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Quiz 3A

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Question 1 (1 point)
All combinations of goods and services that provide the same utility are identified by the:
  1. law of diminishing marginal utility.
  2. law of constant marginal utility.
  3. law of increasing marginal utility.
  4. indifference curve.
Question 2 (1 point)
The point advertising elasticity reveals the:
  1. percentage change in demand following a change in advertising.
  2. percentage change in the quantity demanded following a change in advertising.
  3. percentage change in advertising following a change in the quantity demanded.
  4. percentage change in advertising following a change in demand.
Question 3 (1 point)
If P1 = $5, Q1 = 10,000, P2 = $6 and Q2 = 5,000, then at point P2 the point price elasticity eP equals:
  1. -6.
  2. -2.5.
  3. -4.25.
  4. -0.12.
Question 4 (1 point)
If MC = $25 and eP = -2.5, the profit-maximizing price equals:
  1. $25.
  2. $17.86.
  3. $41.67.
  4. $35.
Question 5 (1 point)
The concept of cross-price elasticity is used to examine the responsiveness of demand:
  1. to changes in income.
  2. for one product to changes in the price of another.
  3. to changes in "own" price.
  4. to changes in income.
Question 6 (1 point)
When the cross-price elasticity ePX = 3:
  1. demand rises by 3% with a 1% increase in the price of X.
  2. the quantity demanded rises by 3% with a 1% increase in the price of X.
  3. the quantity demanded rises by 1% with a 3% increase in the price of X.
  4. demand rises by 1% with a 3% increase in the price of X.
Question 7 (1 point)
If eP = -3 and MC = $1.32, the profit-maximizing price is:
  1. $3.00.
  2. $1.98.
  3. $1.32.
  4. $1.76.
Question 8 (1 point)
Point elasticity measures elasticity:
  1. over a given range of a function.
  2. at a spot on a function.
  3. along an arc.
  4. before non-price effects.
Question 9 (1 point)
With elastic demand, a price increase will:
  1. lower marginal revenue.
  2. lower total revenue.
  3. increase total revenue.
  4. lower marginal and total revenue.
Question 10 (1 point)
According to the law of diminishing marginal utility:
  1. as the consumption of a given product rises, the added benefit eventually diminishes.
  2. as the production cost for a given product rises, the added benefit eventually diminishes.
  3. the demand curve for some products is upward-sloping.
  4. as the price of a given product rises, the added benefit eventually diminishes.
Question 11 (1 point)
Given limited budgets, consumers obtain the most satisfaction if they purchase goods and services that:
  1. provide the highest level of marginal utility.
  2. provide the highest level of total utility.
  3. provide the highest level of marginal utility per dollar spent.
  4. cost the least.
Question 12 (1 point)
An indifference curve is a set of market baskets that:
  1. contain the same goods.
  2. provide the same utility.
  3. have identical marginal rates of substitution.
  4. can be obtained for the same cost.
Question 13 (1 point)
An increase in the quantity purchased following a price cut is:
  1. unrelated to the law of diminishing marginal utility.
  2. inconsistent with the law of diminishing marginal utility.
  3. inconsistent with utility-maximizing behavior.
  4. consistent with the law of diminishing marginal utility.
Question 14 (1 point)
If the quantity of Good X is measured on the horizontal axis and the quantity of Good Y is measured on the vertical axis, the slope of the budget constraint will decrease if the:
  1. price of X decreases.
  2. price of Y decreases.
  3. marginal utility of X decreases.
  4. budget decreases.
Question 15 (1 point)
Income and substitution effects explain change in the quantity of a good consumed that result from a change in:
  1. consumer preferences.
  2. price.
  3. price of other goods.
  4. income.
Question 16 (1 point)
The movement along an indifference curve reflecting the substitution of cheaper products for more expensive ones is :
  1. utility effect.
  2. a substitution effect.
  3. an income effect.
  4. supply effect.
Question 17 (1 point)
The demand for a product tends to be inelastic if:
  1. it is expensive.
  2. a small proportion of consumer's income is spent on the good.
  3. consumers are quick to respond to price changes.
  4. it has many substitutes.
Question 18 (1 point)
Two products are complements if the:
  1. cross-price elasticity of demand is less than zero.
  2. cross-price elasticity of demand equals zero.
  3. cross-price elasticity of demand is greater than zero.
  4. price elasticity of demand for each good is greater than zero.
Question 19 (1 point)
If the income elasticity of demand for a good is greater than one, the good is:
  1. a noncyclical normal good.
  2. a cyclical normal good.
  3. neither a normal nor an inferior good.
  4. an inferior good.
Question 20 (1 point)
A product that enjoys rapidly growing demand over time is likely to be:
  1. a noncyclical normal good.
  2. a cyclical normal good.
  3. neither a normal nor an inferior good.
  4. an inferior good.
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 27). Quiz 3A. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/managerial-economics/quiz3a.htm. This work is licensed under a Creative Commons License Creative Commons License