CHAPTER 19 CONSUMER CHOICE AND ELASTICITY：19章消费者的选择和弹性.doc

Chapter 19 Consumer Choice and Elasticity131.A 15 percent increase in the price of beef reduces the quantity of beef consumed by 30 percent. Thus, the demand for beef is _, and total consumer expenditure (or total firm revenue) will _ as a result of the price increase.a.elastic; increase*b.elastic; decreasec.inelastic; increased.inelastic; decrease132.Which of the following is true about marginal benefit?a.A consumers marginal benefit is equal to the height of her demand curve.b.Consumers will continue to purchase up until the point where marginal benefit equals price.c.Marginal benefit declines as consumption increases because of the law of diminishing marginal utility.*d.All of the above are true.133.Jane received a 10 percent increase in her salary and purchased 20 percent more jewelry. For Jane, jewelrya.has an income elasticity of 2.b.is a normal good.c.is a luxury good.*d.is all of the above.134.An inferior good is distinguished by aa.negative price elasticity of demand.b.positive price elasticity of demand.c.positive income elasticity of demand.*d.negative income elasticity of demand.135.If Joes income increased, and as a result, he purchased more wine and less fast food,*a.wine is a normal good and fast food is an inferior good for Joe.b.wine is an inferior good and fast food is a normal good for Joe.c.both wine and fast food are inferior goods for Joe.d.both wine and fast food are normal goods for Joe.136.“After eating nothing but fast-food hamburgers on spring break, I was anxious to return home and eat something different.” This statement most clearly reflects the law ofa.the budget constraint.b.consumer irrationality.c.greater demand elasticity with time.*d.diminishing marginal utility.137.If the price elasticity of demand for grapes was 2.5,a.the demand for grapes would be considered inelastic.*b.an increase in the price of grapes would decrease total consumer spending on grapes.c.consumer purchases are less sensitive to a change in the price of grapes than to a change in the price of bananas, which have a price elasticity of 1.6.d.the income elasticity for grapes must also be 2.5.138.If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand isa.5, and the demand for hula hoops is elastic.b.0.2, and the demand for hula hoops is elastic.c.5, and the demand for hula hoops is inelastic.*d.0.2, and the demand for hula hoops is inelastic.139.“Because of the unseasonably cold weather, Florida orange growers expect (1) fewer bushels of oranges to be harvested, (2) a higher market price for oranges, and (3) larger total revenues from this years crop.” This statement would most likely be correct if thea.demand for Florida oranges was elastic.b.demand for Florida oranges was unitary elastic.*c.demand for Florida oranges was inelastic.d.income elasticity of Florida oranges was negative.140.Which of the following statements is true regarding the price elasticity of supply?a.The price elasticity of supply is always negative.*b.The price elasticity of supply is always positive.c.The price elasticity of supply will be greater when suppliers have a shorter time to respond to a price change.d.None of the above statements are true.Figure 11141.For this demand curve depicted in Figure 11, the price elasticity of demand is*a.more elastic at $3 than at $2.b.more elastic at $2 than at $3.c.identical at $2 to that at $3.d.equal to 1 over the range from $3 to $2.142.A car wash currently sells 30 car washes a day at a price of $5. Total daily revenue is now $150. If they lower their price to $3,a.total revenue will fall if the number of washes sold only rises to 40.b.total revenue will remain unchanged if the number of washes sold rises to 50.c.total revenue will increase if the number of washes sold rises to 60.*d.all of the above are true.143.Coach Ballford: “To increase our revenue from football games, we need to lower ticket prices.” University President Smith: “Coach, that would be counterproductive, a reduction in ticket prices would reduce our revenue, not increase it.” Which of the following best explains this disagreement?*a.The coach thinks that demand is elastic, while the university president thinks that demand is inelastic.b.The coach thinks that demand is inelastic, while the university president thinks that demand is elastic.c.The coach believes that lower ticket prices will increase attendance, but the university president must not believe attendance will increase when prices are lowered.d.While both the coach and the president believe demand is of unitary elasticity, they disagree about how much attendance will rise.144.All else equal, if a firm raises its price by 20 percent, and the firms total revenue falls by 20 percent,*a.demand must be elastic.b.demand must be inelastic.c.demand must be unit elastic.d.the price elasticity of demand must be equal to 1.145.Which of the following is not a fundamental that underlies consumer behavior?a.Goods can be substituted for one another.b.Consumers make decisions purposefully based upon past experience and knowledge.c.The law of diminishing marginal utility applies to all goods.*d.Consumers always make choices with perfect information.146.Terri currently consumes 10 hamburgers and 2 shirts per month. At her current rates of consumption, her marginal utility of hamburgers is 10 and her marginal utility of shirts is 50. If the price of hamburgers is $2 each, while the price of a shirt is $25, Terria.is maximizing her utility.b.could improve her total utility by buying fewer hamburgers and more shirts.*c.could improve her total utility by buying fewer shirts and more hamburgers.d.could improve her total utility by spending less on both goods.147.If taking an airplane from Pittsburgh to Miami cost $600 and takes 5 hours, while taking a bus would cost $150 and takes 50 hours, the minimum value of your time that would make it worthwhile to fly would bea.$1 per hour.b.$3 per hour.*c.$10 per hour.d.$12 per hour.Figure 12148.Exhibit 12 illustrates two possible demand curves for a product, D1 and D2. Which of the following is true regarding these demand curves?a.Demand curve D1 represents a demand curve that is relatively more elastic than demand curve D2.*b.Demand curve D1 represents a demand curve that is relatively more inelastic than demand curve D2.c.Demand curve D1 represents a demand curve that shows consumer purchases being more responsive to a change in the price of the good than demand curve D2.d.Both are examples of unitary elastic demand curves.149.Making drugs, such as cocaine, illegal results in a higher price than would be present if the drugs were legal. All else constant, the higher price results in drug users spending*a.more on drugs if the demand for drugs is inelastic.b.more on drugs if the demand for drugs is elastic.c.less on drugs if the demand for drugs is inelastic.d.more on drugs if the demand for drugs is unitary elastic.150.If the price of steak rises from $6 to $10 per pound, and the quantity purchased falls from 90 to 70 pounds, the price elasticity of demand (in absolute value) isa.0.2.*b.0.5.c.1.d.2.151.When the price elasticity of demand is greater than one, it means that demand isa.inelastic, and the percent change in quantity is greater than the percent change in price.b.inelastic, and the percent change in quantity is less than the percent change in price.*c.elastic, and the percent change in quantity is greater than the percent change in price.d.elastic, and the percent change in quantity is less than the percent change in price.152.If Russell values a ticket to a rock concert at $100 and is able to purchase it for only $40, he has received _ in consumer surplus on his purchase.a.$40*b.$60c.$100d.$140153.The market demand for a good is*a.the horizontal sum of all individual demand curves for the good.b.generally upward sloping, unlike individual demand curves.c.usually a vertical line at a quantity of 100.d.the average amount purchased by each individual in the market.154.Bob goes out to dinner three times per week, usually either to the local steak house or a Chinese restaurant in town. If the steak house were to raise its prices, Bob would probably (1) be less inclined to eat at the steak house and more inclined to eat at the Chinese restaurant when he did go out and (2) eat out fewer times per week because at the higher prices he cannot afford to eat out as much.*a.Part 1 is an example of the substitution effect, part 2 of the income effect.b.Part 1 is an example of the income effect, part 2 of the substitution effect.c.Part 1 is an example of the law of diminishing marginal utility, part 2 of the substitution effect.d.Part 1 is an example of the proportions hypothesis, part 2 of the income effect.155.The price elasticity of demand for automobiles measures the responsiveness of*a.consumer purchases to a change in the price of automobiles.b.consumer purchases to a change in the quality of automobiles.c.supplier production levels to a change in the price of automobiles.d.consumer purchases of automobiles to a change in their income.156.Which of the following is true regarding the price elasticity of demand?a.Demand is generally more elastic in the long run than in the short run.b.Along a single demand curve, demand elasticity decreases as you move down the curve (to lower prices).c.A demand curve that is flatter (has a less steep slope) is relatively more elastic than a demand curve that has a steeper slope.*d.All of the above are true.Chapter 20 Costs and the Supply of Goods168.The law of diminishing returns indicates whya.beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller amounts of additional satisfaction.b.the firms total fixed costs do not change with output in the short run.c.a firms long-run average total cost curve is U-shaped.*d.a firms marginal costs will eventually increase as the firm expands output in the short run.169.The short run is a time period of insufficient length for the firm to change itsa.output.b.amount of labor employed.*c.plant size and heavy equipment.d.price.170.Sunk or “historical” costs are costsa.associated with current operational decisions.*b.that have already been incurred as the result of past decisions.c.that add to the firms marginal costs.d.that form the major component of the firms variable costs.171.Advantages of the corporate form of business organization includea.the ease of transferring ownership in a corporation.b.the limited liability concept that protects the stockholder from potential debts incurred by the corporation.c.the lack of employee shirking that occurs in corporations.*d.both a and b.172.The average variable cost curve and average total cost curve become closer together as output increases becausea.the marginal cost curve intersects the average total cost curve at its minimum.b.average fixed cost remains constant as output rises.*c.average fixed cost, which is the difference between them, declines with output.d.output is rising more rapidly than inputs are being increased.173.Which of the following factors would not shift the cost curves of an automobile company upward?a.a regulation requiring all automobiles be equipped with improved safety equipmentb.an increase in the price of steel used to make automobilesc.an increase in the property tax on buildings and equipment used by the automobile company*d.An employee develops a new method of installing doors on the cars that requires half as many workers as before.174.The firms average total costs will be a minimum at the output level where thea.firm just begins to confront diminishing returns to the variable factors.b.marginal costs are a minimum.c.firms average fixed costs are at their minimum.*d.marginal cost curve crosses the firms average total cost curve.175.The law of diminishing returns states thata.as we continually add variable factors to a fixed amount of other resources, output eventually increases at a decreasing rate.b.as we increase plant size, costs must diminish.c.the additional output generated by the employment of additional units of a variable input eventually decline.*d.both a and c are correct.Use the figure to answer the following questions.Figure 13The following cost curves are for one very small firm in a large market.176.According to Figure 13, if the firm produces 10 units of output, its average total cost isa.$6.b.$7.c.$12.*d.$13.177.According to Figure 13, if the firm produces 15 units of output, its average fixed cost is*a.$4.b.$5.c.$6.d.$60.178.According to Figure 13, if the firm produces 10 units of output, its total cost isa.$7.b.$13.c.$70.*d.$130.179.According to Figure 13, if the firm produces 10 units of output, its total fixed cost isa.$6.*b.$60.c.$70.d.$130.180.According to Figure 13, the marginal cost of producing the tenth unit is*a.$7.b.$13.c.$70.d.$130.181.This firm, illustrated in Figure 13, minimizes its per-unit costs of production at an output level ofa.Q = 6.b.Q = 10.*c.Q = 15.d.none of the above.182.Diminishing returns to the variable factor of production for this firm in Figure 13 set in at*a.Q = 6.b.Q = 10.c.Q = 15.d.none of the above.183.A homeowner will be away from her house for six months. The monthly mortgage payment on the house is $300. The utilities, to be paid by the owner, cost $100 per month if the house is occupied; otherwise zero. If the owner wishes to minimize her losses from the house, she should rent the house for as much as the market will bear, as long as monthly rent is greater than which of the following? (Assume wear and tear to be zero regardless of whether the house is occupied.) (Hint: Remember the concept of sunk cost.)a.$0*b.$100c.$200d.$400184.Suppose you value watching a movie at $5. You rent it from your local movie rental store for $3.50 for one night. You do not get a chance to watch it, so you decide to keep it an extra day and pay a late fee of $2. Your decision isa.incorrect; you paid $5.50 to watch a movie you valued at only $5. You should have taken the movie back.b.incorrect; you should have returned the movie and rented it later.*c.correct; the $3.50 paid for the first night is a sunk cost and is not relevant in your decision to keep it an additional night.d.correct; you value watching the movie at $5 per night, so keeping it an extra day increases your value of the movie to $10.185.Which of the following factors is most likely to shift the cost curves of an Iowa corn farmer downward?a.an increase in the price of fertilizerb.an increase in the tax on diesel fuel, which is used by the farmer*c.the development of a new, more efficient corn harvesterd.the adoption of a regulation requiring farmers to treat their crops with three new pesticides.186.Which of the following is true?*a.Economic profits are generally lower than accounting profits.b.Economic profits are generally greater than accounting profits.c.Economic profits are generally equal to accounting profits.d.Economic profits plus accounting profits must equal zero.187.When a firm increases its plant size in the long run and its per-unit costs fall, this is calleda.diminishing returns and is shown by the downward-sloping portion of the MP curve (or the upward-sloping portion of the MC curve).b.constant returns to scale and is shown by the flat portion of the LRATC curve.c.diseconomies of scale and is shown by the upward-sloping portion of the LRATC curve.*d.economies of scale and is shown by the downward-sloping portion of the LRATC curve.188.When the owner of a business invests his or her own money in the business, they give up the interest this money could be earning in the bank. This forgone interest is calleda.the marginal cost of diminishing financial services.*b.the opportunity cost of equity capital.c.the opportunity cost of labor erest expense and is included as a cost in the accounting statements of the business.189.Ron works for Betty at Bettys Pizza Palace. Betty has many work rules, and Ron believes if there were fewer rules and more flexibility, he could do a better job. Betty probably has the rules becausea.Ron, like her other employees, is a residual claimant.*b.due to the principal-agent problem, some employees are likely to shirk when the owner is absent.c.she is maximizing sales rather than profits.d.with regard to their jobs, employees seldom know what is best.190.Which of the following is true?a.Under the partnership form of business organization, the owners are not personally liable for the debts of the business.b.When employees also own a business, their incentive to shirk is removed.*c.The limited liability of stockholders under the corporate business structure makes it easier to raise equity capital.d.Under the corporate form of business organization, the owners of the firm are personally liable for its debts.191.Mary owns her own business and works full time in the store without