Principles of Consumer Choice Quiz
Test your knowledge on consumer economics with questions about budget lines, utility, indifference curves, and more.
#1
Which of the following represents the budget line?
The set of all combinations of goods that a consumer can afford
The line that shows the maximum combinations of goods a consumer can buy with their income
The line representing the slope of the indifference curve
The line showing the consumer's preferences
#2
In consumer theory, what does the term 'utility' refer to?
The total satisfaction a consumer gets from consuming goods and services
The amount of money a consumer spends on goods and services
The prices of goods and services in the market
The quantity of goods and services a consumer buys
#3
What does the indifference curve represent in consumer theory?
The combinations of goods that provide equal levels of satisfaction to the consumer
The combinations of goods that maximize the consumer's budget
The combinations of goods that are affordable to the consumer
The combinations of goods that minimize the consumer's expenses
#4
What does the law of demand state?
As the price of a good increases, the quantity demanded decreases
As the price of a good increases, the quantity demanded increases
As the price of a good decreases, the quantity demanded decreases
As the price of a good decreases, the quantity demanded increases
#5
What does the budget constraint show in consumer theory?
The maximum utility a consumer can achieve
The prices of goods and services
The trade-off between two goods given the consumer's income and the prices of the goods
The slope of the indifference curve
#6
What is the assumption of transitivity in consumer choice theory?
Consumers prefer more of a good to less
Consumers prefer a variety of goods
If a consumer prefers bundle A to bundle B and bundle B to bundle C, then the consumer must prefer bundle A to bundle C
Consumers are rational
#7
What does the marginal rate of substitution (MRS) measure in consumer theory?
The rate at which the consumer substitutes one good for another while maintaining the same level of utility
The rate at which the consumer's budget constraint changes
The rate at which the consumer's income changes
The rate at which the consumer's preferences change
#8
What is the law of diminishing marginal utility?
The more units of a good a consumer consumes, the less satisfaction each additional unit provides
The more units of a good a consumer consumes, the more satisfaction each additional unit provides
The price of a good decreases as the quantity consumed increases
The price of a good increases as the quantity consumed increases
#9
What does the Engel curve represent in consumer theory?
The relationship between the quantity of a good consumed and the consumer's income
The relationship between the price of a good and the consumer's income
The relationship between the price of a good and the quantity consumed
The relationship between the quantity of a good consumed and the price of another good
#10
What is the substitution effect in consumer theory?
The change in consumption of a good caused by a change in its price, holding the consumer's utility constant
The change in consumption of a good caused by a change in the consumer's income
The change in consumption of a good caused by a change in the price of another good
The change in consumption of a good caused by a change in the consumer's preferences
#11
What is the income effect in consumer theory?
The change in consumption of a good caused by a change in its price, holding the consumer's utility constant
The change in consumption of a good caused by a change in the consumer's income
The change in consumption of a good caused by a change in the price of another good
The change in consumption of a good caused by a change in the consumer's preferences
#12
What is meant by a Giffen good in consumer theory?
A good that is always inferior
A good for which the quantity demanded decreases as income increases
A good for which the quantity demanded increases as price increases
A good that violates the law of demand
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