ECON 103 Midterm, Spring 2011

The supply curve for cars will be more elastic the: Choose one answer. a. greater the quantity demanded. b. longer the time interval considered. c. greater the decline in input prices. d. less able producers are to make other goods. Make comment or override grade Question 2 If a 10 percent increase in the price of one good results in a decrease of 5 percent in the quantity demanded of another good, then it can be concluded that the two goods are: Choose one answer. a. complements. b. substitutes. c. independent. d. normal. Make comment or override grade History of Responses: # Action Response Time Raw score Grade 1 Save substitutes. 09:02:43 on 15/12/10 0 0 2 Grade substitutes. 09:02:43 on 15/12/10 0 0 Question 3 If a 10 percent increase in the price of one good results in an increase of 5 percent in the quantity demanded of another good, then it can be concluded that the two goods are: Choose one answer. a. complements. b. substitutes. c. independent. d. normal. Make comment or override grade History of Responses: # Action Response Time Raw score Grade 1 Save complements. 09:02:43 on 15/12/10 0 0 2 Grade complements. 09:02:43 on 15/12/10 0 0 Question 4 Marks: 1 If a rational consumer is in equilibrium, then: Choose one answer. a. the marginal utility obtained from one product is equal to the marginal utility obtained from any other product. b. a reallocation of income would increase the consumer's total utility. c. the marginal utility per last dollar spent is the same for all goods consumed. d. total utility becomes zero. Make comment or override grade Incorrect Marks for this submission: 0/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save the marginal utility per last dollar spent is the same for all goods consumed. 09:02:43 on 15/12/10 1 0 2 Save the marginal utility obtained from one product is equal to the marginal utility obtained from any other product. 09:58:19 on 15/12/10 0 0 3 Grade the marginal utility obtained from one product is equal to the marginal utility obtained from any other product. 09:58:19 on 15/12/10 0 0 Question 5 Which is not characteristic of a product with relatively inelastic demand? Choose one answer. a. The good is regarded by consumers as a necessity. b. There are a large number of good substitutes for the good. c. Buyers spend a small percentage of their total income on the product. d. Consumers have had only a short time period to adjust to changes in price. Make comment or override grade Show all questions on one page Question 6 Marks: 1 Answer the next question(s) based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4 and the price of product Y is $2. The income of the consumer is $20. Reference: REF 21-44 Refer to the above table. If the consumer can only buy product X, how much will the consumer buy and what will be the total utility? Choose one answer. a. 4X and 20 b. 4X and 104 c. 5X and 16 d. 5X and 120 Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save 5X and 120 09:14:17 on 15/12/10 1 0 2 Grade 5X and 120 09:14:17 on 15/12/10 1 1 Question 7 Marks: 1 The substitution effect: Choose one answer. a. is generally so weak that its effect cannot be predicted. b. for an increase in the relative price of a good is sometimes positive, but sometimes negative. c. measures the change in the quantity demanded of a good precipitated only by a change in its relative price. d. measures the change in the quantity of a good demanded brought about by a change in real income associated with a change in the price of the good. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save measures the change in the quantity demanded of a good precipitated only by a change in its relative price. 09:14:17 on 15/12/10 1 0 2 Grade measures the change in the quantity demanded of a good precipitated only by a change in its relative price. 09:14:17 on 15/12/10 1 1 Question 8 A consumer's weekly income is $300 and the consumer buys 5 bars of chocolate per week. When income increases to $330, the consumer buys 6 bars per week. The income elasticity of demand for chocolate by this consumer is about: Choose one answer. a. 0. b. .5. c. 1. d. 2. Make comment or override grade History of Responses: # Action Response Time Raw score Grade 1 Save .5. 09:14:17 on 15/12/10 0 0 2 Grade .5. 09:14:17 on 15/12/10 0 0 Question 9 If the price elasticity of demand for a good is .75, the demand for the good can be described as: Choose one answer. a. normal. b. elastic. c. inferior. d. inelastic. Make comment or override grade History of Responses: # Action Response Time Raw score Grade 1 Save inelastic. 09:14:17 on 15/12/10 0 0 2 Grade inelastic. 09:14:17 on 15/12/10 0 0 Question 10 Total revenue falls as the price of a good increases if price elasticity of demand is: Choose one answer. a. elastic. b. inelastic. c. unitary elastic. d. perfectly elastic. Show all questions on one page Question 11 Marks: 1 Reference: NewREF 21-29 Refer to the above table. What is the marginal utility of the fourth unit? Choose one answer. a. 36 b. 44 c. 80 d. 116 Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save 44 09:19:29 on 15/12/10 1 0 2 Grade 44 09:19:29 on 15/12/10 1 1 Question 12 Marks: 1 Reference: NewREF 21-29 Refer to the above table. At what consumption level for this product does diminishing marginal utility set in? Choose one answer. a. 4 units b. 5 units c. 6 units d. 7 units Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save 7 units 09:19:29 on 15/12/10 1 0 2 Grade 7 units 09:19:29 on 15/12/10 1 1 Question 13 Marks: 1 The fact that an ounce of gold is priced higher than an ounce of chocolate suggests that: Choose one answer. a. the marginal utility of the last unit of gold consumed is greater than the marginal utility of the last unit of chocolate consumed. b. the total utility of gold is greater than the total utility of chocolate. c. gold is a normal good while chocolate is an inferior good. d. there are many substitutes for chocolate, but few for gold. Make comment or override grade Incorrect Marks for this submission: 0/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save the total utility of gold is greater than the total utility of chocolate. 09:19:29 on 15/12/10 0 0 2 Grade the total utility of gold is greater than the total utility of chocolate. 09:19:29 on 15/12/10 0 0 Question 14 Marks: 1 Which statement is valid based on utility theory? Choose one answer. a. Marginal utility is positive when total utility is increasing. b. Marginal utility is positive when total utility is decreasing. c. Marginal utility is negative when total utility is increasing. d. Marginal utility is zero when total utility is decreasing. Make comment or override grade Incorrect Marks for this submission: 0/1. History of Responses: # Action Response Time Raw score Grade 1 Save Marginal utility is negative when total utility is increasing. 09:19:29 on 15/12/10 0 0 2 Grade Marginal utility is negative when total utility is increasing. 09:19:29 on 15/12/10 0 0 Question 15 Reference: Ref 20-46 Consider the above parallel demand curves. Which curve is relatively more elastic at P1? Choose one answer. a. AA b. BB c. Cannot be determined. d. Both have the same slope; therefore both have the same elasticity. Make comment or override grade History of Responses: # Action Response Time Raw score Grade 1 Save Cannot be determined. 09:19:29 on 15/12/10 0 0 2 Grade Cannot be determined. 09:19:29 on 15/12/10 0 0 Question 16 Marks: 1 Answer the next question(s) based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4 and the price of product Y is $2. The income of the consumer is $20. Reference: REF 21-44 Refer to the above table. When the consumer purchases the utility-maximizing combination of product X and product Y, total utility will be: Choose one answer. a. 72. b. 84. c. 136. d. 156. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save 156. 09:24:56 on 15/12/10 1 0 2 Grade 156. 10:00:17 on 15/12/10 1 1 Question 17 Marks: 1 Answer the next question(s) based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4 and the price of product Y is $2. The income of the consumer is $20. Reference: REF 21-44 Refer to the above table. If the consumer buys both product X and product Y, how much will the consumer buy of each to maximize utility? Choose one answer. a. 4X and 2Y b. 3X and 4Y c. 4X and 3Y d. 5X and 3Y Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save 3X and 4Y 09:24:56 on 15/12/10 1 0 2 Grade 3X and 4Y 10:00:17 on 15/12/10 1 1 Question 18 Marks: 1 The total utility of a product is calculated by: Choose one answer. a. summing the marginal utility from the first unit of a product that is consumed and the last unit of a product that is consumed. b. multiplying the marginal utility of a unit of the product consumed times the average quantity consumed. c. summing the marginal utilities for each successive unit of the product that is consumed. d. multiplying price times quantity and dividing by the marginal utility. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save summing the marginal utilities for each successive unit of the product that is consumed. 09:28:01 on 15/12/10 1 0 2 Grade summing the marginal utilities for each successive unit of the product that is consumed. 10:00:17 on 15/12/10 1 1 Question 19 Marks: 1 The utility of a specific product: Choose one answer. a. is determined by consumer income. b. is determined by the price of the product. c. varies from person to person using the product. d. is constant from person to person using the product. Make comment or override grade Incorrect Marks for this submission: 0/1. History of Responses: # Action Response Time Raw score Grade 1 Save is determined by the price of the product. 09:52:31 on 15/12/10 0 0 2 Grade is determined by the price of the product. 10:00:17 on 15/12/10 0 0 Question 20 An inferior good is best defined as a product for which the: Choose one answer. a. cross elasticity of demand is negative. b. income elasticity of demand is negative. c. cross elasticity of demand is zero. d. income elasticity of demand is zero. Make comment or override grade 21 Marks: 1 The price of diamonds is substantially greater than the price of water because: Choose one answer. a. the total utility of water is greater than the total utility of diamonds. b. the total utility of diamonds is greater than the total utility of water. c. the marginal utility of the last unit of a diamond is significantly greater than the marginal utility of the last unit of a gallon of water. d. the marginal utility of the last unit of a diamond is significantly less than the marginal utility of the last unit of a gallon of water. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save the marginal utility of the last unit of a diamond is significantly greater than the marginal utility of the last unit of a gallon of water. 09:33:51 on 15/12/10 1 0 2 Grade the marginal utility of the last unit of a diamond is significantly greater than the marginal utility of the last unit of a gallon of water. 09:33:51 on 15/12/10 1 1 Question 22 Marks: 1 Reference: NewREF 21-29 Refer to the above table. The addition of which unit has the greatest marginal utility? Choose one answer. a. fifth b. sixth c. seventh d. eighth Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save sixth 09:33:51 on 15/12/10 1 0 2 Grade sixth 09:33:51 on 15/12/10 1 1 Question 23 Reference: Ref 20-63 Refer to the above graph. When the quantity of product X increases from 14,000 to 16,000, the price elasticity of demand for product X is: Choose one answer. a. elastic. b. inelastic. c. unit-elastic. d. perfectly inelastic. Make comment or override grade Question 24 A straight-line downward-sloping demand curve has a price elasticity of demand which: Choose one answer. a. decreases as price decreases. b. increases as price decreases. c. is zero at all prices. d. is unitary at all prices. Make comment or override grade Question 25 Marks: 1 Suppose next year football tickets at your university are given away and there are still empty seats for all games. Ignoring all other costs of going to the game, you should attend until your: Choose one answer. a. total utility begins to decline. b. average utility becomes negative. c. average utility begins to decline. d. marginal utility begins to decline. Make comment or override grade Incorrect Marks for this submission: 0/1. 26 Marks: 1 Which statement is false? Choose one answer. a. The substitution effect measures the change in the quantity demanded of a good brought about only by a change in its relative price. b. The income effect for a change in the price of any normal good offsets the substitution effect, so the demand curve is positively sloped. c. The income effect shows a change in the real income associated with a change in the price of a good. d. The income effect of a normal good will reinforce its substitution effect. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save The income effect for a change in the price of any normal good offsets the substitution effect, so the demand curve is positively sloped. 09:40:07 on 15/12/10 1 0 2 Grade The income effect for a change in the price of any normal good offsets the substitution effect, so the demand curve is positively sloped. 09:40:07 on 15/12/10 1 1 Question 27 Marks: 1 (Consider This) The marginal utility of a second newspaper taken from a newspaper vending machine is: Choose one answer. a. constant. b. increasing. c. close to zero. d. close to one. Make comment or override grade Incorrect Marks for this submission: 0/1. History of Responses: # Action Response Time Raw score Grade 1 Save close to one. 09:53:18 on 15/12/10 0 0 2 Grade close to one. 09:53:18 on 15/12/10 0 0 Question 28 Marks: 1 Which best expresses the law of diminishing marginal utility? Choose one answer. a. The more consumption of a product, the smaller is the total and marginal utility from the consumption. b. The less consumption of a product, the greater is the total and marginal utility of the consumption. c. The more consumption of a product, the smaller is the marginal utility from consuming an additional unit. d. The more consumption of a product, the smaller is the total and marginal utility from the consumption. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save The more consumption of a product, the smaller is the marginal utility from consuming an additional unit. 09:40:07 on 15/12/10 1 0 2 Grade The more consumption of a product, the smaller is the marginal utility from consuming an additional unit. 09:40:07 on 15/12/10 1 1 Question 29 Marks: 1 The table below shows the marginal-utility schedules for goods A and B for a hypothetical consumer. The price of good A is $1 and the price of good B is $2. The income of the consumer is $11. Reference: REF 21-70 (REF21060) Refer to the above table. To maximize utility, the consumer will buy: Choose one answer. a. 3 A and 5 B. b. 5 A and 6 B. c. 5 A and 3 B. d. 6 A and 4 B. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save 5 A and 3 B. 09:40:07 on 15/12/10 1 0 2 Grade 5 A and 3 B. 09:40:07 on 15/12/10 1 1 Question 30 Reference: Ref 20-67 Consider the demand curve above. If area 0ABC is smaller than area 0DEF , we may conclude that demand in this range is: Choose one answer. a. price-inelastic. b. income-inelastic. c. price-elastic. d. income-elastic. Make comment or override grade Show all questions on one page Question 31 Marks: 1 Given that MUx/Px > MUy/Py, consumers who spend all of their income on these two goods can: Choose one answer. a. maximize total utility but not marginal utility. b. maximize marginal utility but not total utility. c. increase total utility by buying more of y and less of x. d. increase total utility by buying more of x and less of y. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save increase total utility by buying more of x and less of y. 09:42:17 on 15/12/10 1 0 2 Grade increase total utility by buying more of x and less of y. 09:42:17 on 15/12/10 1 1 Question 32 Marks: 1 Assume that A and B are both priced at $1 per unit and that Mary has $10 to spend on A and B. She buys 6 units of A and 4 units of B. The marginal utility of A is 12 and the marginal utility of B is 8. This indicates that: Choose one answer. a. Mary is in equilibrium. b. given another dollar, Mary should buy an additional unit of B. c. in order to maximize utility, Mary should buy more of B and less of A. d. in order to maximize utility, Mary should buy more of A and less of B. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save in order to maximize utility, Mary should buy more of A and less of B. 09:57:13 on 15/12/10 1 0 2 Grade in order to maximize utility, Mary should buy more of A and less of B. 09:57:13 on 15/12/10 1 1 Question 33 Marks: 1 Which statement is correct? Choose one answer. a. The income effect for a change in the price of any normal good offsets the substitution effect. b. The income effect shows a decrease in real income is associated with a decrease in the price of a good. c. The income effect of a normal good will reinforce its substitution effect. d. The substitution effect measures the increase in the quantity demanded of a good because of a decrease in the price of all other goods. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save The income effect shows a decrease in real income is associated with a decrease in the price of a good. 09:57:13 on 15/12/10 0 0 2 Save The income effect of a normal good will reinforce its substitution effect. 09:59:47 on 15/12/10 1 0 3 Grade The income effect of a normal good will reinforce its substitution effect. 09:59:47 on 15/12/10 1 1 Question 34 Marks: 1 Which is a dimension or assumption of the marginal-utility theory of consumer behavior? Choose one answer. a. Goods and services are free. b. The consumer has a small income. c. Each consumer has clear-cut preferences for goods and services. d. Goods and services yield continually increasing amounts of marginal utility as the consumer buys more of them. Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Action Response Time Raw score Grade 1 Save Each consumer has clear-cut preferences for goods and services. 09:42:17 on 15/12/10 1 0 2 Grade Each consumer has clear-cut preferences for goods and services. 09:42:17 on 15/12/10 1 1 Question 35 Marks: 1 A consumer has two basic choices: rent a DVD movie for $4.00 and spend 2 hours of time watching it or spend $20 for dinner at a restaurant that takes 1 hour of time. If the marginal utilities of the movie and the dinner are the same, and the consumer values time at $12 an hour, the rational consumer will most likely: Choose one answer. a. rent more movies and buy fewer restaurant dinners. b. buy more restaurant dinners and rent fewer movies. c. buy fewer restaurant dinners and rent fewer movies. d. make no change in the consumption of both. Make comment or override grade Correct 36 Reference: REF 20-30 Over the $5-$6 range, demand is: Choose one answer. a. one. b. zero. c. elastic. d. inelastic. Make comment or override grade Question 37 Marks: 1 After eating four slices of pizza, you are offered a fifth slice. You turn down the slice. Your refusal indicates that the: Choose one answer. a. marginal utility for pizza slices is negative. b. total utility for pizza slices is negative. c. marginal utility is positive for the fourth slice and negative for the fifth slice. d. total utility was positive for the fourth slice and negative for the fifth slice. Make comment or override grade Incorrect Marks for this submission: 0/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save total utility was positive for the fourth slice and negative for the fifth slice. 09:46:10 on 15/12/10 0 0 2 Grade total utility was positive for the fourth slice and negative for the fifth slice. 09:46:10 on 15/12/10 0 0 Question 38 When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is: Choose one answer. a. elastic. b. inelastic. c. cross-elastic. d. unitary elastic. Make comment or override grade Question 39 Marks: 1 Total utility is best defined by which of the following? Choose one answer. a. the change in marginal utility multiplied by the price of a product b. the maximum amount of satisfaction from consuming a product c. the total satisfaction received from consuming a particular amount of a product d. the additional satisfaction received from consuming one more unit of a product Make comment or override grade Correct Marks for this submission: 1/1. History of Responses: # Actio n Response Time Raw score Grad e 1 Save the total satisfaction received from consuming a particular amount of a product 09:46:10 on 15/12/10 1 0 2 Grade the total satisfaction received from consuming a particular amount of a product 09:46:10 on 15/12/10 1 1 Question 40 Marks: 1 The satisfaction or pleasure one gets from consuming a good or service is: Choose one answer. a. price. b. utility. c. consumption. d. preferences. Make comment or override grade Correct Marks for this submission: 1/1. 41 Which is not a determinant of the price elasticity of demand for most products? Choose one answer. a. the slope of the demand curve for a product b. the number of good substitutes available for the product c. the proportion of most consumers' budget spent on the product d. the amount of time consumers have to adjust their purchases of a product to a change in its price Make comment or override grade Question 42 Reference: Ref 20-119 What is the price elasticity of supply between points A and B above? Choose one answer. a. 1 b. 3 c. -1 d. 1/3 Make comment or override grade Question 43 Reference: Ref 20-39 Which demand curve above is relatively more elastic between P1 and P2? Choose one answer. a. D1 b. D2 c. D3 d. D4 Make comment or override grade Question 44 Marks: 1 Other things being equal, demand is likely to be inelastic if the marginal utility of a product: Choose one answer. a. increases slowly as additional units are consumed. b. increases rapidly as additional units are consumed. c. decreases slowly as additional units are consumed. d. decreases rapidly as additional units are consumed. Make comment or override grade Incorrect Marks for this submission: 0/1. Question 45 Block's sells 500 bottles of perfume a month when the price is $7. A huge increase in resource costs causes price to rise to $9 and Block's only manages to sell 460 bottles of perfume. The price elasticity of demand is: Choose one answer. a. .33 and elastic. b. -3.0 and elastic. c. -.33 and inelastic. d. -3.0 and inelastic. Make comment or override grade