December 2020

As an individual consumes more of a given good, the marginal utility of that good to the consumer a. rises at an increasing rate. b. rises at a decreasing rate. c. falls. d. rises.

 The amount of added utility that a consumer gains from the consumption of one more unit of a good is called a. incremental utility. b. total utility. c. diminishing utility. d. marginal utility.

A certain consumer buys only food and compact discs. If the quantity of food bought increases, while that of compact discs remains the same, the marginal utility of food will a. fall relative to the marginal utility of compact discs.        b. rise relative to the marginal utility of compact discs. c. rise, but not as

The slope of the indifference curve for goods X and Y is called the marginal a. product rate. b. rate of transformation. c. rate of substitution. d. rate of utility.

Consumer equilibrium occurs where the budget line is tangent to the a. lowest possible indifference curve. b. highest possible indifference curve. c. utility-maximizing indifference curve. d. utility-equalization indifference curve.

Only at the point of consumer equilibrium does the marginal rate of substitution (MRS) equal the a. slope of the budget line. b. slope of the indifference curve. c. price ratio. d. all of the above.

At point A in Exhibit A-6, consumers would be a. spending all of their income but not maximizing total utility. b. spending all of their income and maximizing total utility. c. maximizing total utility without spending all of their income. d. none of the above.

Assume that the equilibrium price for a good is $10. If the market price is $5, a a. shortage will cause the price to remain at $5. b. surplus will cause the price to remain at $5. c. shortage will cause the price to rise toward $10. d. surplus will cause the price to rise

In an efficient market, deadweight loss is _.a. maximum. b. minimum. c. constant. d. zero.

Draw a supply and demand graph to illustrate the problem described in the case study, and prescribe your own solution. Which proposal do you think best serves the interests of small dairy farmers? Why?