Quiz 2 (more advanced)

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You have 1 hours minutes for 16 questions. All the best !!!

Theory of Consumer Behaviour Quiz 2

Kindly read the questions carefully. The questions here are a bit trickier than what was in the first set.

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1. An increase in income, ceteris paribus, usually allows a consumer to:

1. Avoid the Law of Diminishing MU.

2. Decrease their TU.

3. Reach a higher TU.

4. Buy fewer goods.

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2. If a person is forced to pay their maximum willingness to pay for every unit:

1. MU is zero.

2. TU is zero.

3. Consumer surplus is zero.

4. Consumer surplus is maximized.

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3. If Felicia buys a GH₵2.50 Indomie and her TCS is GH₵0.50, her $TU$ for that Indomie was:

1. GH₵0.50

2. GH₵2.00

3. GH₵3.00

4. GH₵2.50

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4. The "Law of Diminishing Marginal Utility" applies only if:

1. Consumption is continuous over a given period.

2. The price is rising.

3. The consumer is wealthy.

4. There are many sellers.

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5. Rationality implies that if you have GH₵10, you will:

1. Buy only water.

2. Save it all.

3. Spend it in a way that gives you the highest total satisfaction.

4. Buy the most expensive item possible.

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6. If the 5th glass of water makes a person feel sick, the $MU$ of that glass is:

1. 0

2. Negative.

3. Infinite.

4. Positive.

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7. The "origin" on a utility graph represents:

1. Infinite utility.

2. Zero consumption and zero utility.

3. The price line.

4. Market equilibrium.

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8. Marginal Consumer Surplus (MCS) is:

1. ∆TCS/∆Q

2. TU-TE

3. P-MU

4. MU-P

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9. When $MU$ is decreasing but still positive, $TU$ is:

1. Decreasing.

2. Increasing at a decreasing rate.

3. Increasing at an increasing rate.

4. Constant.

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10. Which of these is an "Ordinal" concept?

1. 10 utils.

2. GH₵5 of utility.

3. "I prefer A to B."

4. 20 utils.

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11. If a 6th item has an MU of -1, the TU of the 6 items is:

1. Equal to the TU of 5 items

2. Lower than the TU of 5 items

3. Higher than the TU of 5 items

4. 0

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12. If MU_X/P_X < MU_Y/P_Y, the rational consumer will

1. Decrease both Qx and Qy.

2. Increase Qx and decrease Qy

3. Decrease Qx and increase Qy.

4. Increase both Qx and Qy.

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13. Why are water prices low in most markets?

1. Because its Marginal Utility is low due to its abundance.

2. Because consumers are irrational.

3. Because its Total Utility is low.

4. Because it has no "value-in-use."

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14. If P_A = GH₵5 and MU_A = 10, and P_B = GH₵10 and MU_B = 20:

1. The consumer is irrational.

2. The consumer is in equilibrium.

3. The consumer should buy more of A.

4. The consumer should buy more of B.

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15. If a consumer gets 20 utils from GH₵2 spent on Good A, the $MU$ per Cedi is:

1. 20

2. 40

3. 10

4. 2

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16. In a graph with $MU$ on the vertical axis and $Q$ on the horizontal axis, the area of Total Utility is:

1. The area above the MU curve.

2. The slope of the line.

3. The area under the MU curve.

4. The distance from the origin to Q.

Your score is