Question

For a consumer to maximize utility, he will choose the

a. point where the slope of the budget line equals the slope of the indifference curve.

b. any point where the budget line and indifference curve intersect.

c. point where he gets the most of the good he prefers most.

d. point where the marginal rate of substitution is greatest.

e. the point where marginal utility is zero for both goods

____ 37. At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

a. 0.33.

b. 1.

c. 2.

d. 4.

____ 38. All of the following observations concerning the elasticity formula are true except

a. the changes with which it deals is measured as a percentage change.

b. each of the percentage changes is calculated in terms of the average values.

c. the calculation considers both positive and negative signs.

d. each percentage change is taken as an "absolute value."

Figure 6-5

____ 39. In Figure 6-5, if price falls from point A to point B along the unit-elastic demand curve,

a. total expenditure remains unchanged.

b. total expenditure increases.

c. total expenditure decreases.

d. total expenditure first increases and then declines.

____ 40. The price elasticity of a vertical demand curve is always

a. infinitely large.

b. zero.

c. one.

d. increasing as price increases.

____ 41. Along a perfectly elastic demand curve,

a. the slope is always zero.

b. the price elasticity of demand is 1.

c. consumer purchases will not respond at all to a change in price.

d. All of the above are true.

Answer 1