirically measurable.?C. They all help explain the upsloping supply curve.?D. They all help explain the downsloping demand curve.
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