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CA Foundation Theory of Consumer Behaviour — practice questions

Explore 52 free Theory of Consumer Behaviour questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Theory of Consumer Behaviour questions and exercises with answers

Showing questions 1–30 of 52.

An indifference curve joins bundles that give the consumer what?Read the answer and worked solution →A collection of indifference curves for one consumer is called what?Read the answer and worked solution →The slope of an indifference curve is called the what?Read the answer and worked solution →Who first actually drew indifference curves, in his 1906 book?Read the answer and worked solution →Whose 1881 book explained the mathematics needed for drawing indifference curves?Read the answer and worked solution →Which two economists refined indifference curve analysis in the 1930s?Read the answer and worked solution →Indifference curve analysis rests on which type of utility?Read the answer and worked solution →Moving to a higher indifference curve means the consumer gets what?Read the answer and worked solution →A normal indifference curve has which type of slope?Read the answer and worked solution →Why are indifference curves normally downward sloping?Read the answer and worked solution →Which assumption rules out two indifference curves crossing?Read the answer and worked solution →A typical indifference curve is drawn how relative to the origin?Read the answer and worked solution →Convex preferences reflect which principle of utility?Read the answer and worked solution →The consumer cannot rank two bundles. Which assumption fails?Read the answer and worked solution →If A is preferred to B and B to C, then A is preferred to C. This is what?Read the answer and worked solution →The assumption that a consumer prefers more of both goods is called what?Read the answer and worked solution →Which item breaks the 'more is better' assumption for a consumer?Read the answer and worked solution →Treating identical bundles as equally good is which assumption?Read the answer and worked solution →Infinitely divisible bundles that make curves unbroken reflect which assumption?Read the answer and worked solution →What does MRS of X for Y measure?Read the answer and worked solution →Along a convex indifference curve, as X increases, MRS of X for Y does what?Read the answer and worked solution →The diminishing MRS means the consumer gives up what as X rises?Read the answer and worked solution →MRS corresponds to the slope of the indifference curve multiplied by what?Read the answer and worked solution →At equilibrium consumption levels, marginal rates of substitution across consumers are what?Read the answer and worked solution →Perfect substitutes produce indifference curves of what shape?Read the answer and worked solution →For perfect substitutes the MRS is what?Read the answer and worked solution →Which pair is closest to perfect complements?Read the answer and worked solution →A budget constraint shows what a consumer can do?Read the answer and worked solution →The budget set contains bundles where?Read the answer and worked solution →A consumer's best affordable bundle is where the budget line is what?Read the answer and worked solution →

Worked practice questions

An indifference curve joins bundles that give the consumer what?

  1. Equal total cost
  2. Equal marginal cost
  3. Equal quantity of goods
  4. Equal level of utility
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Correct answer: D. Equal level of utility

Every point on the curve is a bundle between which the consumer is indifferent, so all give the same satisfaction.

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A collection of indifference curves for one consumer is called what?

  1. A budget schedule
  2. A demand schedule
  3. An isoquant family
  4. An indifference map
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Correct answer: D. An indifference map

Several curves for different utility levels drawn together form the consumer's indifference map.

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The slope of an indifference curve is called the what?

  1. Marginal cost of output
  2. Price elasticity of demand
  3. Marginal rate of substitution
  4. Income multiplier effect
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Correct answer: C. Marginal rate of substitution

The absolute slope of the curve measures how much of one good is given up for one more unit of the other, which is the MRS.

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