- If the demand for grapes increases simultaneously
with an increase in the supply of grapes, we can
say that
(A) equilibrium quantity rises, but the price change
is ambiguous.
(B) equilibrium quantity falls, but the price change
is ambiguous.
(C) equilibrium quantity rises, and the price rises.
(D) equilibrium quantity falls, and the price falls.
(E) the quantity change is ambiguous, but the
equilibrium price rises.- In Figure D.2, identify the area of consumer
surplus.
(A) 0ACB
(B) 0FCB
(C) AFC
(D) ACE
(E) FCE- Suppose the price of beef rises by 10 percent and
the quantity demanded of beef falls by 20 per-
cent. We can conclude that
(A) demand for beef is price elastic and consumer
spending on beef is falling.
(B) demand for beef is price elastic and consumer
spending on beef is rising.
(C) demand for beef is price inelastic and con-
sumer spending on beef is falling.
(D) demand for beef is price inelastic and con-
sumer spending on beef is rising.
(E) demand for beef is unit elastic and consumer
spending on beef is constant.- If the price of firm A’s cell phone service rises by
5 percent and the quantity demanded for firm B’s
cell phone service increases by 10 percent, we can
say that
(A) demand for firm B is price elastic.
(B) supply for firm B is price elastic.
(C) firms A and B are substitutes because the
cross-price elasticity is greater than zero.
(D) firms A and B are complements because the
cross-price elasticity is less than zero.
(E) firms A and B are complements because the
cross-price elasticity is greater than zero.- Which of the following describes the theory
behind the demand curve?
(A) Decreasing marginal utility as consumption
rises.
(B) Increasing marginal cost as consumption
rises.
(C) Decreasing marginal cost as consumption
rises.
(D) Increasing total utility at an increasing rate as
consumption rises.
(E) The substitution effect is larger than the
income effect.- If a consumer is not required to pay a monetary
price for each cookie she consumes, the consumer
will stop eating cookies when
(A) the total utility from eating cookies is equal
to zero.
(B) the substitution effect outweighs the income
effect from eating cookies.
(C) the ratio of marginal utility divided by total
utility is equal to one.
(D) the marginal utility from eating the last
cookie is zero.
(E) the marginal utility from eating the next
cookie is increasing at a decreasing rate.24 › Step 2. Determine Your Test Readiness
Figure D.2PriceQuantityCSD0FBAEhttp://www.ebook3000.com