Costs and Price
Summer2011-Microeconomics-Exam Two Practice
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
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?
[pic]
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