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83. Any point on the budget constraint
84. If Josh's income increases, then
85. The point where the budget constraint and an indifference curve are tangent
86. The mix of consumer purchases that maximizes the utility attainable from available income is called the
87. The slope of the budget constraint, when a consumer has reached optimal consumption of two goods, is equal
to the
A. Marginal rate of substitution.
88. The slope of the indifference curve is equal to the
89. Assume that Anna buys peanut butter and bread. If the price of peanut butter falls, then
90.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the
price of Y is $1 per unit. If the price per unit of good X is $3, the consumer would maximize utility at point
91.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price
of Y is $1 per unit. If the price per unit of good X is $3, the consumer would maximize utility by consuming
92.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the
price of Y is $1 per unit. If the price per unit of good X is $1, the optimal consumption is found at point
93.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price
of Y is $1 per unit. If the price per unit of good X is $1, the consumer would maximize utility by consuming
94.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume
the price of Y is $1 per unit. In Figure 19.3, given an income of $30 and a price for good Y of $1, which of
the following two points represent optimal consumption?
95.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the
price of Y is $1 per unit. In Figure 19.3, point E
96.
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the
price of Y is $1 per unit. Point D on the graph
Topic: APPENDIX
97. Status and ego considerations in consumption are economic explanations of demand.
98. Economists focus on the effect of changes in income and prices in influencing actual consumer purchases.
99. Psychology and sociology focus on what creates desires for goods, but economics focuses on what
consumers actually purchase.
100. Marginal utility represents the additional satisfaction obtained from one more unit of a good or service.
101. The law of diminishing marginal utility does not apply to goods that a person really enjoys.
102. If marginal utility is rising, then total utility must be falling.
103. If there is no budget constraint, utility maximization is achieved when marginal utility is zero.
104. Utility maximization is always achieved where total revenue is maximized.
105. Market demand is identical to individual demand.
106. The law of diminishing marginal utility gives us insight into the downward-sloping demand curve because
consumers are willing to pay a higher price for goods with high marginal utility.
107. An individual's consumer surplus is the difference between the maximum price that she or he is willing to pay
108. Consumers who actually purchase a good either were willing to pay that price or more.
109. Consumer surplus does not exist because some consumers cannot afford to purchase the product at all.
110. Consumer surplus is represented graphically under the demand curve and below the equilibrium price.
111. All consumers in the market enjoy a consumer surplus.
112. Colleges do not engage in price discrimination because it is illegal.
113. Price discrimination occurs when stores mark down products for sale.
114. Sellers can increase total revenues by charging different individuals the maximum they are willing to pay.
115. Price discrimination occurs with products that consumers buy regularly.
116. Price discrimination is illegal in the United States.
117. Price discrimination only occurs when consumers have only partial information about a product's price
and availability.
118. According to consumer choice theory, rational behavior requires that consumers compare the marginal utility
of each purchase with its price.
119. Optimal consumption is the mix of consumer goods sold that maximizes utility for producers.
120. If the marginal utility per dollar spent for candy bars is higher than the marginal utility per dollar spent
for popcorn, you should buy more popcorn and fewer candy bars in order to maximize utility.
FALSE
121. Advertisers currently spend about $1 million per year to change the demand for products.
122. A successful advertising campaign induces consumers to buy more of a product at any given price than before.
123. A successful advertising campaign will make demand for a product less price-elastic.
124. Consumer theory predicts that a consumer will purchase the product with the highest marginal utility per dollar.
125. When a rational consumer has stopped buying, she or he will have allocated a limited budget so that
the marginal utility per good will be the same.
FALSE
126. An indifference curve represents combinations of two goods that provide an individual the same total utility.
127. The farther an indifference curve is from the origin, the more total utility it yields.
128. A budget constraint line represents combinations of two goods that provide an individual the same total utility.
129. A consumer can purchase a product that is outside her or his budget constraint if it is on a higher indifference
curve.
130. An indifference curve shows the combinations of two goods that yield the same level of utility.
131. The rational consumer chooses a combination of two goods that is on the budget constraint and is tangent
to the highest indifference curve possible.
TRUE
132. Two indifference curves can cross one another.
133. Use the law of diminishing utility to explain why a demand curve is typically downward-sloping.
134. Explain how a successful advertising campaign will affect the demand curve for the product
being advertised.
135. Explain how a rational consumer decides which goods to buy.
136. Using the concept of the budget constraint and indifference curves, explain how a consumer maximizes total
utility.
137. Under what conditions can sellers engage in price discrimination?
138. Explain the benefits consumers enjoy from competitive markets.
Chapter 05 Test Bank Summary
Category
# of Questions
AACSB: Analytic
47
AACSB: Reflective Thinking
91
Accessibility: Keyboard Navigation
103
Blooms: Analyze
29
Blooms: Apply
18
Blooms: Remember
22
Blooms: Understand
69
Difficulty: 01 Easy
22
Difficulty: 02 Medium
69
Difficulty: 03 Hard
47
Learning Objective: 05-01 Why demand curves are downward sloping.
58
Learning Objective: 05-02 The nature and source of consumer surplus.
20
Learning Objective: 05-03 The meaning and use of price discrimination.
16
Learning Objective: 05-04 How consumers maximize utility.
44
Topic: APPENDIX
27
Topic: CHOOSING AMONG PRODUCTS
32
Topic: CONSUMER SURPLUS
17
Topic: DETERMINANTS OF DEMAND
10
Topic: IN THE NEWS
2
Topic: PRICE DISCRIMINATION
16
Topic: THE DEMAND CURVE
31
Topic: THE ECONOMY TOMORROW
3
