SAMPLE QUIZ

1. Utility is determined by an individual's

a. income
b. price
c. relative price
d. profit
e. tastes and preferences
2. Marginal utility is negative only !en "uantity demanded is negative.
a. True
b. False
#. $iminis!ing marginal utility means t!at
a. as you consume more of a good, other things constant, the total satisfaction you obtain
from consuming this good tends to fall
b. as you hire more labor, other things constant, the total amount produced begins to fall
c. as you hire more labor, other things constant, the marginal product begins to fall
d. as you consume more of a good, other things constant, the additional satisfaction you
obtain from each additional unit of the good tends to fall
e. as you consume more of a good, other things constant, the extra satisfaction you obtain
from each extra good becomes negative
%. &I don't 'eel so good. I s!ouldn't !ave !ad t!at last donut.& (!i)! statement best
des)ribes t!is situation*
a. The marginal utility of the last donut was positive.
b. The marginal utility of donuts is still increasing.
c. The total utility from eating donuts is negative.
d. The marginal utility of the last donut was negative.
e. The marginal utility of the next donut will be positive.
+. (!en total utility is 'alling, marginal utility is

a. increasing
b. decreasing
c. positive
d. negative
e. 0
-. .iving table:
apple Total Utility Marginal Utility

! !0 """
# !$ """
% #& '
& #$ """
( %0 #

In above E/!ibit, t!e marginal utility o' )onsuming t!e 'ourt! a00le is
a. &
b. )
c. '
d. #&
e. #
1. A 'ree good 20ri)e 3 456 ill be )onsumed u0 to t!e 0oint at !i)! its marginal
utility is 7ero.
a. True
b. False
8. I' by 0ur)!asing a little more mil9 and a little less i)e )ream you )ould in)rease
your total utility,

a. the MU of mil* must be greater than that of ice cream
b. the MU of ice cream must be greater than that of mil*
c. the MU+, of mil* must be greater than that of ice cream
d. mil* must be cheaper than ice cream
e. the MU of mil* will increase
:. (!i)! o' t!e 'olloing varies along a given demand )urve*
a. consumer preferences
b. prices of substitutes
c. prices of complements
d. the price of the good itself
e. income
15. A demand )urve usually !as a

a. negative slope because price and -uantity demanded are inversely related
b. negative slope because as price rises, demand falls
c. positive slope because price and -uantity demanded are positively related
d. positive slope because price and -uantity demanded are inversely related
e. slope of .ero because there is no change along a demand curve when everything else is
held constant
11. I' a de)rease in t!e 0ri)e o' a good )auses a rig!tard s!i't in t!e demand )urve
'or t!at good, t!en it is an in'erior good.
a. True
b. False
12. I' t!e 0ri)e o' gasoline 2a normal good6 de)reases, ot!er t!ings )onstant,
a. the demand for gasoline increases
b. the demand for gasoline decreases
c. the -uantity demanded of gasoline increases
d. the -uantity demanded of gasoline decreases
e. neither the demand for gasoline nor the -uantity demanded of gasoline changes
because everything is held constant along a demand curve
1#. I' t!e 0ri)e o' vanilla i)e )ream de)reases, it is li9ely t!at

a. demand for vanilla ice cream will increase
b. demand for vanilla ice cream will decrease
c. demand for chocolate ice cream will increase
d. demand for chocolate ice cream will decrease
e. the -uantity demanded of vanilla ice cream will decrease
1%. Su00ly )urves generally slo0e u0ard be)ause o' all o' t!e 'olloing e/)e0t one.
(!i)! is t!e e/)e0tion*
a. ,roducers are willing to offer more of a good at higher prices.
b. / higher price attracts resources from lessvalued uses.
c. ,roducers must be compensated for the rising opportunity cost of additional output.
d. ,roducers have a greater incentive to sell more as the price increases.
e. The price of a good usually must fall to induce an increase in -uantity supplied.
1+. An im0rovement in te)!nology s!i'ts t!e su00ly )urve inard.
a. True
b. False
1-. (!i)! o' t!e 'olloing ill in)rease t!e su00ly o' vanilla i)e )ream*
a. an increase in the price of vanilla beans 0an ingredient in ice cream1
b. a decrease in the sales tax on restaurant bills
c. an increase in the price of chocolate ice cream
d. a decrease in the price of mil* 0an ingredient in ice cream1
e. an increase in the price of hot fudge
11. Studies s!o t!at t!e su00ly )urve 'or oranges !as s!i'ted. (!i)! o' t!e
'olloing )ould not e/0lain t!e s!i't in t!e su00ly )urve*

a. 2eather conditions have changed.
b. The price of fertili.er has changed.
c. The wage paid to orange pic*ers has changed.
d. The price of oranges has changed.
e. The demand for grapefruit has changed.
18. I' a sur0lus e/ists in t!e mar9et 'or simear, an e)onomist ould 0redi)t t!at
a. the price of swimwear will rise
b. producers will increase the production of swimwear
c. the supply of swimwear will increase
d. the price of swimwear at retail outlets will begin to fall
e. buyers will react to the surplus by increasing their demand for swimwear
1:. A de)rease in demand ill result in a2n6
a. increase in e-uilibrium price and -uantity
b. decrease in e-uilibrium price and -uantity
c. decrease in e-uilibrium price and an increase in e-uilibrium -uantity
d. increase in e-uilibrium price and a decrease in e-uilibrium -uantity
e. change in e-uilibrium price and -uantity only if supply changes too
25. An in)rease in su00ly ill )ause a2n6

a. increase in demand
b. decrease in demand
c. increase in -uantity demanded
d. decrease in e-uilibrium -uantity demanded
e. increase in e-uilibrium price
21. I' bot! su00ly and demand in)rease, t!en t!e )!ange in e"uilibrium "uantity is
indeterminate.
a. True
b. False
22. (!i)! o' t!e 'olloing statements is not )orre)t*
a. / reduction in money income will shift the budget line to the right.
b. / reduction in money income accompanied by an increase in product prices will
necessarily shift the budget line to the left.
c. /n increase in product prices will shift the budget line to the left.
d. /n increase in money income will shift the budget line to the right.