Micro Chapter 2

Congestion effect occurs when a good becomes: a. more valuable because most people use it b. more valuable because other people use it c. less valuable because other people use it d. less valuable because fewer people use it

less valuable because other people use it

When you apply the Rational Rule for Buyers, you can _____ your economic surplus by continuing to buy until price equals _____. a. maximize; marginal benefit b. minimize; marginal cost c. minimize; marginal benefit d. maximize; quantity

maximize; marginal benefit

_____ occur when a good becomes more useful because other people use it. If more people buy such a good, your demand for it will _____ a. network effects; increase b. congestion effects; decrease c. congestion effects; increase d. network effects; decrease

network effects; increase

Paint and paintbrushes are complements. If the price of paint rises, we can expect: a. the demand for paintbrushes to increase b. the demand for paintbrushes to decrease c. the quantity demanded of paintbrushes to remain unchanged d. the quantity demanded of paint to increase

the demand for paintbrushes to decrease

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) the air pollution that the cyclist has to breather (ii) the cost of the subway tickets (iii) the time it takes to cycle to work vs the time it takes to ride the subway to work (iv) the cost per gallon of gasoline

(i) (ii) and (iii)

Which of the following scenarios illustrates the law of demand? a. a research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand. b. Kathleen eats more steak when the price is low, and less when the price is high c. John likes to drink spring water. At $2 he buys 4 bottles of water, and at $1.50 he still buys 4 bottles d. Francis does not care about the price of coffee at the coffee shop - he must buy 2 cappuccinos everyday, regardless of the price

Kathleen eats more steak when the price is low, and less when the price is high

_____ in demand is a shift of the _____ to the right a. a decrease; price b. an increase; demand curve c. a decrease; demand curve d. an increase; price

an increase; demand curve

Moving down along the demand curve due to _____ in price would cause quantity demand to rise, while shifting the demand curve to the right _____ quantity demand for any fixed price a. a fall; raises b. a fall; diminishes c. a ride; raises d. a rise; diminishes

a fall; raises

A normal good is: a. a good which is only purchased by high-income consumers b. a good for which higher income causes a decrease in demand c. a good which is normally purchased by many consumers d. a good for which higher income causes an increase in demand

a good for which higher income causes an increase in demand

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: a. amount of a good that a seller is willing to sell at a particular price b. amount of a good that a person is willing to buy at each price c. amount of a good that a person actually buys at the market price d. amount where opportunity cost is equal to the marginal benefit

amount of a good that a person is willing to buy at each price

_____ is a shift of the demand curve to the right, and _____ is a shift of the demand curve to the left a. a fall in price; a rise in price b. a decrease in demand; an increase in demand c. an increase in demand; a decrease in demand d. a rise in price; a fall in price

an increase in demand; a decrease in demand

When you read the individual demand curve, you will see that as the price gets lower, your quantity demanded get higher. This is because the individual demand curve is a _____ line. a. upward-sloping b. downward-sloping c. vertical d. horizontal

downward-sloping

The interdependence principle: a. refers to the marginal benefit of consuming additional units of an item b. implies that consumers depend on each other to make purchase decisions in the market c. is the same as the cost-benefit principle d. implies that buyers decisions are affected by many factors other than the price of an item

implies that buyers decisions are affected by many factors other than the price of an item

If a good with network effects becomes more popular, its value to the individual consumer _____. If a good with congestion effects becomes more popular, its value to the individual consumer _____. a. increases; decreases b. decreases; increases; c. decreases; is unaffected d. is unaffected; increases

increases; decreases

When you get hired for a well-paying job, you will most likely view older used cars as: a. inferior goods b. substitute goods c. normal goods d. complementary goods

inferior goods

Diminishing marginal benefit: a. is not important in determining a consumer's purchase decision b. is when buying an additional item yields a larger marginal benefit than the previous item c. is when buying an additional item yields a smaller marginal benefit than the previous item d. is when consumers do not follow the rational rule

is when buying an additional item yields a smaller marginal benefit than the previous item

A rational buyer will: a. not consider costs vs benefits when purchasing a product b. buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product c. buy a product until the marginal benefit of consuming the product is less than the price of the product d. keep buying a product until marginal benefit equals price

keep buying product until the marginal benefit equals price

The _____ explains that the quantity demanded tends to be higher when the price is lower. a. individual demand curve b. law of demand c. law of supply d. individual supply curve

law of demand

When plotting a demand curve: a. quantity supplied is on the vertical axis b. quantity demanded is on the vertical axis c. price is on the vertical axis d. price is on the horizontal axis

price is on the vertical axis

At each specific price, the total quantity of an item demanded is simply the: a. the quantity than an individual consumer will demand at that price b. sum of the quantity that each seller will supply at that price c. the quantity that an individual seller will supply at that price d. sum of the quantity that each potential consumer will demand at that price

sum of the quantity that each potential consumer will demand at that price

An individual demand curve is a graph: a. that plots the quantity of an item that someone plans to buy, at one single price point b. that plots the market price of a product at different points in time c. that plots the quantity of an item that a seller plans to sell, at each price d. that plots the quantity of an item that someone plans to buy, at each price

that plots the quantity of an item that someone plans to buy, at each price

When you're no longer holding constant things that affect quantity demanded other than price: a. the quantity may shift upward or downward b. the demand curve may shift c. the demand curve will not shift d. the price may move along the demand curve

the demand curve may shift

All of the following are factors that may shift an individual demand curve EXCEPT a change in: a. the price of the good b. an individual's income c. an individual's expectations d. an individual's preferences

the price of the good

A downward-sloping demand curve implies: a. buyers are willing to buy less when prices are lower b. there is an inverse relationship between price and quantity demanded c. there is a positive relationship between price and quantity demanded d. there is no relationship between price and quantity demanded

there is an inverse relationship between price and quantity demanded

To scale up the quantities demanded by a survey of 300 people to be representative of 300 million people,_____. a. we should multiply each quantity by 1,000 b. we should multiply each quantity by 1 million c. we should divide each quantity by 1,000 d. we should divide each quantity by 1 million

we should multiply each quantity by 1 million

To scale up the quantities demanded by a survey of 2,000 people to be representative of 2 million people,_____. a. we should multiply each quantity by 1 million b. we should divide each quantity by 1,000 c. we should divide each quantity by 1 million d. we should multiply each quantity by 1,000

we should multiply each quantity by 1,000

The quantity of gas you buy at any given price might change due to all the following factors, EXCEPT: a. a decrease in bus fares b. a rise in the amount of traffic c. an increase in your salary d. an increase in fares for cruises

an increase in fares for cruises

_____ is a graph plotting the total quantity of an item demanded by the entire market, at each price a. the individual supply curve b. the market demand curve c. the market supply curve d. the individual demand curve

the market demand curve