1. To calculate the total utility of consuming N products: A. add the additional satisfaction of consuming each product up to N and multiply by its price. B. add the total satisfactions of consuming each product up to N. C. multiply the additional satisfaction from consuming the Nth product by its price. D. multiply total satisfaction from consuming N products by N.

2. Suppose that the following table lists the utility that Steve receives from consuming oranges at 50 cents apiece. What is the marginal utility of increasing consumption from 2 to 3 oranges?

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A. 3

B. 6

C. 5

D. 12

3. Suppose that if you buy one Big Mac that gives you marginal utility of 500 and a second Big Mac that gives you marginal utility of 200, total utility of buying (and eating) two Big Macs is: A. 200.

B. 300.

C. 500.

D. 700.

4. When marginal utility is zero, total utility is:

A. increasing.

B. decreasing.

C. zero.

D. at its maximum.

5. The principle of diminishing marginal utility says that marginal utility: A. is negative.

B. is positive.

C. is always falling.

D. falls after some point.

6. Given the price, the lower the marginal utility of a good: A. the less you are willing to buy of it.

B. the more you are willing to buy of it.

C. the lower the total utility of that good.

D. the more substitutes there are.

7. Demand is said to be elastic when the:

A. percentage change in quantity demanded is less than the percentage change in price. B. percentage change in quantity demanded is greater than the percentage change in price. C. change in quantity demanded is less than the change in price. D. change in quantity demanded is greater than the change in price.

8. A price elasticity of demand for a good or service of 1.8 tells us that: A. the price changes by $1.80 when quantity changes by one unit. B. quantity demanded falls by 1.8% when price rises by 1%.

C. the price rises by 1.8% when quantity demanded falls by 1%. D. quantity demanded falls by 1.8 units when price changes by $1.

9. If the price of a good goes up by 5% and, in response, the quantity demanded falls by 15%, the price elasticity of demand would be: A. .05.

B. 3.

C. 0.3333.

D. 0.15.

10. It has been estimated that the price elasticity of demand for attending baseball games is 0.23. Other things constant, a 10 percent increase in attendance can be explained by a: A. 43.48% fall in the price of a ticket.

B. 43.48% rise in the price of a ticket.

C. 23% fall in the price of a ticket.

D. 23% rise in the price of a ticket.

11. If the price elasticity of demand for a good is inelastic, a price change causes: A. a zero change in quantity demanded.

B. an infinite change in quantity demanded.

C. a greater than proportionate change in quantity demanded. D. a less than proportionate change in quantity demanded.

12. Elizabeth Savoca estimated that for every 1% increase in tuition costs at college, 2.4% fewer students applied to that college. This indicates that the elasticity of applying to college is: A. inelastic.

B. elastic.

C. perfectly inelastic.

D. unit elastic.

13. Cross-price elasticity of demand is defined as the:

A. percentage change in quantity demanded divided by percentage change in the price of the same good. B. percentage change in demand divided by percentage change in the price of another good. C. change in the price of another good divided by the change in quantity demanded. D. percentage change the price of another good divided by the percentage change in quantity demanded.

14. It is estimated that a 3% drop in the price of Asian and European autos will decrease the demand for American cars by .84%. From this information one can conclude that: A. The income elasticity of demand for American cars is less than one. B. European and Asian cars are luxuries.

C. European and Asian cars are substitutes for American cars. D. European and Asian...