Question

1) The law of diminishing marginal benefit states that

A) the willingness to pay for an additional unit declines as more of a good is consumed

B) the demand for a commodity declines as its price increases

C) the demand for a commodity is more dependent on income than on price

D) lower levels of consumption give lower level of utility

2) The market demand is the ( ) of the individual demand of all the potential buyers

A) square root of the sum B) sum

C) square of the sum D) product

3) Which of the following factors will not cause a shift in the demand for a good?

A) a change in the market price of the good B) a change in the number of consumers

C) a change in tastes and preferences D) a change in consumer incomes

4) Which of the following factors is expected to cause the demand curve for coffee to shift to the right?

A) a higher personal tax on the income of all consumers

B) a higher tax on the sale of tea, a substitute for coffee

C) an increase in the supply of coffee due to better weather

D) a fall in the manufacturing cost of coffee

Answer 1

a) "A"

As we go on consuming more and more of a good the benefit that we receive from that reduce and willingness to pay will also reduce.

b) "B"

The market demand is the sum of all the demand.

c) "A"

A change in the market price will not cause a shift in the demand for the goods

d) "B"

A higher tax on the sale of tea will shift the demand curve for coffee to the right.