Question

Consumer surplus is _____

Select one:

a. the difference between the maximum price consumers are willing to pay and the amount they actually pay.

b. the horizontal sum of the individual demand curves for all consumers in a market.

c. the amount by which quantity demanded exceeds quantity supplied at the current market price.

d. the amount by which quantity supplied exceeds quantity demanded at the current market price.

e. the change in total utility derived from a one-unit change in the consumption of a good.

If the price of a good falls, _____

Select one:

a. the total utility from consuming a specific unit of that good remains constant.

b. the marginal utility of per dollar spent on consuming a specific unit of that good falls.

c. the marginal utility of per dollar spent on consuming a specific unit of that good rises.

d. the total utility from consuming a specific unit of that good decreases.

e. the marginal utility of per dollar spent on consuming a specific unit of that good remains unchanged.

Which of the following is correct?

Select one:

a. If total utility is decreasing, then marginal utility is increasing.

b. If total utility is increasing, then marginal utility is zero.

c. If total utility is increasing, then marginal utility is decreasing.

d. If total utility is increasing, then marginal utility is greater than zero.

e. If marginal utility is increasing, then marginal utility is less than zero.

Which of the following is true of "cabin fever"?

Select one:

a. Each additional warm day adds to increasing marginal utility.

b. "Spring fever" breaks with the arrival of "cabin fever."

c. Each additional spring day adds disutility.

d. Each additional cold day adds disutility.

e. Each additional cold day adds utility.

Answer 1

Question 1) Consumer surplus is the difference between the maximum price consumers are willing to pay and the amount they actually pay. So, option a is the correct answer.

Question 2) If the price of a good falls, the marginal utility of per dollar spent on consuming a specific unit of that good rises. This is because as the utility obtained remains the same and the price decreases, the marginal utility per dollar increases. So option c is the correct answer.

Question 3) Marginal utility is the utility obtained from an extra unit. So, the total utility is the sum of all the marginal utilities. So, if the marginal utility is increasing, or the marginal utility is greater than zero, the total utility will increase. So the statement that if the total utility is increasing, the marginal  utility is greater than zero. So, option d is the correct answer.

Question 4) In cabin fever, each additional cold day adds disutility. So, option d is the correct answer.

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