WorksheetsConsumer Behavior Quiz
Total questions: 40
Worksheet time: 20mins
What does utility measure?
The price of a good
The satisfaction derived from consuming a good
The weight of a product
The production cost of a good
What is a key difference between cardinal and ordinal utility?
Cardinal utility is qualitative; ordinal utility is quantitative
Ordinal utility uses numerical measurement; cardinal utility uses ranking
Cardinal utility is quantitative; ordinal utility is qualitative
Both are qualitative measures
How is marginal utility (MU) calculated?
Total utility divided by price
Δ Total utility / Δ Quantity
Quantity divided by total utility
Total utility times quantity
What happens to marginal utility as consumption increases, according to the law of diminishing marginal utility?
It remains constant
It increases
It decreases
It doubles
At consumer equilibrium, which condition is satisfied?
MUx / Px > MUy / Py
MUx / Px = MUy / Py
MUx = MUy
Px = Py
What does the slope of a budget line represent?
Income level
Opportunity cost
Total utility
Fixed cost
What happens to a budget line when the price of one good decreases?
Shifts inward
Shifts outward
Rotates outward
Rotates inward
Which of the following is true about indifference curves?
They intersect each other
They are upward sloping
They are convex to the origin
They represent negative utility
What does the theory of consumer choice examine?
How to increase production efficiency
How individuals make rational decisions with limited resources
The relationship between cost and revenue
Strategies for business growth
Which of the following is NOT a characteristic of utility?
It is subjective
It varies among individuals
It is always measurable in numbers
It measures satisfaction from goods or services
If marginal utility becomes negative, what happens to total utility?
Increases at a decreasing rate
Decreases
Remains constant
Doubles
What does the law of diminishing marginal utility assume?
Consumers aim to minimize expenditure
Consumers aim to maximize utility
Prices remain constant
Marginal utility never changes
In the context of cardinal utility, what are 'utils'?
Units of utility measurement
Units of price
Units of income
Units of goods
If MUx/Px > MUy/Py, what will the consumer likely do?
Purchase more of good X
Purchase more of good Y
Stop purchasing either good
Purchase equal quantities of X and Y
What does a decrease in the price of good X do to its marginal utility per dollar (MUx/Px)?
It increases MUx/Px
It decreases MUx/Px
It has no effect on MUx/Px
It doubles MUx/Px
What is represented by the absolute value of the slope of an indifference curve?
Marginal utility
Marginal rate of substitution (MRS)
Opportunity cost
Budget constraint
Which of the following factors causes a budget line to shift outward?
Decrease in income
Decrease in the price of a good
Increase in the price of a good
Increase in income
Why are indifference curves downward sloping?
To reflect increasing total utility
To reflect diminishing marginal utility
To show opportunity cost of goods
To show preferences for bundles of goods
Which of the following is an assumption of the ordinal utility theory?
Utility is measured in utils
Consumers prefer more goods to fewer goods
Indifference curves intersect
Utility cannot be ranked
A consumer has $50, and the price of good X is $10 while the price of good Y is $5. How many units of X can they buy if they spend all their money on X?
5
10
2
7
If income is $100 and Px = $20, Py = $10, what is the budget line equation?
20Qx + 10Qy = 100
Qx + Qy = 100
100 = Px × Py
Qx/Qy = 2
A consumer is in equilibrium consuming 4 units of X and 2 units of Y, where Px = $10, Py = $5, MUx = 20, and MUy = 10. What happens if Px decreases to $5?
The consumer will buy more X
The consumer will buy more Y
The consumer will buy fewer X
No change in consumption
What happens to the budget line if both income and the prices of goods double?
Shifts outward
Shifts inward
Remains unchanged
Rotates outward
Indifference curves closer to the origin represent:
Higher utility levels
Lower utility levels
Equal utility levels
No utility levels
If point A and B are on the same indifference curve, what does it indicate?
A is preferred to B
B is preferred to A
A and B provide the same utility
No relationship can be inferred
A consumer has $100. If the price of good X is $20 and the price of good Y is $10, what is the maximum number of units of good X the consumer can buy?
5
10
2
20
Using the same data ($100 income, Px = $20, Py = $10), how many units of good Y can the consumer purchase if they buy 2 units of X?
8
5
4
6
Given income of $60, Px = $5, and Py = $3, write the budget constraint equation.
5Qx + 3Qy = 60
Qx + Qy = 60
60 = Px × Py
3Qx + 5Qy = 60
If income is $80, and prices of goods X and Y are $8 and $4, respectively, what is the slope of the budget line?
-0.5
-1
-2
-0.25
A consumer has a budget of $120, and the price of good X is $15 while the price of good Y is $10. What is the intercept of good X on the budget line?
8
12
6
10
If the consumer's income increases from $100 to $150, while prices remain constant, what happens to the budget line?
It shifts inward
It shifts outward
It rotates outward
It remains unchanged
If the price of good X falls from $20 to $10 and income is $100, how does the budget line change?
It shifts inward
It rotates outward around the Y-axis
It rotates outward around the X-axis
It remains unchanged
A consumer has 4 units of X and 3 units of Y, where MUx = 20 and MUy = 10. Px = $5, and Py = $2. Is the consumer in equilibrium?
Yes
No, they should buy more of X
No, they should buy more of Y
No, they should stop buying both goods
Given the same data, how should the consumer adjust their consumption to reach equilibrium?
Increase consumption of X and decrease Y
Decrease consumption of X and increase Y
Increase both X and Y
Decrease both X and Y
What is the Marginal Rate of Substitution (MRS) between 2 goods if the consumer gives up 3 units of X for 1 additional unit of Y?
0.33
1
3
2
If a consumer's MRS is 2, and Px = $6, Py = $3, what should the consumer do?
Buy more of X
Buy more of Y
Stop buying X and Y
The consumer is in equilibrium
Suppose a consumer's indifference curve has a steeper slope than the budget line. What does this imply?
The consumer values good X more than good Y
The consumer values good Y more than good X
The consumer is in equilibrium
The consumer is maximizing utility
If MRS between X and Y is 1, and Px = $10, Py = $5, how should the consumer adjust?
Buy more X and less Y
Buy more Y and less X
Increase consumption of both X and Y
The consumer is in equilibrium
A consumer is initially in equilibrium. If the price of X decreases, what happens to the equilibrium consumption?
The consumer buys less X and more Y
The consumer buys more X and less Y
The consumer buys equal amounts of X and Y
The consumer stops buying Y
If income is $60, Px = $3, and Py = $2, what is the optimal bundle if MRS = 1.5 at equilibrium?
10 units of X and 10 units of Y
15 units of X and 10 units of Y
20 units of X and 10 units of Y
10 units of X and 20 units of Y
