A personal computer operating system is a good

A personal computer operating system is a good example of a network good because

a. the value of the operating system increases when its price goes down.

b. the value of complementary software products become more valuable with an increase in the price of the operating system.

c. the value of the operating system decreases when more people buy the operating system.

d. All of the above.

e. None of the above.

As the time period during which consumers can buy good A increases, the elasticity of demand for good A will

a. Increase

b. Decrease

c. Remain the same

d. (unknown; not enough information to say.)

‘Rational addiction’ means

Select one:

a. people are rational when they become addicted.

b. People can make rational decisions about the gains and pains of consuming an addictive good before they become addicted to the good.

c. People are irrationally rational after they have become addicted to a good.

d. People are rationally irrational after they have become addicted to the good.

If a good is addictive, the firm has an incentive to charge initially a below-cost price because

Select one:

a. Its long-term demand curve is upward sloping.

b. Its short-run demand curve is inelastic.

c. Its current consumption will lead to a higher future demand and lower price that needs to be charged.

d. Its current consumption will lead to a higher demand and higher price in the future.

Assume a new nuclear power plant wishes to raise consumers’ electrical rates to cover the unexpectedly high cost of construction. However, the government regulatory commission refuses to let electrical rates be increased because they say it will only worsen the power plant’s financial problems. We can conclude that

Select one:

a. The power plant is arguing that the demand for elasticity is elastic, whereas the government is arguing that it is inelastic.

b. The power plant should increase its electrical rates if the demand for electricity is elastic.

c. The power plant should decrease its electrical rates if the demand for electricity is inelastic

d. The demand for electricity must be unitary elastic.

e. The power plant is arguing that the demand for electricity is inelastic, whereas the government is arguing that it is elastic.

If the university movie theater has reasoned that increased ticket prices will enable it to finance a new movie projector, then we can conclude that

Select one:

a. The demand for movie viewing at the university is inelastic.

b. Tuition and fees will drop

c. The theater has too many seats to satisfy the demand for movie viewing.

d. The program council chairman should be fired

e. The demand for movie viewing at the university is elastic

The law of diminishing marginal utility states that

Select one:

a The marginal utility of the last unit consumed of any good is less than the marginal utility of all other products consumed.

b As more of a good or service is consumed, its marginal utility relative to other products increases.

c As more of a good or service is consumed, marginal utility relative to other products decreases.

d As more of a good or service is consumed, its marginal utility relative to other products remains the same.

e The marginal utility of all products consumed must be equal

If the price of home computers rises and people still buy them, then

Select one:

a. Demand has decreased

b. The law of demand does not hold

c. The demand for home computers is inelastic

d. The demand for home computers is elastic

e. This could have been caused by a shift of the demand curve.

The grater the network effects associated with given reductions in the initial price,

Select one:

a. The greater the elasticity of the long-run demand for the network good.

b. The lower the elasticity of the long-run demand for the network good.

c. The greater the inelasticity of the long-run demand for the network good.

d. None of the above

Which of the following will not change the demand for a product?

Select one:

a. The number of consumers

b. A change in consumer tastes or preferences

c. The price of the product

d. The price of other products

e. Consumer incomes

Which of the following is NOT a good example of a network good?

Select one:

a. Fax machines

b. Operating systems

c. Gasoline

d. Smartphones

Marginal utility is associated with the extra satisfaction of

Select one:

a. All units consumed

b. Goods but not services

c. The last unit consumed,

d. Goods and services that one must purchase, but not goods and services one does not have to purchase

e. None of the above

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then

Select one:

a The product has a inelastic demand

b The producer should raise the price further to increase total revenue.

c The product has an elastic demand

d Total consumption expenditures will be unaffected

e The product has a unitary elastic demand

If the product has an elastic demand, this means that

Select one:

a. Consumers are relatively sensitive to a change in the price of the product

b. Consumers are relatively insensitive to a change in the quantity demanded

c. Consumers are relatively insensitive to a change in the price of the product

d. Producers are relatively insensitive to a change in the price of the product

e. Producers are relatively sensitive to a change in the quantity demanded

If Mux/Px equals the extra satisfaction for the last penny spent on all other products, then

Select one:

a. Px is less than all other product prices.

b. The consumer could increase his or her satisfaction by purchasing less of X

c. The consumer could increase his or her satisfaction by purchasing more of X

d. Px is greater than all other product prices

e. The consumer is in equilibrium

Consider a world in which there are only two goods, A and B. Which statement best explains why the law of demand emerges from the concept of consumer equilibrium?

Select one:

a. When consumers have maximized their utility and the price of B falls, consumers will increase their total utility by buying less of B and more of A

b. When consumers have maximized their utility and the price of B falls, consumers will increase their total utility by buying less of A and more of B

c. When consumers have maximized their utility and the price of B rises, consumers will increase their total utility by buying less of B and more of A

d. When consumers have maximized their utility and the price of B rises, consumers will increase their total utility by buying less of A and more of B

When a good or service involves network effects,

Select one:

a A consumer’s benefit depends on how many other consumers are using the goods or service

b The demand curve decreases with income

c Producers may drop the initial price to the point of incurring losses to build the network and increase future demand

d A and C

e All of the above.

With lagged demand

Select one:

a. Consumption and demand for a good or service is interdependent over time.

b. Demand gets smaller over time

c. Producers may choose to lower their prices over time

d. None of the above

Evaluating the ratios of different products’ marginal utilities to their prices enables us to

Select one:

a. Move toward consumer equilibrium

b. Determine if we should purchase more of one product and less of another

c. Compare products whose prices are not the same

d. Compare products of unlike nature (such as haircuts and automobiles)

e. Do all of the above

If Mux/Px>MUy/Py, then the consumer

Select one:

a Should buy less of X and more of Y

b Is in equilibrium

c Should buy less of X and less of Y

d Should buy more of X and more of Y

e Should buy more of X and less of Y

If the price of X decreases, and this decreases the demand for Y, then

Select one:

a. Goods X and Y are substitutes

b. The demand for good X has increased

c. Goods X and Y are complements

d. Good Y is an inferior product

e. Good Y is a normal product

To calculate an elasticity coefficient of demand, we need to

Select one:

a. Divide the percentage change in the price by the percentage change in the quantity demanded

b. Multiply the percentage change in the quantity demanded by the percentage change in the price

c. Know the slope of the demand curve

d. Multiply the percentage change in the price by the percentage change in the quantity demanded

e. Divide the percentage change in the quantity demanded by the percentage change in the price

If the price of good A goes from $5 to $4 and the quantity demanded goes from 60 to 70, the demand is

Select one:

a. Elastic (greater than 1).

b. Inelastic (less than 1)

c. Unitary elastic (equal to 1)

d. None of the above.

When an economist says the demand for a product has increased, he or she means that

Select one:

a. Consumers are willing and able to purchase more at any given price

b. The demand curve has shifted to the left

c. The product has become more scarce and consumers therefore want it more

d. Consumers would be willing and able to pay less to receive the same quantity

e. The price has decreased and consumers will therefore purchase more of the product

If Ed= 1.50 and price decreases by 20 percent, then

Select one:

a. Quantity demanded will decrease by 30 percent

b. Quantity demanded will increase by 30 percent

c. Total revenue will remain unchanged

d. Total revenue will decrease

e. Total revenue will decrease quantity demanded will increase by 3 percent