What happens to consumer surplus as price falls along a given demand curve?
a. It always increases.
b. It always decreases.
c. It never changes.
d. It increases only if price increases just a little.
e. It depends on the elasticity of demand and supply.
QUESTION 2Suppose Jerry consumes three hamburgers at McDonald's one evening. He figured the last one was just worth the price he paid for it. If the hamburgers he buys have a price of 1, then
a. he earned no consumer surplus
b. he would have earned consumer surplus if he had eaten one more hamburger
c. he was irrational
d. he may have earned consumer surplus on the first two hamburgers
e. he earned 1 consumer surplus on the third hamburger alone
QUESTION 3Elvis values the first gravy sandwich at 5, the second at 4.50, the third at 4 . If he buys three for 4 each, his consumer surplus is
a. 5
b. 4
c. 1.50
d. 9.50
e. 12
QUESTION 4A decrease in price along the elastic segment of a demand curve will
a. increase total utility, marginal utility, consumer surplus, and consumer expenditure
b. decrease total utility, consumer surplus, and consumer expenditure and increase marginal utility
c. decrease total utility and consumer surplus and increase consumer expenditure and marginal utility
d. increase consumer surplus through a decrease in consumer expenditure
e. decrease consumer surplus through an increase in consumer expenditure
QUESTION 5As price falls along a given demand curve for pretzels,
a. quantity demanded, total utility, marginal utility, and consumer surplus increase; consumer expenditure decreases
b. quantity demanded, total utility, and consumer surplus increase; marginal utility and consumer surplus decrease
c. quantity demanded, total utility, consumer surplus, and consumer expenditure increase; marginal utility decreases
d. quantity demanded, total utility, and consumer surplus increase; marginal utility decreases; consumer expenditure might increase, decrease, or remain constant
e. quantity demanded, total utility, marginal utility, consumer surplus, and consumer expenditure all increase
QUESTION 6If you buy a good, its expected marginal value to you
a. is equal to its price
b. is greater than its price
c. is less than its price
d. may be less than or equal to but not greater than its price
e. may be greater than or equal to but not less than its price
QUESTION 7Arthur Bach is worth 780 million dollars. He goes into an upscale men's store and buys 32 green sweaters, each costing 200 . If Arthur has maximized his utility from this purchase, what is the marginal utility of the thirty-third green sweater?
a. cannot tell
b. greater than 200
c. less than 200
d. 0
e. 200
QUESTION 8According to the theory of utility maximization,
a. people who buy tap water apparently feel the additional benefit (compared with bottled water) offsets the additional cost
b. people who buy bottled water apparently feel the additional benefit (compared with tap water) offsets the additional cost
c. the marginal utility of the last gallon of bottled water consumed exceeds the marginal utility of the first gallon of tap water consumed
d. the marginal utility of bottled water exceeds the marginal utility of diamonds
e. bottled water must be more expensive (per gallon) than tap water
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