utility

Market equilibrium occurs when:

• a) Demand is greater than supply
• b) Supply is greater than demand
• c) Quantity demanded equals quantity supplied
• d) Prices rise continuously

If the price of a product is set below the equilibrium price, what happens?

• a) A surplus occurs
• b) A shortage occurs
• c) Demand decreases
• d) Supply increases

What happens when there is a surplus in a market?

• a) Demand is higher than supply
• b) Supply is higher than demand
• c) Prices increase
• d) Consumers buy more goods

Marginal utility is best defined as:

• a) The total satisfaction from consuming a product
• b) The additional satisfaction from consuming one more unit of a good
• c) The decrease in price over time
• d) The consumer’s willingness to buy any product

The Law of Diminishing Marginal Utility states that:

• a) As a person consumes more of a good, total utility decreases
• b) Total utility remains constant with increased consumption
• c) Each additional unit of a good consumed provides less additional satisfaction
• d) Consumers will stop purchasing goods when price increases

What is consumer surplus?

• a) The amount consumers save when they buy at a lower price than they are willing to pay
• b) The total cost paid by the consumer
• c) The difference between supply and demand
• d) The total revenue earned by businesses

If consumer income increases, how does this affect demand for a normal good?

• a) Demand decreases
• b) Demand increases
• c) Demand remains unchanged
• d) Price automatically decreases

Which of the following shifts the demand curve to the right?

• a) Increase in consumer income
• b) Decrease in the price of the good
• c) Increase in the price of complementary goods
• d) Decrease in population

If the price of a product is above the equilibrium price, a shortage occurs.

• True
• False

Equilibrium price is the price at which quantity supplied equals quantity demanded.

• True
• False