Pretest 2

If a 10 percent increase in the price of a good leads to a 25 percent decrease in the quantity demanded of a good, demand is:

• Relatively inelastic
• Relatively elastic
• Perfectly elastic
• Perfectly inelastic

A product is likely to have a price elasticity of demand that exceeds 1 when:

• Its price falls

• It is a necessity

• It has close substitutes

• Consumers are not very responsive to changes in price

Because a budget line shows limits, it is most similar to a 

• supply curve
• demand curve
• production possibilities frontier
• marginal utility curve

If Ann gets 100 units of utility from reading a book and 500 units of utility from playing with her cat, we know that Ann

• does not enjoy reading books
• does not enjoy playing with her cat
• prefers reading a book to playing with her cat
• prefers playing with her cat to reading a book

Utility is the

• benefit or satisfaction that a person gets from the consumption of a good or service
• measure of how useful a resource is in the production process
• measure of productivity associated with a good or service
• economic term for consumption possibilities

As more of a good is consumed, total utility

• increases and then decrease

• decreases
• remains the same
• becomes negative and then turns positive

Marginal utility is equal to which of the following

• total income divided by the price of the product
• the change in total utility from consuming one more unit of a good
• the satisfaction obtained from consuming any number of units of a good
• none of the above is correct

The first four dinner rolls Joan consumes have total utility of 15, 27, 37, and 45 respectively. What is the marginal utility of the 4th dinner roll?

• 124 units of utility
• 45 units of utility
• 11.25 units of utility
• 8 units of utility

Marginal utility curves describe a consumer's 

• ability to buy goods
• preferences
• income
• consumption

The goal of a consumer is to

• acquire the largest possible quantity of goods
• acquire the largest possible variety of goods
• maximize utility
• save money