Microeconomics test 2 (chapter 5)

question

The optimal combination of goods for a consumer to purchase is shown by

answer

a point of tangency between the budget line and the indifference curve

question

Scarcity raises both price and marginal utility but generally reduces total utility.

answer

True

question

An inferior good is a good whose quantity demanded

answer

rises when the consumer's real income falls

question

A consumer possesses five pounds of bananas and values their total utility at $2.14. If one additional pound is acquired and marginal utility is 11 cents, total utility will

answer

Rise to 2.25

question

The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper fowl." In the language of economists, this means

answer

chicken is an inferior good.

question

Since price tends to equal total utility, the price of water is low and the price of diamonds is high.

answer

False

question

If a good has "snob appeal," consumers may purchases less when the price falls.

answer

True

question

The budget line facing a household includes information on

answer

prices of two goods and household income.

question

For a ____, if incomes rise and prices do not change, quantity demanded will increase.

answer

Normal Good

question

Vicki consumes meatloaf and pizza. To keep her utility constant, you must give her more of one good if you take some of the other away. This information implies that

answer

Vicki's indifference curve must have a negative slope

question

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,

answer

Juan is better off getting up at 8 a.m.

question

Quantity demanded is not only affected by price but by variables such as income and the prices of other goods.

answer

True

question

A budget line is a straight line designed to show

answer

all combinations of two goods that can be purchased with a given income

question

The budget line represents a consumer's preferences for a commodity.

answer

True

question

An increase in a consumer's income will always increase the demand for a good.

answer

False

question

Marginal utility is measured by the maximum amount of money a consumer is willing to pay for one more unit of a commodity.

answer

True

question

For a consumer to maximize utility, he will choose the

answer

point where the slope of the budget line equals the slope of the indifference curve

question

As a general rule, consumers hav

answer

limited income, unlimited desire for goods, and many choices of goods

question

The slope of the budget line

answer

equals the ratio of the prices

question

Marginal utility can fall even as total utility from the consumption of a good is rising.

answer

True

question

Total utility increases if one more unit of a product is purchased and marginal utility is positive

answer

true

question

If indifference curves and budget lines are used to analyze consumer choice, an inferior good will

answer

be easily identified because the quantity purchased will fall as income rises.

question

consumer will consume the combination of goods at the point of tangency between the budget line and the indifference curve.

answer

true

question

The market demand curve

answer

shows how the total quantity demanded of some good changes as price changes, other things held constant.

1 of 24

question

The optimal combination of goods for a consumer to purchase is shown by

answer

a point of tangency between the budget line and the indifference curve

question

Scarcity raises both price and marginal utility but generally reduces total utility.

answer

True

question

An inferior good is a good whose quantity demanded

answer

rises when the consumer's real income falls

question

A consumer possesses five pounds of bananas and values their total utility at $2.14. If one additional pound is acquired and marginal utility is 11 cents, total utility will

answer

Rise to 2.25

question

The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper fowl." In the language of economists, this means

answer

chicken is an inferior good.

question

Since price tends to equal total utility, the price of water is low and the price of diamonds is high.

answer

False

question

If a good has "snob appeal," consumers may purchases less when the price falls.

answer

True

question

The budget line facing a household includes information on

answer

prices of two goods and household income.

question

For a ____, if incomes rise and prices do not change, quantity demanded will increase.

answer

Normal Good

question

Vicki consumes meatloaf and pizza. To keep her utility constant, you must give her more of one good if you take some of the other away. This information implies that

answer

Vicki's indifference curve must have a negative slope

question

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,

answer

Juan is better off getting up at 8 a.m.

question

Quantity demanded is not only affected by price but by variables such as income and the prices of other goods.

answer

True

question

A budget line is a straight line designed to show

answer

all combinations of two goods that can be purchased with a given income

question

The budget line represents a consumer's preferences for a commodity.

answer

True

question

An increase in a consumer's income will always increase the demand for a good.

answer

False

question

Marginal utility is measured by the maximum amount of money a consumer is willing to pay for one more unit of a commodity.

answer

True

question

For a consumer to maximize utility, he will choose the

answer

point where the slope of the budget line equals the slope of the indifference curve

question

As a general rule, consumers hav

answer

limited income, unlimited desire for goods, and many choices of goods

question

The slope of the budget line

answer

equals the ratio of the prices

question

Marginal utility can fall even as total utility from the consumption of a good is rising.

answer

True

question

Total utility increases if one more unit of a product is purchased and marginal utility is positive

answer

true

question

If indifference curves and budget lines are used to analyze consumer choice, an inferior good will

answer

be easily identified because the quantity purchased will fall as income rises.

question

consumer will consume the combination of goods at the point of tangency between the budget line and the indifference curve.

answer

true

question

The market demand curve

answer

shows how the total quantity demanded of some good changes as price changes, other things held constant.

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