#1
Which of the following is an example of a basic need according to Maslow's hierarchy?
Food
ExplanationBasic physiological requirement for survival.
#2
What does the term 'marginal utility' refer to in economics?
The additional satisfaction gained from consuming one more unit of a good
ExplanationExtra satisfaction from consuming an additional unit.
#3
What is the difference between 'cardinal utility' and 'ordinal utility'?
Cardinal utility measures satisfaction in absolute units; ordinal utility only ranks preferences
ExplanationAbsolute vs. relative satisfaction measurement.
#4
What is the concept of 'marginal rate of substitution' (MRS) in consumer theory?
It measures the rate at which a consumer is willing to give up one good for another while maintaining the same level of satisfaction
ExplanationRate of exchange between two goods.
#5
According to the concept of 'elasticity of demand,' what does it mean if the price elasticity of demand is greater than 1?
Demand is elastic
ExplanationDemand is responsive to price changes.
#6
In microeconomics, what does the term 'utility' refer to?
The satisfaction derived from consuming a good or service
ExplanationMeasure of satisfaction or pleasure gained.
#7
What is the law of diminishing marginal utility?
As the quantity of a good consumed increases, the additional satisfaction from each additional unit decreases
ExplanationDecrease in satisfaction with each additional unit consumed.
#8
According to the law of demand, what is the relationship between price and quantity demanded?
Negative
ExplanationInverse relationship between price and quantity demanded.
#9
What is the difference between 'total utility' and 'marginal utility'?
Total utility is the overall satisfaction from consuming a given quantity; marginal utility is the additional satisfaction from consuming one more unit
ExplanationOverall vs. additional satisfaction.
#10
In consumer equilibrium, what is the significance of the marginal utility-to-price ratio?
It helps in maximizing total utility by allocating expenditure efficiently
ExplanationGuides efficient allocation of expenditure.
#11
How does a consumer achieve equilibrium in consumption?
By maximizing total utility
ExplanationOptimizing satisfaction from consumption.
#12
What is the significance of an indifference curve in consumer theory?
It shows the various combinations of goods that give the consumer equal satisfaction
ExplanationRepresents equal levels of satisfaction.
#13
What is the concept of 'revealed preference' in consumer theory?
Preferences are revealed by observing actual choices made by consumers
ExplanationInferred preferences from observed behavior.
#14
How does a Giffen good behave in terms of demand with changes in price?
As price increases, demand increases
ExplanationDemand goes against the law of demand.
#15
What is the concept of 'consumer surplus'?
The difference between what a consumer is willing to pay and what they actually pay for a good
ExplanationBenefit gained from paying less than willingness.