Question Bank: Theory Of Consumer Behaviour

What does the law of diminishing marginal utility state?

If a consumer prefers more of a good as long as its marginal utility is positive, what will they do?

Which of the following best describes an indifference curve?

What shapes the typically convex shape of an indifference curve?

If two indifference curves intersect, what can be inferred?

A consumer's optimal choice is found at what point?

How does a price decrease affect the demand for a normal good?

Given two goods, bananas and mangoes, how is the Marginal Rate of Substitution (MRS) defined?

What does a straight-line indifference curve indicate about two goods?

If a consumer experiences a gain in total utility from consuming more of a good, this reflects what type of good?

In what situation would the marginal utility of a good increase?

What effect does an increase in income have on a consumer's demand for an inferior good?

What happens to a consumer's budget constraint if the price of one good decreases?

If two goods are such that the MRS between them remains constant regardless of quantity, they are characterized as:

What defines a consumer's budget set?

When a consumer is at their optimal choice point, what relationship is true?

Which of the following best describes the tangency condition for consumer optimal choice?

What happens to the consumer’s budget line if the price of one good increases?

If a consumer's preferences are monotonic, what does this imply?

Which scenario is consistent with a consumer being at their optimum choice?

How is the Marginal Rate of Substitution (MRS) calculated?

Which of the following statements about a consumer's choice is false?

In which case would a consumer likely choose to consume only one good?

If a utility-maximizing consumer is given a cash subsidy, what is expected to happen?

Which factor leads to a rightward shift in the budget line?

Which concept most closely describes the satisfaction a consumer derives from consuming goods?

Which of the following relationships should hold at the consumer's optimal choice?

What does it mean if an indifference curve is convex to the origin?

What does the consumer's budget constraint represent?

If the income of a consumer increases, how does it affect the budget line?

Which of the following is included in the definition of a budget set?

What is represented by the slope of the budget line?

If the price of bananas increases and the price of mangoes remains unchanged, what happens to the budget line?

Which of the following combinations represents a point above the budget line?

How does the budget set change if the price of mangoes decreases?

If a consumer has a budget of $40 and wants to buy bananas priced at $5 each and mangoes priced at $10 each, which combination can they afford?

What is the vertical intercept of a budget line when a consumer spends all their income on mangoes?

If a consumer's budget line is given by \( 5x_1 + 10x_2 = 100 \), what is the price ratio of the two goods?

Which of the following statements about the budget constraint is FALSE?

When the budget line is tangent to an indifference curve, what does it signify?

If a consumer's income doubles, what happens to their budget set if prices remain constant?

If the prices of both goods increase proportionately, what remains unchanged for the consumer?

Which of the following best describes the region below the budget line?

What does the market demand curve represent?

Which factor would cause a rightward shift in the demand curve?

What happens to the demand for a good when its price decreases?

When the demand for a product decreases due to an increase in its price, this is known as:

If two goods are substitutes, what is likely to happen to the demand for one if the price of the other rises?

What is the formula for calculating market demand when combining two individual demands?

Which of the following would NOT shift the demand curve?

If a good is classified as inferior, what happens to its demand when consumer income increases?

What is the main characteristic of a demand curve for a normal good?

If the demand curve shifts leftward, what does this imply about consumer behavior?

What does the demand curve typically illustrate?

How does an increase in the price of complementary goods affect the demand for a primary good?

If the price of a good increases, what typically happens to the quantity demanded, according to the Law of Demand?

Calculating elasticities of demand is crucial for understanding how responsive demand is to price changes. What would be the price elasticity of demand given a 10% price increase leading to a 20% decline in quantity demanded?

What is the formula for calculating price elasticity of demand?

When combining the demands of three consumers, what is the correct approach?

If a good has an elasticity of demand less than one, it is considered to be:

If at a price of Rs. 10, the quantity demanded is 50 units and when the price rises to Rs. 15, the quantity demanded falls to 30 units, what is the elasticity of demand?

Which of the following would most likely have elastic demand?

What is the main focus of the concept of 'demand' in economics?

When consumer income increases, what is likely to happen to the demand for normal goods?

Which term reflects a situation where demand decreases while price increases?

If the demand for a product is perfectly elastic, what happens to total revenue when the price changes?

If a new study shows that a healthy alternative to a popular snack is more appealing, what might happen to the demand for that snack?

In what scenario would a demand curve shift to the left?

How would the demand for a product with few close substitutes be characterized?

What happens to demand for a good if it becomes a fad or trend?

When the price of a complementary good decreases, what is likely to happen to the demand for the original good?

What describes a demand schedule?

In terms of demand, what does a 'decrease' refer to specifically?

What does the price elasticity of demand measure?

If the price of a good increases by 10% and the quantity demanded decreases by 20%, what is the price elasticity of demand?

Which of the following goods is likely to have elastic demand?

When the absolute value of price elasticity of demand is less than one, the demand is said to be:

Which demand scenario would yield a price elasticity of demand equal to 1?

For which goods would the demand typically be inelastic?

At which point on a linear demand curve is the demand perfectly elastic?

What would happen to total revenue if demand is elastic and price increases?

Which statement about perfectly inelastic demand is true?

If an individual increases their demand for a good from 5 units to 10 units due to a price drop from Rs. 20 to Rs. 10, what is the price elasticity of demand?

What type of goods has a price elasticity of demand greater than 1?

Which of the following factors can cause the demand for a good to be elastic?

Which demand curve is associated with perfectly elastic demand?

How does total revenue react when demand is unitary elastic with a price increase?

What happens to the market demand curve when two individual demand curves are summed up horizontally?