Supply and Demand Quiz

A basic assumption that economists make about consumer behavior is that...

• an individual’s desire for a particular commodity during a given period of time is infinite.
• consumers are consistent about their preferences as measured by the satisfaction derived from various goods.
• one consumer’s preferences tend to be very much like other consumers’ preferences.
• the marginal utility a consumer receives from a given commodity will always increase as consumption increases.

Utility is a measure of...

• demand.
• output.
• usefulness.
• satisfaction.

The law of diminishing marginal utility implies that...

• the more of a commodity a consumer purchases, the less likely he will be to purchase that same commodity in the future.
• the usefulness of any commodity tends to decline following consumption of the first unit.
• increase in personal satisfaction will eventually decline as more and more units of a commodity are consumed.
• as consumption of a commodity increases, market demand inevitably declines.

A consumer is in equilibrium if...

• she is spending the same percentage of income on all commodities in her market basket.
• the marginal utility for each commodity she purchases is equal at all consumption levels.
• the total utility received from various commodities is equal.
• any other allocation of her income would lead to a reduction in total utility.

If the marginal cost of a given commodity is lower than the average variable cost, we can conclude that...

• average variable cost is at a minimum.
• average total cost is at a minimum.
• average variable cost will decline.
• average variable cost will remain constant.

According to Economics U$A economist Richard Gill the experience of Marin County residents during the drought of the early 1970s shows that...

• scarcity is not as much of a factor in determining price as economists once thought.
• people tend to make better use of resources when they are scarce.
• price has more impact on demand for scarce resources than on demand for abundant resources.
• when there is no substitute for a resource, price virtually controls demand.