#1
According to the concept of revealed preference, how can consumer preferences be identified?
By analyzing surveys and questionnaires.
By observing the choices consumers actually make in the market.
By conducting experiments to measure consumer satisfaction.
By relying on hypothetical scenarios presented in economic models.
#2
What is the significance of the income effect in consumer choice theory?
It measures the impact of inflation on consumer purchasing power.
It examines how changes in income affect the quantity demanded of a good.
It represents the shift in consumer preferences towards luxury goods.
It analyzes the impact of advertising on consumer choices.
#3
In consumer choice theory, what does the term 'ordinal utility' refer to?
The numerical value assigned to a good based on its market price.
The ranking of preferences without assigning specific numerical values.
The utility derived from consuming a good based on its quantity.
The total satisfaction derived from consuming a specific quantity of a good.
#4
According to the law of demand, how does the quantity demanded of a good change when its price decreases?
It increases.
It decreases.
It remains constant.
It depends on the type of good.
#5
What is the impact of an increase in the price of a complementary good on the demand for the main good?
The demand for the main good increases.
The demand for the main good decreases.
The demand for the main good remains constant.
The demand for the main good is unaffected by changes in the price of a complementary good.
#6
Which of the following is a basic assumption of consumer behavior in microeconomics?
Consumers always have unlimited resources.
Consumers aim to maximize total spending.
Consumers make rational decisions to maximize utility.
Consumers have perfect information about all products.
#7
What does the law of diminishing marginal utility state?
The more you consume, the higher your total utility.
Consumers will always choose the product with the lowest price.
The additional satisfaction from consuming one more unit of a good decreases as more units are consumed.
Consumers always prefer quantity over quality.
#8
What is the substitution effect in consumer choice theory?
The tendency of consumers to switch from one product to another when prices increase.
The impact of changes in income on the quantity demanded of a good.
The shift in consumer preferences towards substitute goods.
The change in quantity demanded due to a change in the relative price of a good.
#9
What role does the budget line play in consumer choice theory?
It represents the various combinations of goods that give the same level of satisfaction.
It shows the impact of changes in income on consumer choices.
It depicts the boundary between what a consumer can and cannot afford.
It illustrates the indifference curve of a rational consumer.
#10
What is the concept of 'revealed preference' in consumer theory?
Consumers explicitly state their preferences through surveys.
Consumer preferences are revealed through their actual choices in the market.
Consumers base their preferences on hypothetical scenarios presented in economic models.
Government regulations dictate consumer choices.
#11
In consumer choice theory, what is the significance of a Giffen good?
Giffen goods have a highly elastic demand.
The demand for Giffen goods increases as income rises.
Giffen goods violate the law of demand.
The demand for Giffen goods increases as their prices rise due to income and substitution effects.
#12
What is the concept of 'opportunity cost' in consumer decision-making?
The monetary value of a product in the market.
The total value of all goods and services consumed by a consumer.
The highest-valued alternative that must be sacrificed to consume a particular good.
The quantity of a good that a consumer can afford to purchase.
#13
In economics, what does the term 'indifference curve' represent?
A curve showing the relationship between income and consumption.
A curve representing the trade-off between two goods that give the consumer the same level of satisfaction.
A curve depicting the impact of inflation on consumer preferences.
A curve indicating the total spending pattern of consumers.
#14
What is the difference between normal goods and inferior goods?
Normal goods are always of higher quality than inferior goods.
Normal goods are luxury items, while inferior goods are necessities.
Normal goods have an elastic demand, while inferior goods have an inelastic demand.
Normal goods are demanded more as income increases, while inferior goods are demanded less as income increases.
#15
What is the concept of 'utility' in economics?
The total value of all goods and services consumed by a consumer.
The satisfaction or pleasure derived from consuming goods and services.
The monetary value of a product in the market.
The quantity of a good that a consumer can afford to purchase.
#16
How does the concept of elasticity relate to consumer choice?
It measures the responsiveness of consumer preferences to changes in income.
It assesses how changes in the price of a good affect the quantity demanded by consumers.
It determines the total utility derived from consuming a particular good.
It indicates the level of satisfaction a consumer gains from a given quantity of a good.
#17
How does the concept of 'marginal utility' contribute to consumer decision-making?
It represents the total satisfaction derived from consuming all units of a good.
Consumers make decisions based on the additional satisfaction gained from consuming one more unit of a good.
It measures the total spending pattern of consumers.
Consumers decide based on the total quantity of goods they can afford to purchase.
#18
What is the key difference between perfect substitutes and perfect complements in consumer preferences?
Perfect substitutes are always of higher quality than perfect complements.
Perfect substitutes are consumed together, while perfect complements are used separately.
Consumers have no preference between perfect substitutes, while they prefer consuming perfect complements together.
Perfect substitutes have an inelastic demand, while perfect complements have an elastic demand.
#19
What does the term 'consumer surplus' represent in economics?
The extra money consumers have left after making purchases.
The additional satisfaction gained from consuming a good beyond what consumers paid for it.
The total amount of money consumers spend on goods and services.
The profit earned by consumers from selling their surplus goods.