Microeconomics and Consumer Behaviour - One Line Questions

1. For a normal good, an increase in income leads to: — An increase in demand
2. Which of the following best describes a complementary good? — A good that is consumed together with another good
3. The Giffen paradox describes a situation where an increase in the price of a good leads to: — An increase in quantity demanded
4. The concept of 'rational choice' in microeconomics assumes that consumers: — Make decisions to maximize their utility given constraints
5. What type of good experiences an increase in demand when the price of a related good increases? — Substitute good
6. A positive cross-price elasticity of demand implies that the two goods are: — Substitutes
7. The point where the indifference curve is tangent to the budget line represents: — Consumer equilibrium
8. A Giffen good is a special type of inferior good for which the income effect is so strong that it outweighs the substitution effect. This means that as the price of a Giffen good increases, its quantity demanded will: — Increase
9. If a consumer is indifferent between two bundles of goods, it means they provide: — The same level of utility
10. For a normal good, the Engel curve typically slopes: — Upward
11. If the price elasticity of demand for a good is less than 1, the demand is considered: — Inelastic
12. When the price elasticity of demand is exactly 1, the demand is termed: — Unit elastic
13. A vertical demand curve represents: — Perfectly inelastic demand
14. Which of the following factors generally leads to more elastic demand? — Large proportion of income
15. An indifference curve represents combinations of two goods that yield the consumer the same level of: — Utility
16. An inferior good is a good for which demand: — Decreases as income increases
17. Which economic concept describes the set of all possible bundles of goods that a consumer can afford given their income and the prices of goods? — Budget Line
18. If the price elasticity of demand for a good is greater than 1, the demand is considered: — Elastic
19. The 'all-or-nothing' demand curve, where any price above a certain point leads to zero demand and any price below leads to infinite demand, represents: — Perfectly elastic demand
20. A positive income elasticity of demand indicates that the good is: — Normal
21. What happens to the budget line if the consumer's income increases, assuming prices remain constant? — It shifts outward parallel
22. What happens to the budget line if the price of one good decreases, assuming income and the price of the other good remain constant? — It pivots outward
23. The slope of the budget line indicates the rate at which a consumer can trade one good for another while keeping total expenditure constant. This is known as the: — Relative Price
24. The condition for consumer equilibrium, MUx/Px = MUy/Py, implies that the consumer maximizes utility when the: — Ratio of marginal utility to price is equal for all goods
25. Consumer equilibrium is achieved when the budget line is tangent to the indifference curve. At this point, what is true about the Marginal Rate of Substitution (MRS) and the relative prices of the goods? — MRS is equal to the ratio of prices
26. A negative income elasticity of demand indicates that the good is: — Inferior
27. The concept of 'bounded rationality' suggests that consumers' decision-making is limited by: — Limited information and cognitive ability
28. The principle of transitivity in consumer preferences means that if a consumer prefers A to B, and B to C, then they must: — Prefer A to C
29. What is the fundamental assumption about consumer preferences that economists generally make? — Preferences are transitive and complete
30. In the context of utility, 'satisfaction' is most closely related to: — Utility
31. The Engel curve shows the relationship between: — Income and quantity demanded
32. The income elasticity of demand measures the responsiveness of quantity demanded to a change in: — Income of the consumer
33. Behavioral economics challenges traditional microeconomic assumptions by incorporating insights from: — All of the above
34. A negative cross-price elasticity of demand implies that the two goods are: — Complements
35. If the price of good X increases, and the quantity demanded of good Y decreases, then X and Y are: — Complements
36. If the price of a good decreases, and the consumer buys more of it, this is an illustration of the: — Law of Demand
37. The substitution effect of a price change refers to the change in consumption resulting from: — The change in the relative prices of goods, making one relatively cheaper
38. The income effect of a price change refers to the change in consumption resulting from: — The change in the purchasing power of the consumer's income
39. The convexity of indifference curves implies: — The Marginal Rate of Substitution decreases as the consumer moves down the curve
40. The concept of 'consumer surplus' measures the difference between: — The price consumers are willing to pay and the price they actually pay
41. What does the elasticity of demand measure? — The responsiveness of quantity demanded to a change in price
42. The cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of: — A related good
43. What is the Marginal Rate of Substitution (MRS) graphically represented by? — The slope of the indifference curve
44. What is 'framing' in behavioral economics? — The way information is presented affects choices
45. Which of the following is NOT a property of indifference curves? — They can intersect each other
46. What is the primary goal of a consumer in microeconomic theory? — To maximize utility
47. The law of diminishing marginal utility states that as a consumer consumes more of a good, the additional satisfaction gained from each extra unit eventually decreases. What is this additional satisfaction called? — Marginal Utility
48. For an inferior good, the Engel curve typically slopes: — Downward
49. A demand curve for a normal good is typically: — Downward sloping
50. What does ordinal utility theory assume about the measurement of utility? — Utility can be ranked or ordered but not precisely measured
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