Question 1

Since there is a relatively plentiful supply of water in Canada (this is not true in many parts of the world) , the consumption of water in Canada

Accepted Answer

A)   takes place at a relatively high marginal value.
B)   takes place at a relatively low marginal value.
C)   should be regulated by the government.
D)   takes priority over all other goods.
E)   should be unlimited at a price of $0.F) B) and D)
G) B) and E)

Question 2

Any consumption point that is on the budget line

Accepted Answer

A)   indicates consumption spending beyond current income.
B)   implies that the household is not spending all of its income on the goods in question.
C)   implies the household is paying above-market prices for the goods in question.
D)   implies the household is paying below-market prices for the goods in question.
E)   implies that the household is spending all of its income on the goods in question.F) A) and C)
G) B) and C)

Question 3

An equal proportional increase in money income and all money prices will

Accepted Answer

A)   rotate the budget line inward from the vertical axis.
B)   shift the budget line to the left parallel to the original budget line.
C)   shift the budget line to the right parallel to the original budget line.
D)   rotate the budget line inward from the horizontal axis.
E)   leave the position of the budget line unchanged.F) A) and C)
G) A) and B)

Question 4

At a garage sale, Dominique purchases a sewing machine for $30 when she was willing to pay $55.If the sewing machine costs $200 new, Dominique's consumer surplus would be _ .

Accepted Answer

A)   $0
B)   $25
C)   $120
D)   $145
E)   $170F) A) and E)
G) A) and D)

Question 5

If the price of a normal good changes, the income effect of the price change will

Accepted Answer

A)   produce a positively sloped demand curve.
B)   reinforce the substitution effect.
C)   always be to increase quantity demanded.
D)   oppose the substitution effect.
E)   always be larger than the substitution effect.F) B) and C)
G) All of the above

Question 6

Given a typical downward-sloping demand curve in a market that has reached its equilibrium, the consumer surplus

Accepted Answer

A)   is calculated as the product of market price and quantity consumed.
B)   is measured by the area below the market price and under the demand curve.
C)   is measured by the area above the market price and under the demand curve.
D)   is measured by the area immediately above the demand curve.
E)   cannot be measured given the information.F) B) and D)
G) All of the above

Question 7

In indifference curve analysis, the consumer's utility-maximizing point is where

Accepted Answer

A)   the consumer's marginal utility curve is tangent to the relevant budget line.
B)   the indifference curve farthest from the origin intersects with the budget line that is farthest from the origin.
C)   each indifference curve has the same slope as the relevant budget line.
D)   the price-consumption line is tangent to the budget line.
E)   one indifference curve is tangent to the relevant budget line.F) B) and E)
G) A) and E)

Question 8

Suppose the price of potatoes falls and we observe a decrease in an individual's purchases of potatoes. Which of the following can we infer?

Accepted Answer

A)   The income effect is negative and reinforces the substitution effect.
B)   The income effect is positive and exceeds the substitution effect.
C)   The income effect just offsets the substitution effect.
D)   The substitution effect outweighs the income effect.
E)   The income effect is negative and outweighs the substitution effect.F) C) and D)
G) A) and E)

Question 9

The Smith family is allocating its monthly household expenditure between only two goods, foodandclothing. Suppose that the price of food is $12 per unit, and the price of clothing is $16 per unit and that the marginal utility that the family is receiving from its consumption of clothing is currently200. What is the family's marginal utility from its consumption of food if it is maximizing its utility?

Accepted Answer

A)   75
B)   16
C)   12
D)   150
E)   200F) A) and C)
G) None of the above

Question 10

Given a particular consumer's indifference map, the further the indifference curve is from theorigin

Accepted Answer

A)   the higher the level of satisfaction.
B)   the lower the marginal rate of substitution.
C)   the more goods are included.
D)   the higher the marginal rate of substitution.
E)   the lower the level of satisfaction.F) C) and E)
G) B) and E)

Question 11

Given a particular market demand curve, consumer surplus is

Accepted Answer

A)   greater the lower the price and the larger the output.
B)   less the lower the price and the larger the output.
C)   greater the lower the price and the smaller the output.
D)   less the lower the price and the smaller the output.
E)   greater the higher the price and the smaller the output.F) None of the above
G) A) and C)

Question 12

The substitution effect is

Accepted Answer

A)   the change in quantity demanded that occurs when one good is substituted for another.
B)   the change in the relative prices of two or more goods.
C)   the change in quantity demanded that occurs as a result of a change in absolute prices, with real income held constant.
D)   the change in quantity demanded that occurs as a result of a change in relative prices with real income held constant.
E)   the change in quantity demanded that occurs as a result of a change in relative prices with money income held constant.F) A) and E)
G) A) and B)

Question 13

Economists usually assume that consumers

Accepted Answer

A)   are motivated to maximize their utility.
B)   spend all of their current income.
C)   are poor judges of what is best for them.
D)   are motivated to maximize their profit.
E)   usually save as much as possible of their income.F) A) and E)
G) A) and D)

Question 14

The table below shows the total value (in dollars)  that Andrew gets from playing 9-hole rounds of golf.  TABLE 6-3
-Refer to Table 6-3. If the price of a 9-hole round of golf is $16, then Andrew's consumer surplus will be

Accepted Answer

A)   $108.
B)   $16.
C)   $44.
D)   $92.
E)   $310.F) B) and E)
G) A) and B)

Question 15

The table below shows the total value (in dollars)  that Andrew gets from playing 9-hole rounds of golf.  TABLE 6-3
-Refer to Table 6-3.

Accepted Answer

A)   $16
B)   $310
C)   $430
D)   $108
E)   $92F) A) and E)
G) A) and D)

Question 16

Suppose Arun consumes only 2 goods -- books and CDs -- and has a set of downward sloping indifference curves. As Arun moves from one point to another on a particular indifference curve,

Accepted Answer

A)   the combination of books and CDs that Arun prefers will remain constant, but the level of satisfaction will vary.
B)   the combination of books and CDs will vary, but the level of utility remains constant.
C)   Arun is consuming the same combination of goods, but with varying levels of income.
D)   Arun's level of satisfaction will vary as the combinations of books and CDs varies.
E)   the combination of books and CDs and Arun's income level will remain constant.F) A) and C)
G) D) and E)

Question 17

A parallel shift in the consumer's budget line always indicates a change in

Accepted Answer

A)   at least one money price.
B)   both prices.
C)   money income.
D)   tastes.
E)   real income.F) C) and D)
G) D) and E)

Exam 6: Consumer Behaviour

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3. If the price of a 9-hole round of golf is $16, then Andrew's consumer surplus will be

Correct Answer
verified

At a garage sale, Dominique purchases a sewing machine for $30 when she was willing to pay $55.If the sewing machine costs $200 new, Dominique's consumer surplus would be _ .

Correct Answer
verified

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.

Correct Answer
verified

Suppose Arun consumes only 2 goods -- books and CDs -- and has a set of downward sloping indifference curves. As Arun moves from one point to another on a particular indifference curve,

Correct Answer
verified

If the price of a normal good changes, the income effect of the price change will

Correct Answer
verified

Given a particular market demand curve, consumer surplus is

Correct Answer
verified

In indifference curve analysis, the consumer's utility-maximizing point is where

Correct Answer
verified

Given a particular consumer's indifference map, the further the indifference curve is from theorigin

Correct Answer
verified

Any consumption point that is on the budget line

Correct Answer
verified

Correct Answer
verified

Suppose the price of potatoes falls and we observe a decrease in an individual's purchases of potatoes. Which of the following can we infer?

Correct Answer
verified

An equal proportional increase in money income and all money prices will

Correct Answer
verified

A parallel shift in the consumer's budget line always indicates a change in

Correct Answer
verified

The substitution effect is

Correct Answer
verified

Since there is a relatively plentiful supply of water in Canada (this is not true in many parts of the world) , the consumption of water in Canada

Correct Answer
verified

Given a typical downward-sloping demand curve in a market that has reached its equilibrium, the consumer surplus

Correct Answer
verified

Economists usually assume that consumers

Correct Answer
verified

Exam 6: Consumer Behaviour

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3. If the price of a 9-hole round of golf is $16, then Andrew's consumer surplus will be

Correct AnswerverifiedShow Answer

At a garage sale, Dominique purchases a sewing machine for $30 when she was willing to pay $55.If the sewing machine costs $200 new, Dominique's consumer surplus would be _ .

Correct AnswerverifiedShow Answer

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.

Correct AnswerverifiedShow Answer

Suppose Arun consumes only 2 goods -- books and CDs -- and has a set of downward sloping indifference curves. As Arun moves from one point to another on a particular indifference curve,

Correct AnswerverifiedShow Answer

If the price of a normal good changes, the income effect of the price change will

Correct AnswerverifiedShow Answer

Given a particular market demand curve, consumer surplus is

Correct AnswerverifiedShow Answer

In indifference curve analysis, the consumer's utility-maximizing point is where

Correct AnswerverifiedShow Answer

Given a particular consumer's indifference map, the further the indifference curve is from theorigin

Correct AnswerverifiedShow Answer

Any consumption point that is on the budget line

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the price of potatoes falls and we observe a decrease in an individual's purchases of potatoes. Which of the following can we infer?

Correct AnswerverifiedShow Answer

An equal proportional increase in money income and all money prices will

Correct AnswerverifiedShow Answer

A parallel shift in the consumer's budget line always indicates a change in

Correct AnswerverifiedShow Answer

The substitution effect is

Correct AnswerverifiedShow Answer

Since there is a relatively plentiful supply of water in Canada (this is not true in many parts of the world) , the consumption of water in Canada

Correct AnswerverifiedShow Answer

Given a typical downward-sloping demand curve in a market that has reached its equilibrium, the consumer surplus

Correct AnswerverifiedShow Answer

Economists usually assume that consumers

Correct AnswerverifiedShow Answer

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