Question 1

Suppose Jose receives diminishing marginal benefits from consuming more cups of latte. Do you think that Jose may eventually receive negative marginal benefits from consuming an additional cup of latte?

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Question 2

The data below show Paula and Susan's willingness to pay for compact discs.

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Question 3

Which of the following will most likely happen when a person's income increases, other things being equal?
A)The budget line will shift outward.
B)The indifference curves will shift downward.
C)The indifference curves will shift outward.
D)The budget line will become steeper.
E)The budget line will become flatter.

Accepted Answer

When a person's income increases, their purchasing power increases, which means they can afford more goods and services. This leads to the budget line shifting outward, allowing the person to consume more of both goods.

Question 4

Suppose that Mary's willingness to pay for T-shirts is $20 for one T-shirt, $26 for two T-shirts, $30 for three T-shirts, and $32 for four T-shirts. Draw Mary's demand curve for T-shirts. If the price of a T-shirt is $6, how many T-shirts would Mary buy? What is Mary's consumer surplus? Show the consumer surplus in a diagram. Now suppose that a sale reduces the price of T-shirts to $4. How many T-shirts will Mary buy now? What is the new consumer surplus?

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Question 5

Exhibit 5-10 
-Refer to Exhibit 5-10. Assume that Stephanie and Roger are the only consumers in the market. Calculate consumer surplus for Stephanie, Roger, and the market as a whole if market price is $1.

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The answer of Exhibit 5-10 
-Refer to Exhibit 5-10. Assume...

Question 6

What happens to consumer surplus if the price of a good falls? Why?

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Question 7

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. Even at the market equilibrium price, as long as consumers are willing to pay more than the equilibrium price for some units, there will be a positive consumer surplus.

Question 8

Use the information of utility in the box below to find the quantity of each good the consumer will purchase in each of the three cases to maximize utility.

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Question 9

Which of the following statements is true? The substitution effect of an increase in the price of tea refers to the

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Question 10

Define consumer surplus. Does a consumer really get a surplus? Why or why not?

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Question 11

Analyze the following data for Julie's utility from consumption of CDs and magazines.

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Question 12

The following table shows David's willingness to pay for ice cream.

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The answer of The following table shows David's willingness to...

Question 13

Consumer surplus increases as price decreases.

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. As price decreases, consumers are able to purchase more of the good or service, increasing their overall satisfaction and consumer surplus.

Question 14

As an individual consumer's income increases, that consumer's
A)budget line shifts to the left.
B)indifference curve shifts to the right.
C)budget line shifts to the right.
D)indifference curve shifts to the left.
E)budget line remains unchanged.

Accepted Answer

When an individual consumer's income increases, their budget line shifts to the right, allowing them to afford more goods and services. This means they can either consume more of the same goods and services or they can choose to consume different goods and services altogether. Therefore, option C is the correct choice.

Question 15

A budget line identifies combinations of two goods that a consumer
A)will purchase if the prices are low enough.
B)will purchase, given his or her preferences.
C)wants to purchase.
D)is able to purchase, given his or her income and prices.
E)has purchased, given his or her income and prices.

Accepted Answer

A budget line represents the combinations of two goods that a consumer is able to purchase, given his or her income and the prices of the goods. Therefore, choice D is the correct answer. Choices A, B, C, and E are incorrect because they do not accurately describe the purpose or function of a budget line.

Question 16

Why does water, which is essential to our health, cost so much less than diamonds, which are far less useful?

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Question 17

Consider the table below showing Anne's willingness to pay for magazines.

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Question 18

Consumer surplus applies only to market demand, not individual demand.

Accepted Answer

Consumer surplus can apply to both market demand and individual demand. Market demand refers to the total demand for a product from all consumers, while individual demand refers to the demand of a specific consumer. Consumer surplus is the difference between the maximum amount a consumer is willing to pay for a product and the actual price they pay. This concept can be applied to both market demand and individual demand.

Question 19

Consumer surplus measures the difference between what consumers are willing to pay and what they actually pay for a given quantity of a good.

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a given quantity of a good or service and the actual price they pay. Therefore, the statement is true.

Question 20

Which of the following statements is true? The income effect of an increase in the price of iPads refers to the

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