Chapter 19 - Theory of Consumer Behavior

1		Statement I: Utility and usefulness are the same thing. Statement II: Utility is measured by how much you are willing to pay for something.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
2		Who held this view? Individuals make choices in order to promote pleasure and to avoid pain.
			A)	Adam Smith
			B)	Jeramy Bentham
			C)	John Maynard Keynes
			D)	Karl Marx
			E)	W. Stanley Jevons
3		Statement I. As you consume more and more units of a service, your marginal utility rises. Statement II. A person's demand schedule for a product is identical to her marginal utility schedule.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
4		Most people have
			A)	virtually the same utility schedule for hamburgers.
			B)	somewhat similar utility schedules for hamburgers.
			C)	very different utility schedules for hamburgers.
5		If a service were free, you would consume additional units of that service until your total utility
			A)	rose.
			B)	declined.
			C)	reached its maximum.
			D)	reached its minimum.
6		If a service were free, you would consume additional units of that service until your marginal utility
			A)	was rising.
			B)	was falling.
			C)	was positive.
			D)	was zero.
7		You should buy more and more units of a product until its marginal utility is
			A)	is greater than price.
			B)	equal to price.
			C)	less than price.
8		You will maximize your total utility when your marginal utility is
			A)	greater than zero.
			B)	equal to zero.
			C)	less than zero.
9		The water-diamond paradox
			A)	cannot be resolved.
			B)	is no longer valid.
			C)	can be resolved by using marginal utility analysis.
			D)	explains why diamonds are overvalued.
10		Most people enjoy a consumer surplus on
			A)	virtually none of the goods and services they buy.
			B)	a few of the goods and services they buy.
			C)	on many of the goods and services they buy.
			D)	on all of the goods and services they buy.
11		Soda is selling for $5 a can and you buy 4 cans and drink them.
			A)	You are definitely enjoying a consumer surplus.
			B)	You are probably enjoying a consumer surplus.
			C)	You may be enjoying a consumer surplus.
			D)	You are definitely not enjoying a consumer surplus.
12		A consumer surplus is the difference between the price you pay and
			A)	the price the seller would have liked to have charged you.
			B)	the price you would have been willing to pay.
			C)	the price you should have paid.
			D)	the price that you could have afforded to pay.
13		Which would be an example of a seller that cuts down on the consumer surplus of its customers?
			A)	a movie theater that charges more in the winter than in the summer.
			B)	a soft drink company that charges more for its products during hot weather than in cold weather.
			C)	a candy store that charges more for two-scoop ice cream cones than one-scoop ice cream cones.
			D)	a department store that charges more for designer labels than clothing designed by less popular brand names.
14		Statement I. If you buy six units of a good, your total utility is higher than if you purchased only five units. Statement II. Utility is measured by a product's usefulness.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
15		If your marginal utility from your last session with your dance instructor is equal to the price she charged you, then
			A)	you have had exactly the right number of sessions.
			B)	you have had too many sessions.
			C)	you have not had enough sessions.
			D)	there is no way to determine whether you have had enough sessions.