Quiz 1 (easy) – MJNEXIS-ERA

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Theory of Consumer Behaviour Quiz 1

Kindly read the questions carefully. Most of the questions in this set are very easy and are just to help recall. A few tricky questions have been placed here and there.

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1. If a consumer’s $MU$ for the 3rd bottle of soda is 15 and the 4th bottle is 10, the "Change in TU" from 3 to 4 bottles is:

1. 15

2. 25

3. 10

4. 5

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2. Total Utility starts at the origin (0,0) because:

1. Prices are always positive

2. Consumers are never satisfied

3. Utility is always zero

4. Zero consumption yields zero utility

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3. The downward slope of the MU curve illustrates:

1. Diminishing marginal utility

2. Constant utility

3. Perfectly elastic demand

4. Increasing retur

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4. Which theory is NOT mentioned as explaining consumer behavior?

1. Profit Maximization Theory

2. Marginal Utility Theory

3. Indifference Theory

4. Revealed Preference Theory

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5. When Total Utility (TU) reaches its maximum, Marginal Utility (MU) is:

1. At its maximum

2. Zero

3. Positive

4. Negative

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6. If the price of a good increases, what happens to the $MU = P$ equilibrium point?

1. The MU curve shifts upward.

2. It shifts to a lower quantity.

3. It shifts to a higher quantity.

4. It remains the same.

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7. A "Rational" consumer according to economic theory:

1. Always chooses the healthiest option available.

2. Always has perfect information about every price in Ghana.

3. Never buys luxury goods like diamonds.

4. Acts consistently to maximize their own satisfaction within a budget.

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8. Who among these is a Swiss economist associated with the MU revolution?

1. Leon Walras

2. Carl Menger

3. Adam Smith

4. Stanley Jevons

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9. Marginal Utility (MU) measures the:

1. Satisfaction divided by price

2. Additional satisfaction from one extra unit

3. Total satisfaction of a consumer

4. Minimum satisfaction required to buy

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10. If MUA / MUB > PA / PB, the consumer should:

1. Lower the price of A

2. Buy more of B

3. Stop buying both

4. Buy more of A

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11. When $MU$ is negative, what is the behavior of the $TU$ curve?

1. It is horizontal.

2. It is falling.

3. It is rising at an increasing rate.

4. It is rising at a decreasing rate.

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12. If a consumer is willing to pay GH₵10 for the 1st unit, GH₵8 for the 2nd, and GH₵6 for the 3rd, and the market price is GH₵6, the Total Consumer Surplus is:

1. GH₵18

2. GH₵6

3. GH₵10

4. GH₵24

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13. According to the Law of Diminishing Marginal Utility, as consumption increases:

1. Price must increase

2. Total utility must fall immediately

3. Extra satisfaction from extra units declines

4. Tastes become unstable

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14. If Darren's MU for the 6th packet of crisps is -1, his TU will:

1. Become zero

2. Stay the same

3. Decrease

4. Increase

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15. A rational consumer continues buying as long as:

1. P > TU

2. MU < P

3. MU > P

4. MU = 0

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16. A consumer buys 5 units of a good at GH₵10 each. The $TU$ of 5 units is GH₵70. The Total Consumer Surplus is:

1. GH₵50

2. GH₵120

3. GH₵20

4. GH₵70

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17. Total Utility (TU) is defined as:

1. The price of all units combined

2. Total satisfaction from all units consumed in a period

3. Satisfaction from the last unit

4. Average satisfaction per unit

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18. "Utility" in economics is best described as being:

1. Objective

2. Measurable in kilograms

3. Constant for everyone

4. Subjective

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19. Total Consumer Surplus is the area _______ the demand curve and _______ the price line.

1. Below; Above

2. Above; Below

3. Below; Below

4. Above; Above

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20. The formula for Marginal Consumer Surplus (MCS) is:

1. MCS = P - MU

2. MCS = MU / P

3. MCS = MU + P

4. MCS = MU - P

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21. Which individual is credited with the water-diamond paradox in the 1760s?

1. Carl Menger

2. Adam Smith

3. Leon Walras

4. Stanley Jevons

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22. "Ignorance" in consumer behavior refers to:

1. Lack of data regarding market prices or quality.

2. Being unable to calculate MU.

3. Choosing a goal that is morally wrong.

4. Buying more of a good when the price rises.

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23. Consumer Surplus is the difference between:

1. Willingness to pay and actual price paid

2. Price and Cost

3. Total Utility and Marginal Utility

4. Demand and Supply

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24. Total Consumer Surplus (TCS) is calculated as:

1. TCS = MU - P

2. TCS = TU - TE

3. TCS = TU + TE

4. TCS = TE - TU

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25. If the price of Good A falls, the equi-marginal principle suggests the consumer will:

1. Buy more of Good A until MUA / PA falls back to equality with other goods.

2. Increase the price of Good B.

3. Keep consumption the same.

4. Buy less of Good A to keep MU high.

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26. If Darren gets 7 utils from 1 packet of crisps and 11 utils total from 2, the MU of the 2nd is:

1. 11

2. 18

3. 7

4. 4

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27. Total Expenditure (TE) is:

1. The marginal consumer surplus

2. The actual amount spent on a good

3. The willingness to pay

4. The total utility gained

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28. According to the 1870s revolution, market value is determined by:

1. Labor hours

2. Scarcity alone

3. Total utility

4. Marginal utility

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29. Which is a limitation of using money to measure utility?

1. It is impossible to count money.

2. Money has no value.

3. The marginal utility of money itself may change as a person's wealth changes.

4. Money is only used for "value-in-use."

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30. Rationality in economics does NOT mean:

1. Perfect information

2. Consistent behavior

3. Maximizing value for money

4. Aiming for specific goals

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31. If MU < P, the consumer should:

1. Buy more

2. Increase the price

3. Not change anything

4. Buy less

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32. Which of the following is a "Subjective" statement?

1. The price of this diamond is GH₵5000.

2. Diamonds are found in mines.

3. This diamond provides me with 100 utils.

4. The diamond weighs 2 grams.

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33. A consumer in equilibrium is currently consuming Goods X and Y. If the price of Good X (Px) doubles and the consumer’s income also doubles:

1. The consumer will definitely buy more of Good X.

2. The consumer is no longer in equilibrium unless $MUx also changes.

3. The MUx / Px ratio remains unchanged.

4. The consumer surplus for Good X will increase.

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34. If the Total Utility (TU) of consuming 4 units is 100 and the 5th unit provides a Marginal Utility (MU) of 15, the TU of 6 units would be:

1. 85

2. 115

3. Cannot be determined without the MU of the 6th unit

4. 130

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35. At the point of satiety, which of the following is FALSE?

1. The slope of the TU curve is zero.

2. MU = 0

3. TU is at its maximum.

4. TU is at its minimum.

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36. If MU_X / P_X is currently 10, and the consumer is in equilibrium, what must be the MU_Y / P_Y for Good Y?

1. 5

2. 0

3. 20

4. 10

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37. In the equi-marginal principle, if MU _A / P_A > MU_B / P_B, the consumer will buy more of A, which will:

1. Decrease the MU of A.

2. Decrease the Price of B.

3. Increase the Price of A.

4. Increase the MU of A.

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38. Total Expenditure is represented graphically by:

1. The area above the price line.

2. The slope of the MU curve.

3. The rectangle formed by Price times Quantity.

4. The area under the demand curve.

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39. If a glass of water has a TU of 50 and a diamond has a TU of 20, Adam Smith’s paradox suggests that:

1. Water is a Giffen good.

2. The "value-in-use" of water is higher, but market price depends on the utility of the last unit available.

3. The market price is determined by the 50 utils.

4. Water must be more expensive.

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40. The water-diamond paradox asks why water has a low "value-in-exchange" despite having a high:

1. Marginal utility

2. Production cost

3. Value-in-use

4. Market price

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41. The difference between "Value-in-use" and "Value-in-exchange" is essentially the difference between:

1. Scarcity and Abundance.

2. Demand and Supply.

3. TU and Price.

4. MU and TU.

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42. If a consumer is willing to pay GH₵5000 for a phone but pays GH₵4850, the surplus is:

1. GH₵150

2. GH₵4850

3. GH₵5000

4. GH₵9850

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43. In economic theory, "rational" behavior is defined as being consistent with:

1. One's own particular goals

2. Government regulations

3. Social norms

4. Moral approval

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44. In the formula MCS = MU - P, "P" stands for:

1. Price

2. Preference

3. Production

4. Profit

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45. If a consumer is "at equilibrium" with one good:

1. Their TU must be zero.

2. Their MU must be higher than the price.

3. They cannot benefit from buying more or less of that good.

4. They have spent all their money.

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46. If $TU$ is constant across three units of consumption, $MU$ for those units is:

1. Negative.

2. Zero.

3. Increasing.

4. Constant and positive.

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47. If MU > P, the consumer's surplus is:

1. Positive

2. Zero

3. Decreasing

4. Negative

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48. In the "one-commodity" model, if the price of a good is zero, the consumer surplus is:

1. Equal to the Marginal Utility.

2. Zero.

3. Negative.

4. Equal to the Total Utility.

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49. A rational consumer is one who:

1. Seeks the best value for money

2. Never makes mistakes

3. Has unlimited money

4. Only buys essential goods

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50. The assumption that tastes are "given" means they are:

1. Changing every minute

2. Determined by the government

3. Relatively stable for an individual

4. The same for all people

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51. The "marginal utility revolution" occurred during which decade?

1. 1870s

2. 1910s

3. 1820s

4. 1760s

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52. Utility is defined as a sense of:

1. Physical need

2. Wealth

3. Pleasure or satisfaction

4. Debt

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53. The "Value-in-use" of a commodity refers to:

1. Its exchange rate

2. Its production cost

3. Its market price

4. Its importance to human life

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54. Consumer Surplus is a measure of:

1. The difference between the total value placed on consumption and the market payment.

2. The excess supply in the market.

3. The profit made by the firm from a rational consumer.

4. The total amount spent by a consumer.

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55. Equilibrium for a single commodity occurs where:

1. MU = 0

2. TU = P

3. TU is at its minimum

4. MU = P

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56. Which of the following best describes the relationship between the MU curve and the Demand curve?

1. There is no mathematical relationship between the two.

2. The MU curve is the reciprocal of the Demand curve.

3. They are identical in all circumstances.

4. The Demand curve is derived from the MU curve, assuming the MU of money is constant.

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57. The $MU$ of the 1st unit is usually:

1. Zero.

2. Negative.

3. Less than the MU of the 2nd unit.

4. Equal to the TU of the 1st unit.

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58. An individual’s demand curve is the same as their:

1. Supply curve

2. Marginal utility curve

3. Total utility curve

4. Total expenditure curve

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59. If the Total Utility of 2 glasses of water is 60 and 3 glasses is 70, the MU of the 3rd glass is:

1. 10

2. 60

3. 130

4. 70

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60. The slope of the Total Utility curve is:

1. Total Expenditure.

2. Marginal Utility.

3. Average Utility.

4. Consumer Surplus.

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61. If MU is negative, Total Utility (TU) is:

1. Increasing

2. At its maximum

3. Constant

4. Decreasing

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62. A person who is "ignorant" of some market facts can still be:

1. Unproductive

2. Rational

3. Inefficient

4. Irrational

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63. If the $MU$ of the 10th unit of a good is 5 utils and the price is GH₵5, the Marginal Consumer Surplus for that specific unit is:

1. 0

2. GH₵10

3. GH₵25

4. GH₵5

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64. The MU curve slopes downward because of:

1. Market competition

2. Diminishing marginal utility

3. Decreasing income

4. Increasing costs

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65. If a rational consumer finds that MU/P for bread is 5 and MU/P for milk is 8, the consumer should:

1. Spend an equal amount of money on both

2. Buy more milk, which will eventually cause the MU of milk to fall

3. Buy more bread to increase its MU

4. Buy less milk to increase its MU.

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66. The correct plain-text formula for Marginal Utility is:

1. MU = ΔTU / ΔQ

2. MU = ΔQ / ΔTU

3. MU = TU + Q

4. MU = TU / Q

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67. To maximize consumer surplus, a person buys until:

1. P = 0

2. MU = P

3. MU is at its highest

4. TU = 0

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68. The "Marginal Utility Revolution" of the 1870s was unique because:

1. Three economists in different countries reached the same conclusion independently.

2. it was the first time economists used the word "Value."

3. It was started by Adam Smith.

4. It proved that Total Utility determines price.

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69. If the Law of Diminishing Marginal Utility did NOT hold, the demand curve would be:

1. Non-existent.

2. Vertical.

3. Downward sloping.

4. Upward sloping or horizontal.

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70. The "equi-marginal principle" for two goods (A and B) is:

1. MUA * PA = MUB * PB

2. MUA - PA = MUB - PB

3. MUA / PA = MUB / PB

4. MUA + MUB = PA + PB

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