Question

A budget line shows:

Question 20 options:

	unlimited income.
	societal demands for goods.
	consumption possibilities.
	production possibilites.

If the market price for a ticket to the opera is $20, but the the opera is willing to sell tickets at $15, and Joe is willing to pay $25, if Joe buys a ticket at the market price then:

Question 21 options:

	total surplus for the transaction is zero.
	total surplus for the transaction is $5.
	total surplus for the transaction is $20.
	total surplus for the transaction is $10.

When total utility is at a maximum, marginal utility is:

Question 22 options:

	at a maximum.
	zero.
	rising.
	at its average value.

Utility theory models the consumer as:

Question 23 options:

	minimizing total utility depending on a preference constraint.
	maximizing total utility depending on a preference constraint.
	maximizing total utility depending on a proct constraint.
	maximizing total utility depending on a budget constraint.

If a university decreases the price of tickets to football games to collect more revenue, it is assuming that the demand for tickets is:

Question 24 options:

	unstable.
	unit elastic.
	price elastic.
	price inelastic.

If the market price for a ticket to the opera is $20, and Oscar is willing to pay $30, then:

Question 25 options:

	Oscar will stay home.
	there will be no sale.
	there will be producer surplus.
	there will be consumer surplus.

Answer 1

20) consumption possibilities because it shows how much consumer can purchase with the given income.

21) total supplies $10 which is the difference between the two willingness to pay

22) zero. This is because total utility is a function of marginal utility. When marginal utility is falling total utility is increasing at decreasing rate. When marginal utility turns negative total utility starts falling. this indicates that when total utility is maximum marginal utility is zero

23) maximizing total utility depending on a budget constraint

24) price elastic

25) there will be a consumer surplus