Question 1

Exhibit 5-10 
-What happens to consumer surplus if the price of a good falls? Why?

Accepted Answer

The answer of Exhibit 5-10 
-What happens to consumer surplus...

Question 2

Which of the following statements is true? The substitution effect of an increase in the price of tea refers to the
(A) decrease in the quantity demanded of tea and the increase in the demand for its substitutes, such as coffee.
(B) decrease in the quantity demanded of both tea and its substitutes, such as coffee.
(C) increase in the quantity demanded of tea and the decrease in the quantity demanded for its substitutes, such as coffee.

Accepted Answer

The answer of Which of the following statements is true?...

Question 3

Consumer surplus increases as price decreases.

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a product and what they actually pay for it. As the price of the product decreases, consumers are able to purchase the same product for less than what they were initially willing to pay, leading to an increase in consumer surplus. Therefore, the statement is true.

Question 4

Consumer surplus measures the difference between what consumers are willing to pay and what they actually pay for a given quantity of a good.

Accepted Answer

Consumer surplus is defined as the difference between the highest price a consumer is willing to pay for a good and the actual price they pay.

Question 5

Use the information of utility in the box below to find the quantity of each good the consumer will purchase in each of the three cases to maximize utility.

Accepted Answer

The answer of Use the information of utility in the...

Question 6

Define consumer surplus. Does a consumer really get a surplus? Why or why not?

Accepted Answer

The answer of Define consumer surplus. Does a consumer really...

Question 7

The data below show Paula and Susan's willingness to pay for compact discs.

Accepted Answer

The answer of The data below show Paula and Susan's...

Question 8

Suppose Jose receives diminishing marginal benefits from consuming more cups of latte. Do you think that Jose may eventually receive negative marginal benefits from consuming an additional cup of latte?

Accepted Answer

The answer of Suppose Jose receives diminishing marginal benefits from...

Question 9

Consumer surplus is zero when a consumer pays a price equal to the market equilibrium price.

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. Even at the market equilibrium price, as long as consumers are willing to pay more than the equilibrium price for some units, there will be a positive consumer surplus.

Question 10

Exhibit 5-10 
-Refer to Exhibit 5-10. Assume that Stephanie and Roger are the only consumers in the market. Calculate consumer surplus for Stephanie, Roger, and the market as a whole if market price is $1.

Accepted Answer

The answer of Exhibit 5-10 
-Refer to Exhibit 5-10. Assume...

Question 11

Why does water, which is essential to our health, cost so much less than diamonds, which are far less useful?

Accepted Answer

The answer of Why does water, which is essential to...

Question 12

Analyze the following data for Julie's utility from consumption of CDs and magazines.

Accepted Answer

The answer of Analyze the following data for Julie's utility...

Question 13

Which of the following statements is true? The income effect of an increase in the price of iPads refers to the
(A) reduction of income incurred by iPad producers.
(B) decrease in the quantity demanded of iPads as buyers experience lower real incomes.
(C) decrease in the quantity demanded of iPads as buyers experience lower nominal incomes.

Accepted Answer

The answer of Which of the following statements is true?...

Question 14

Consider the table below showing Anne's willingness to pay for magazines.

Accepted Answer

The answer of Consider the table below showing Anne's willingness...

Question 15

Suppose that Mary's willingness to pay for T-shirts is $20 for one T-shirt, $26 for two T-shirts, $30 for three T-shirts, and $32 for four T-shirts. Draw Mary's demand curve for T-shirts. If the price of a T-shirt is $6, how many T-shirts would Mary buy? What is Mary's consumer surplus? Show the consumer surplus in a diagram. Now suppose that a sale reduces the price of T-shirts to $4. How many T-shirts will Mary buy now? What is the new consumer surplus?

Accepted Answer

The answer of Suppose that Mary's willingness to pay for...

Question 16

The following table shows David's willingness to pay for ice cream.

Accepted Answer

The answer of The following table shows David's willingness to...

Quiz 5: The Demand Curve and the Behavior of Consumers

Exhibit 5-10 -What happens to consumer surplus if the price of a good falls? Why?