Microeconomics and Consumer Behaviour - Question Bank
1. What is 'framing' in behavioral economics?
2. The concept of 'bounded rationality' suggests that consumers' decision-making is limited by:
3. Behavioral economics challenges traditional microeconomic assumptions by incorporating insights from:
4. The condition for consumer equilibrium, MUx/Px = MUy/Py, implies that the consumer maximizes utility when the:
5. In the context of utility, 'satisfaction' is most closely related to:
6. A vertical demand curve represents:
7. 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:
8. A demand curve for a normal good is typically:
9. The convexity of indifference curves implies:
10. Which of the following is NOT a property of indifference curves?
11. What is the primary goal of a consumer in microeconomic theory?
12. The principle of transitivity in consumer preferences means that if a consumer prefers A to B, and B to C, then they must:
13. If a consumer is indifferent between two bundles of goods, it means they provide:
14. The concept of 'rational choice' in microeconomics assumes that consumers:
15. What happens to the budget line if the price of one good decreases, assuming income and the price of the other good remain constant?
16. What happens to the budget line if the consumer's income increases, assuming prices remain constant?
17. For an inferior good, the Engel curve typically slopes:
18. For a normal good, the Engel curve typically slopes:
19. The Engel curve shows the relationship between:
20. If the price of good X increases, and the quantity demanded of good Y decreases, then X and Y are:
21. The point where the indifference curve is tangent to the budget line represents:
22. What does ordinal utility theory assume about the measurement of utility?
23. A negative cross-price elasticity of demand implies that the two goods are:
24. A positive cross-price elasticity of demand implies that the two goods are:
25. The cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of:
26. A negative income elasticity of demand indicates that the good is:
27. A positive income elasticity of demand indicates that the good is:
28. The income elasticity of demand measures the responsiveness of quantity demanded to a change in:
29. Which of the following factors generally leads to more elastic demand?
30. When the price elasticity of demand is exactly 1, the demand is termed:
31. If the price elasticity of demand for a good is less than 1, the demand is considered:
32. If the price elasticity of demand for a good is greater than 1, the demand is considered:
33. What does the elasticity of demand measure?
34. The concept of 'consumer surplus' measures the difference between:
35. 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:
36. The Giffen paradox describes a situation where an increase in the price of a good leads to:
37. An inferior good is a good for which demand:
38. Which of the following best describes a complementary good?
39. What type of good experiences an increase in demand when the price of a related good increases?
40. For a normal good, an increase in income leads to:
41. The substitution effect of a price change refers to the change in consumption resulting from:
42. The income effect of a price change refers to the change in consumption resulting from:
43. If the price of a good decreases, and the consumer buys more of it, this is an illustration of the:
44. 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?
45. What is the Marginal Rate of Substitution (MRS) graphically represented by?
46. 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:
47. An indifference curve represents combinations of two goods that yield the consumer the same level of:
48. 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?
49. 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?
50. What is the fundamental assumption about consumer preferences that economists generally make?