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Multiple Choice Quiz
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1
What is the term that economists use to describe how consumers rank different goods and services?
A)satisfaction index
B)goodness
C)utility
D)none of the above
2
Marginal utility refers to:
A)the additional product produced as the firm adds one additional unit of an input.
B)the additional utility that a consumer derives from consuming one additional unit of a good.
C)the amount of utility divided by the number of units produced.
D)all of the above.
3
The law of diminishing marginal utility states:
A)the supply curve slopes upward.
B)your utility grows at a slower and slower rate as you consume more and more units of a good.
C)the elasticity of demand is infinite.
D)none of the above.
4
Consumers will maximize satisfaction when:
A)the price of each good is exactly equal to the price of every other good consumed.
B)the price of each good is exactly equal to the total utility derived from the consumption of every other good.
C)the marginal utility of the last dollar spent on each good is exactly equal to the marginal utility of the last dollar spent on any other good.
D)marginal utility is equal to average utility.
5
The demand curve generally slopes downward because:
A)a higher price increases the consumer's desired level of consumption.
B)a higher price decreases the consumer's desired level of consumption.
C)that's just the way that it is.
D)none of the above.
6
The substitution effect explains that when the price of a good increases, consumers will consume
A)less of the more expensive good and more of some other good.
B)more of the more expensive good and less of some other good.
C)more of the good because their real incomes are lower after the price increase.
D)less of the good because their real incomes are lower after the price increase.
7
The income effect explains that when the price of a good increases, consumers will consume
A)less of the more expensive good and more of some other good.
B)more of the more expensive good and less of some other good.
C)more of the good because their real incomes are lower after the price increase.
D)less of the good because their real incomes are lower after the price increase.
8
Which of the following groups of goods are complements?
A)steak and steak sauce
B)gasoline and cars
C)CD-ROM's and computers
D)all of the above
9
If goods X and Y are substitutes, an increase in the price of Y will cause _______ in the demand for good X.
A)an increase
B)a decrease
C)no change
D)an inversion
10
______ is the extra value that consumers receive above what they pay for that good.
A)producer surplus
B)utility
C)marginal utility
D)consumer surplus







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