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ECON 6100 Chapter 6: Simple Pricing

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ECON 6100 Chapter 6: Simple Pricing.1. The first law of demand states that a. the quantity demanded increases as price falls b. the quantity demanded decreases as price falls c. the qu ... antity demanded increases as price increases d. none of the above ANSWER: a TOPICS: Section 1: Background: Consumer Values and Demand Curves 2. Its lunch time, you are hungry and would like to have some pizza. By the law of diminishing marginal value, a. you would pay more for your first slice of pizza than your second b. you would pay more for your second slice of pizza than your first c. you would pay an equal amount of money for both the slices since they are identical d. none of the above ANSWER: a TOPICS: Section 1: Background: Consumer Values and Demand Curves 3. As a consumer you believe yourself to act rationally, optimally and self-interestedly. You like ice cream and value a pint at $7. Usually you buy a pint each week at $4. This week however, the price jumped to $5 a pint. What would you do? a. buy the ice cream since the price is still below your maximum willingness to pay b. buy the ice cream since even at the new price it gives you a positive amount of consumer surplus c. not buy the ice-cream since the price is now higher d. both A&B ANSWER: d TOPICS: Section 1: Background: Consumer Values and Demand Curves 4. The difference between the value you place on a product and its market price is called a. Consumer surplus b. Quantity demanded c. Demand d. None of the above ANSWER: a TOPICS: Section 1: Background: Consumer Values and Demand Curves You have the following demand schedule for cheeseburgers. Use the table for questions 5-6 Number of cheeseburgers Your valuation of the cheeseburger 1 $4 2 $3 3 $2.50 4 $2 5. If the cheeseburger costs $2, how many cheeseburgers would you buy a. 1 b. 2 c. 3 d. 4 ANSWER: d TOPICS: Section 1: Background: Consumer Values and Demand Curves 6. What is your total consumer surplus at the optimal consumption level? a. $2 b. $3 c. $11.50 d. $3.50 ANSWER: d TOPICS: Section 1: Background: Consumer Values and Demand Curves 7. An rational, optimizing, self interested consumer would consume up to the point where a. the consumer surplus from the last unit is positive b. the consumer surplus from the last unit is negative c. the consumer surplus from the last unit is zero d. none of the above ANSWER: c TOPICS: Section 1: Background: Consumer Values and Demand Curves 8. A demand curves describes a. the amount of units a consumer will purchase at a given price b. the amount of units a producer will sell at a given price c. both the amount of units that a consumer will buy and a producer will produce at a given price d. the amount of units supplied given a change in prices ANSWER: a TOPICS: Section 1: Background: Consumer Values and Demand Curves [Show More]

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