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Microeconomics for Life: Smart Choices for You, 2e (Cohen)Chapter 2 Making Smart Choices: The Law of Demand
2.1 Put Your Money Where Your Mouth Is: Weighing Benefits, Costs, and Substitutes
1) Your preferences measure
A) the availability of alternatives.
B) how badly you want something.
C) the availability of substitutes.
D) how limited your time is.
E) the price of a product.
Answer: B
Diff: 1 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
2) A Sociology class is a substitute for an Economics class if
A) attending the two classes has the same opportunity cost.
B) the two classes satisfy the same want.
C) the tuition for the two classes is the same.
D) both classes are taught by the same professor.
E) both classes are at the same time.
Answer: B
Diff: 2 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
3) Substitutes must
A) have the same price.
B) satisfy the same want.
C) be sold in the same store.
D) have the same opportunity cost.
E) be exactly the same product or service.
Answer: B
Diff: 2 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
1
Copyright © 2016 Pearson Canada, Inc.
,4) To get tickets to see the Spice Girls reunion tour Sue missed a day at work, which cost her
$300, drove her car downtown and parked, which cost her $30, and paid $170 for the tickets.
Sue's expected benefits from attending the concert are at least
A) $300.
B) $200.
C) $130.
D) $500.
E) $170.
Answer: D
Diff: 2 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
5) What you can afford is limited by
A) preferences.
B) demand.
C) substitutes.
D) money.
E) externalities.
Answer: D
Diff: 2 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
6) What you can afford is limited by
A) preferences.
B) externalities.
C) substitutes.
D) demand.
E) time.
Answer: E
Diff: 2 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
2
Copyright © 2016 Pearson Canada, Inc.
,7) Your demand for tickets to the Lady Gaga concert depends on
A) how much you like Lada Gaga.
B) your income.
C) what other live concerts you are interested in.
D) what else you might spend the money on.
E) all of the above.
Answer: E
Diff: 1 Type: MC Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
8) Economists describe all of your wants - and how intense each want is - as your preferences.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Recall
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
9) For economists, the terms wants and demands mean the same thing.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 28-29
Skill: Recall
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
10) Your preferences can be affected by advertising.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 28-29
Skill: Recall
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
11) Your preferences are determined only by your logical needs.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 28-29
Skill: Recall
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
12) Making a smart choice depends on what substitutes are available and what they cost.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Recall
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
3
Copyright © 2016 Pearson Canada, Inc.
, 13) Sam will drink anything that is cold, while Dave will only drink Gatorade. We expect Sam is
willing to pay more for Gatorade than is Dave.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
14) Sam will drink anything that is cold, while Dave will only drink Gatorade. We expect Dave
is willing to pay more for Gatorade than is Sam.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
15) Smart choices are based on a comparison of expected benefits and opportunity costs.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 28-29
Skill: Recall
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
16) Substitutes need to be exactly the same product or service as the product or service you want.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
17) Substitutes can be different products or services as long as they satisfy the same want.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
18) What you can afford is limited by more than just money.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 28-29
Skill: Applied
Objective: 2.1 Describe what determines your willingness and ability to pay for a product or
service.
4
Copyright © 2016 Pearson Canada, Inc.
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