Customer Choices

What do neoclassical economists believe about consumer choices?

• A) Consumers make random decisions.

• B) Consumers make choices based on their emotions.

• C) Consumers make rational decisions to maximize satisfaction.

• D) Consumers always spend all their money.

What is a budget constraint?

• A) The maximum amount of money you can borrow.

• B) The total amount of money a consumer has to spend.

• C) The amount of money you save after shopping.

• D) The amount of money you earn in a day.

What is utility in economic terms?

• A) The amount of money a person earns.

• B) The number of goods a consumer buys.

• C) The price of a product.

• D) The satisfaction a consumer gets from a purchase.

What does the indifference curve show?

• A) The total cost of goods in the market.

• B) Different combinations of goods that provide the same level of satisfaction.

• C) The profit a company makes from selling goods.

• D) How much money a consumer saves when shopping.

What happens to the utility of a good as more of it is consumed?

• A) Utility increases with every additional unit.

• B) Utility remains the same for each unit consumed.

• C) Utility decreases with every additional unit.

• D) Utility becomes negative after the second unit.

What is the total amount of money you have to spend called?

• A) Budget

• B) Utility

• C) Profit

• D) Loan

What do consumers want to get from the goods they buy?

• A) Less money

• B) More time

• C) Satisfaction

• D) Confusion

What happens to the satisfaction (utility) when you consume more of the same good?

• A) It stays the same

• B) It increases

• C) It doubles

• D) It decreases