Chapter 5 Preliminary Quiz
Demand and Consumer Behavior

Multiple Choice Questions:

Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!

	1. What is the term that economists use to describe how consumers rank different goods and services? a. satisfaction index b. goodness c. utility d. none of the above
	2. Marginal utility refers to: a. the additional product produced as the firm adds one additional unit of an input. b. the additional utility that a consumer derives from consuming one additional unit of a good. c. the amount of utility divided by the number of units produced. d. all of the above.
	3. The law of diminishing marginal utility states: a. the supply curve slopes upward. b. your utility grows at a slower and slower rate as you consume more and more units of a good. c. the elasticity of demand is infinite. d. none of the above.
	4. If you sum all of the marginal utilities for the consumption of units one through five, you will get: a. the marginal utility for the consumption of the fifth unit. b. the marginal utility for the consumption of the sixth unit. c. the total utility for the consumption of the first five units. d. the average utility for the consumption of the first five units.
	5. Consumers will maximize satisfaction when: a. the price of each good is exactly equal to the price of every other good consumed. b. the price of each good is exactly equal to the total utility derived from the consumption of every other good. c. the marginal utility of the last dollar spent on each good is exactly equal to the marginal utility of the last dollar spent on any other good. d. marginal utility is equal to average utility.
	6. The demand curve generally slopes upward because: a. a higher price increases the consumer's desired level of consumption. b. a higher price decreases the consumer's desired level of consumption. c. that's just the way that it is. d. none of the above.
	7. The substitution effect explains that when the price of a good increases, consumers will consume a. less of the more expensive good and more of some other good. b. more of the more expensive good and less of some other good. c. more of the good because their real incomes are lower after the price increase. d. less of the good because their real incomes are lower after the price increase.
	8. The income effect explains that when the price of a good increases, consumers will consume a. less of the more expensive good and more of some other good. b. more of the more expensive good and less of some other good. c. more of the good because their real incomes are lower after the price increase. d. less of the good because their real incomes are lower after the price increase.
	9. The market demand curve is: a. a special demand curve that includes the behavior of firms and households. b. obtained by subtracting the individual demands of different consumers from each other. c. both a and b d. none of the above.
	10. Which of the following groups of goods are complements? a. steak and steak sauce b. gasoline and cars c. CD-ROM's and computers d. all of the above
	11. If goods X and Y are substitutes, an increase in the price of Y will cause _______ in the demand for good X. a. an increase b. a decrease c. no change d. an inversion
	12. Hard-core drug users have an elasticity of demand for illegal drugs that is relatively more ______ than the elasticity of demand for casual drug users. a. unit elastic b. inelastic c. elastic d. income elastic
	13. ______ is the extra value that consumers receive above what they pay for that good. a. producer surplus b. utility c. marginal utility d. consumer surplus
	14. Air is a free good because: a. nobody wants it. b. nobody can sell it. c. there is so much of it. d. none of the above.
	15. If a price reduction in good X has no impact on the quantity demanded of good Y, then we call goods X and Y a. complementary goods. b. substitute goods. c. independent goods. d. none of the above.