Quiz 4

Which of the following are determinants of price elasticity?

• the availability of substitutes

• the price of the good relative to income

• whether the good is a necessity or luxury

• All of these choices are correct.

Socio-psychiatric explanations of consumer demand for a good or service include the - level of income. - desire for ego and status. - prices of other goods. - level of wealth.

• level of income

• desire for ego and status

• prices of other goods

• level of wealth

Which of the following is true about demand?

• In order to demand a good, a person must be willing and able to buy the good.

• Demand reflects the ability to buy a good but not necessarily the desire to do so.

• When drawing a demand curve, influences such as price do not change.

• Demand reflects the desire for a good but not necessarily the ability to buy it.

Which of the following is a determinant of demand for a good?

• technology
• 
  the number of available workers

• 
  consumer income

• 
  prices of factor inputs

At some point during a meal, each extra bite provides less and less additional satisfaction. This can be explained by:

• a shift in the demand curve.

• the law of demand.

• the law of increasing opportunity cost.

• the law of diminishing marginal utility.

If demand is elastic, then:

• quantity demanded is not very responsive to changes in price.

• quantity demanded is very responsive to changes in price.

• consumer spending does not respond to changes in income.

• total revenue falls in response to a price decrease.

The assumption of ceteris paribus is important because it:

• explains the concept of diminishing marginal utility.

• explains the reason for government failure.

• determines the point where total utility is maximized.

• allows us to focus on the effects of a change in one variable at a time on another variable of interest.

If quantity demanded rises only slightly following a moderate price cut, then the response would be considered:

• elastic

• inelastic

• 
  unitary elastic. 

• abnormal

The law of demand and the law of diminishing marginal utility are related since both

• assert that consumer preferences are not as significant as price and income.

• assume that the first units consumed have more utility than subsequent units.

• address the budget constraints that consumers face.

• predict that consumers will continue to buy unlimited amounts of goods.

The following table shows the utility (enjoyment) that Joyce receives from eating ice cream cones on a hot summer day: This chart illustrates the law of:

• supply

• diminishing returns

• diminishing marginal utility

• demand