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KU / Economics / ECON 104 / What does marginal benefit equate to?

# What does marginal benefit equate to? Description

##### Description: Test Bank Questions with answers
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• ECON 1. Total

## What does marginal benefit equate to? 104 Revenue =

Test Price

Bank Questions per Unit Quantity

10/4/2016 of Units sold

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2. In a competitive market equilibrium

A) total consomer surplus equals total I producer surplus B) Marginal benefit and marginal cost are

## What are some of the assumptions of economists about consumers? Don't forget about the age old question of What are the two body parts that diaphragm separate?

Maximized C) Consumers and producers benefit equally D) The marginal benefit equals the marginal

cost of the last unit sold Don't forget about the age old question of What was established by the kansas-nebraska act?

3. When demand is elastic, a fall in price

causes total revenue to rise because

A when price falls, quantity sold increases

## How is price elasticity defined? If you want to learn more check out Why can the human body be referred to as a system of compartments?

so total revenue automatically rises B) the increase in quantity sold is large

enough to offset the lower price C) the percentage increase in quantity

demanded is less than the percentage - fall in price

D) the demand curve shifts

What is the vale of consumer surplus at a price of \$18 ?

6م)*(A We also discuss several other topics like What are the 4 types of political parties?

B)#120 () \$180 D) \$240

40

80

Quantity

CS = 1 / 2 (21-18) × 40 = \$60

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18

15

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What is the value of producer surplus at a price of \$18?

A) \$240 B) \$300 () \$340 D) \$720

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40

%

Quantity

PS=(18-13) +40 +

Ź (13-11)+40=\$240

6. Consider a demand curve that has a

constant elasticity value of O. What happens to quantity demanded and total revenue when price increases?

A) The quantity demanded and total

revenue remain the same B) The quantity demanded does not

Change but total revenue increases c) The quantity demanded and total

revenue fall to zero D) The quantity demanded does not Don't forget about the age old question of What is the best economic activity in nordic countries?

change but total revenue decreases

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7. If the price elasticity of demand for

canned soup is estimated at -1.62. What happens to sales revenue it the price of canned soup rises?

A) it falls by 162 percent

B) it rises by 1.67 percent to C) it falls

D) it rises

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ECON 104

10/4/2016 8. Economists assume that the goal of consumers

is to

A) do as little work as possible to survive B) make themselves as well off as possible c) Spend all their income D) Consome as much as possible

9.11f a consumer receives 20 units of utility

from consuming two candy bars, and 251 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

A) 25 utility units B) 20 utility units

c) 5 utility units on + D) Unknown as more information is needed - to determine the answer.

increases when you your marginal utility

consume another unit Imust be

A) increasing B) decreasing

C) negative → D) positive

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ECON 104

Quantity of 1. Pita Wraps

10/4/2016

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04

Total

Quantity of Bubble Tea

Total

Utility

utility

60

40

20

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4 5

usou

102 132 144 144 138 128

106

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112

115 115

7

7

Keegan has \$30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is \$6 and the price of a glass of Bubble

Tea is \$3.

What is Keegan's

A) 3 pita wraps + B) 3 pita wraps

C4 pita wraps D) 5 pita wraps

optimal consumption bundle? and 3 bubble teas and 4 bubble teas and 2 bubble teas and O bubble teas

antity

- W

-

Pita wrap T. Utility M. Utility M. Cost Quantity T. Utility M. Utility in cost

60 - - #6 I 40 - - 102 42 \$12 2 70 30 10 \$6 132 30 5 \$18 I 3 91 21 7 \$90 144 12 02 \$24 14 1066 15 5 12 | 144 0 0 \$30

6 2 \$15. 138 -6 -1 \$36

3 1 18 128 -10 -1.67 \$42

oo \$21

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Price

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ECON 104

10/4/2016 When the price of hoagies increases from \$5.00 to \$5.75

quantity demanded decreases from Q. to Qo. This change

in quantity demanded - Qo Q. Quantity is due to

A) the price and output effects → B) the income and substitution effects

C) the fact that marginal willingness

to pay falls D) the law of diminishing marginal utility

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D

13

\$5.75

ca

\$5.00

Price A

Which of the following

statements is true?

A) Quantities Qo and

Q, are the utility maximizing quantities

of hoagies at two Qo Q Quantity

different prices of

hoagies. B) Quantities Oo and Q, may not necessarily

be the utility-maximizing quantities of hoagies at two different prices because we have no information on the consumers budget or the price of other goods. C) Quantities Qo could be a utility-maximizing choice if the price is \$5.75, but quantity

Qu may not be because we have no information on the marginal utility per dollar when price changes.

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SUMMON TUE WED THU 28 29 30 31 1

FRI 2

SAT 3

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ECON 104

10/4/2016 14. In order to derive an individuals demand

curve for salmon, we would observe what happens to the utility - maximizing bundle when we change

A) income and hold everything else constant B tastes and preferences and hold everything

else constant c) the price of the product and hold

everything else constant. D) the price of a close substitute and hold

everything else constant

15. Price elasticity of demand measures

Al how responsive suppliers are to price

changes B) how responsive sales are to changes in

the price of a related good Chow responsive quantity demanded is to

a change in price D) how responsive sales are to a change

16. If the percentage increase in price is 15

Ipercent and the value of the price elasticity lot demand is -3, then quantity demanded

- A) will increase by 45 percent

B) will increase by 5 percent + C) will decrease by 45 percent

D) will decrease by 5 percent

30

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ECON 104

10/4/2016 17. Perfectly inelastic demand is represented by a

demand curve which is

and relatively Linelastic demand is represented by a demand

curve which is

A) downward sloping; vertical B) horizontal; downward sloping

C) vertical downward sloping D) upward sloping; horizontal

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S

18

If 50 units are sold at a price of \$20 and 80 units are sold at a price of \$15, what is

the absolute value of the price elasticity of demand? Use the midpoint method.

A) 0.17 B) 0.62

Price Elasticity of Demand = >C) 1.62

D 5

50-80

50+ 80

2

I P2P.

7

-

[zo-i5

7

AP

167.

Using the midpoint formula, calculate the absolute value of the price elasticity of

demand between e. and f. - AJO.32

B)0.4 () 2.5 D)3.125

60

100

Quantity

700-100

PE of Da

= 3,725

0.16

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ECON 104

10/4/2016 2o. Which of the following statements about price

elasticity of demand is true?

A) The elasticity coefficient is constant along

the demand curve B) The elastic portion of a straight line,

downward-sloping curve corresponds to

the seament above the midpoint C) The inelastic portion of the demand

curve corresponds to the segment above

the midpoint Di At the midpoint of the demand corve,

the elasticity coefficient is zero.

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21. Which of the following statements about

the price elasticity of demand along a downward sloping linear demand curve is true?

A) it is inelastic at high prices and

elastic a low prices. B) it is unit elastic throughout the

demand curve. C) It is elastic at high prices and

inelastic at low prices. D. It is perfectly elastic at very high

prices and perfectly inelastic at very low prices

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SUN

8

MOH TUE WED

29

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31

1

2

3

10/4/2016

ECON 104 22. Which of the following products comes

closest to having a perfectly inelastic demand?

A) gasoline B) cholesterol medication in general C) iPhones D) bus rides

23. When there are few close substitutes available

for a good demand tends to be

A) perfectly inelastic B) perfectly elastic C) relatively inelastic D) relatively elastic

24. The demand for all carbonated beverages

as a whole is likely to be.

demand for Dr. Pepper.

A more elastic than B) perfectly elastic compared to C) less elastic than D) perfectly inelastic compared to

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