#1
5. What is the relationship between total utility and marginal utility?
They are always equal.
Total utility increases as marginal utility decreases.
Total utility and marginal utility move in opposite directions.
Total utility and marginal utility are independent of each other.
#2
6. In the context of consumer behavior, what does the term 'utility' refer to?
The satisfaction or pleasure derived from consuming a good or service.
The price of a good or service.
The quantity of a good or service available in the market.
The cost of production for a good or service.
#3
12. According to the Law of Demand, how does the quantity demanded change with a decrease in price, assuming all other factors remain constant?
It increases.
It decreases.
It remains constant.
It is unpredictable.
#4
1. What is the Law of Diminishing Marginal Utility?
As consumption increases, total utility increases at a decreasing rate.
As consumption increases, total utility increases at an increasing rate.
As consumption decreases, total utility increases.
As consumption increases, total utility remains constant.
#5
2. Which of the following is NOT a characteristic of a Giffen good?
Inferior good
Positive income elasticity
Negative substitution effect
Upward-sloping demand curve
#6
7. How does the concept of 'income effect' relate to changes in consumer purchasing behavior?
It refers to the impact of changes in price on the quantity demanded.
It describes how changes in income affect the demand for normal goods.
It explains how changes in income impact the purchasing power of consumers.
It is unrelated to consumer choices and preferences.
#7
8. What is the difference between total utility and marginal utility?
Total utility measures the satisfaction from consuming one additional unit, while marginal utility is the overall satisfaction.
Total utility is the sum of marginal utilities, while marginal utility is the satisfaction from consuming one additional unit.
Total utility and marginal utility are interchangeable terms.
There is no difference; they represent the same concept.
#8
13. What is the role of the budget constraint in consumer choice?
It limits the total utility a consumer can achieve.
It has no impact on consumer choices.
It determines the quantity of goods a consumer can buy given their income and the prices of goods.
It only applies to luxury goods.
#9
3. What is the formula for calculating Marginal Utility (MU)?
MU = ΔQ / ΔP
MU = ΔP / ΔQ
MU = ΔT / ΔQ
MU = ΔQ / ΔT
#10
4. According to the Law of Equi-Marginal Utility, how should a consumer allocate their budget among different goods to maximize total utility?
Allocate more budget to goods with higher total utility.
Allocate equal budget to all goods.
Allocate budget such that the marginal utility per dollar is the same for all goods.
Allocate budget based on personal preferences.
#11
9. Which of the following is an assumption of the Law of Diminishing Marginal Utility?
Consumer preferences remain constant.
Consumers always make rational choices.
Consumers have unlimited resources.
Goods are perfect substitutes for each other.
#12
10. If the price of a good increases, what is the expected impact on the consumer's equilibrium in terms of utility maximization?
Increase in consumption of the good.
Decrease in consumption of the good.
No change in consumption of the good.
Cannot be determined without additional information.
#13
11. What is the concept of 'Cardinal Utility' in economics?
It refers to the measurement of utility using numerical values.
It describes the ranking of goods based on their utility.
It is unrelated to the concept of utility in economics.
It represents the utility derived from consuming cardinal goods.