1. When the midpoint formula is used to calculate elasticity, a percent change in Y is measured as ________.a) change in Y * Y midpointb) Y midpoint + change in Yc) Y midpoint ÷ change in Yd) change in Y ÷ Y midpoint2 of 25The law of diminishing marginal utility helps to explain why _______.a) the amusement park offers a two-day pass at a cheaper price then buying two single-day passesb) at buffets people will eventually eat less and less foodc) people will eventually get bored of doing something for a long time or repeatedlyd) all of the above3 of 25The reason the midpoint formula is used to calculate a percent change for elasticity is that with the midpoint formula ___________.a) elasticity is independent of the direction in which variables are changingb) elasticity is always a negative numberc) elasticity is always a number between -1 and 1d) elasticity is always a number between 0 and 14 of 25Katie has a lemonade stand. She is currently charging 50 cents for a glass of lemonade. If the price elasticity of demand is 1.5, which of the following statements is true?a) If Katie raises her price, she will not lose very many new customers, and her total revenue will increase.b) If Katie raises her price, she will lose a lot of customers, and her total revenue will decrease.c) If Katie lowers her price, she will not get very many new customers, and her total revenue will decrease.d) none of the above5 of 25If demand is unit elastic, __________.a) total revenue is constant no matter what price is chargedb) total revenue is zero no matter what price is chargedc) total revenue increases as price increasesd) total revenue decreases as price increases6 of 25If the elasticity of demand equals 1, ____________.a) the quantity demanded changes proportionally to changes in priceb) the quantity demanded is relatively unresponsive to pricec) the quantity demanded is relatively responsive to priced) the quantity demanded is unrelated to price7 of 25In Mexico, it takes 3 days to produce a bulldozer and 12 days to produce an airplane. In Brazil, it takes 2 days to produce a bulldozer and 10 days to produce an airplane. The opportunity cost of producing an airplane is lower in ________.a) Mexicob) Brazilc) neither; it is the same in both countriesd) either; it depends upon the elasticity of demand for airplanes8 of 25A drought hits the Midwest and wipes out part of the wheat crop, shifting the supply curve in. If demand for wheat is inelastic, what do you expect to happen to the total revenue of wheat farmers as a whole?a) Total revenue will decrease.b) Total revenue will equal zero.c) Total revenue will increase.d) Total revenue will stay the same.9 of 25Which of the following might influence a person’s marginal utility and thus their choices?a) product information they readb) addictive tendenciesc) advertisingd) all of the above10 of 25Economists often use “marginal analysis” in making decisions. Marginal refers to _________.a) a shift in a curveb) an incremental changec) a movement along a curved) the total amount11 of 25The rule of utility maximization states, “To maximize utility, a consumer adjusts spending until _________.”a) the total utility from the last dollar spent on each good is the sameb) the marginal utility from the last dollar spent on each good is the samec) the total utility from each good is the samed) the marginal utility from the last unit of each good is the same12 of 25Jan is in equilibrium if she ___________.a) has equal total utility from all goodsb) follows the rule of utility maximizationc) has purchased an equal quantity of all goodsd) has not exhausted her budget constraint13 of 25Kaiden buys chocolate and donuts, which are both normal goods. When the price of chocolate rises, the substitution effect tells Kaiden to buy ____________.a) more chocolate and less donutsb) less chocolate and less donutsc) less chocolate and more donutsd) more chocolate and more donuts14 of 25The following is Clyde’s monthly schedule of how many mini hamburgers he eats, depending upon the price of the hamburger.Quantity Purchased / Consumed Price Total Utility5 $5 10 utils10 $4 20 utils20 $3 30 utils35 $2 35 utils55 $1 35 utilsClyde reaches the satiation point if ______.a) he consumes 10 hamburgers during the monthb) he consumes 20 hamburgers during the monthc) he consumes 35 hamburgers during the monthd) he consumes 55 hamburgers during the month15 of 25The following is Clyde’s monthly schedule of how many mini hamburgers he eats, depending upon the price of the hamburger.Quantity Purchased / Consumed Price Total Utility5 $5 10 utils10 $4 20 utils20 $3 30 utils35 $2 35 utils55 $1 35 utilsThe price of hamburgers is $3 this month. His marginal utility for the 20th hamburger is ______.a) 1 utilb) 2 utilsc) 10 utilsd) 15 utils16 of 25The following is Clyde’s monthly schedule of how many mini hamburgers he eats, depending upon the price of the hamburger.Quantity Purchased / Consumed Price Total Utility5 $5 10 utils10 $4 20 utils20 $3 30 utils35 $2 35 utils55 $1 35 utilsThe price of hamburgers is $5 this month. The total revenue the hamburger seller receives from Clyde this month is ______.a) $5b) $10c) $25d) $5017 of 25The following is Clyde’s monthly schedule of how many mini hamburgers he eats, depending upon the price of the hamburger.Quantity Purchased / Consumed Price Total Utility5 $5 10 utils10 $4 20 utils20 $3 30 utils35 $2 35 utils55 $1 35 utilsThe price of hamburgers decreases from $3 to $2 during the next month. This represents an elasticity of demand that is between ______.a) 0 and 1 (inelastic)b) 1 and 2 (elastic)c) 2 and 3 (elastic)d) 3 and 4 (elastic)18 of 25Farmer Karla goes to the farmers market to sell her 100 bundles of carrots. While at the farmers market, Karlas supply of carrots can be best described as ______.a) perfectly inelasticb) elasticc) perfectly elasticd) The answer depends upon the price of carrots.19 of 25When Coke is on sale at Safeways grocery store, sales of Pepsi drop (and vice versa). This is because the two goods have a cross elasticity of demand that is ____________.a) less than oneb) greather than onec) positived) negative20 of 25If the price of an inferior good decreases, ____________.a) the substitution effect would lead the consumer to buy more of the goodb) the substitution effect would lead the consumer to buy less of the goodc) the income effect would lead the consumer to buy more of the goodd) it depends; any of the above may or may not occur21 of 25You are at a restaurant. You can purchase steak for $35, fish for $30, a hamburger for $15, and a pasta dish for $7.50. You would obtain 25 utils from the steak, 30 utils from the fish, 20 utils from the hamburger, and 15 utils from the pasta dish. What is your best choice to get the most for your money?a) steakb) fishc) hamburgerd) pasta dish22 of 25Companies sometimes use designers or celebrities to endorse their product through advertising or by putting their names on the product. Companies do this because they hope that these actions will _________.a) increase the marginal utility consumers receive when buying the productb) decrease the price elasticityc) increase profitd) all of the above23 of 25Ceteris paribus, which of the following will result in demand for a good having a higher price elasticity of demand?a) The time period under consideration is very short.b) The good is a large part of your budget.c) The good does not have many substitutes.d) All of the above would all result in higher price elasticity of demand.24 of 25The total utility for water is higher than the total utility for diamonds. You can explain the diamond-water paradox (that diamonds are expensive but not necessary for survival / not as useful, while water is inexpensive yet necessary for survival / very useful) because _______.a) prices do not have any relationship with utilityb) the marginal utilities of diamonds and water must be equalc) the marginal utility of diamonds is lower than that of water because diamonds are scarced) the marginal utility of water is lower than that of diamonds because water is more abundant25 of 25Ba
d choices, such as shopping, drinking, or gambling to excess, ______.a) show that the utility maximization model is not applicable to the behavior of addictsb) show that utility only matters after a good is consumed, not beforec) cannot be replaced by good choices in the futured) show that the perceptions of the utility provided by consumption can be incorrect

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