18 Questions
What can be inferred when a consumer chooses a more expensive market basket over a cheaper one?
The consumer prefers the chosen market basket
In a revealed preference scenario, what is the implication of choosing a market basket over another?
The chosen market basket is preferred to the alternative
If a consumer chooses market basket A over market basket B, and then chooses market basket B over market basket D, what can be inferred about market basket A?
A is preferred to all market baskets in the green-shaded area
What is the purpose of budget lines in revealed preference analysis?
To illustrate the consumer's possible choices
What is the implication of a corner solution in a college trust fund scenario?
The student is spending the trust fund only on education
If a consumer facing budget line l1 chooses market basket A, and a consumer facing budget line l2 chooses market basket B, what can be inferred about market basket A?
A is preferred to B
What is the assumption of transitivity in consumer preferences?
If a consumer prefers basket A to basket B and basket B to basket C, then the consumer prefers basket A to basket C.
What is the implication of the assumption that 'more is better than less' in consumer preferences?
Consumers always prefer more of any good to less.
What is an indifference curve?
A curve representing all combinations of market baskets that provide a consumer with the same level of satisfaction.
According to the figure, which basket is clearly preferred to basket A?
Basket E
What is the role of additional information in comparing market baskets?
It is necessary to compare market baskets that are not comparable.
What is the implication of the assumption that goods are desirable?
Consumers always prefer more of any good to less.
What concept refers to the idea that consumers can compare and rank all possible market baskets?
Completeness
In consumer behavior theory, what does it mean for a consumer to be 'indifferent' between two market baskets?
They are equally satisfied with either basket.
What is the key assumption about preferences when considering the theory of consumer behavior?
Completeness
What principle states that consumers can easily compare any two market baskets?
Transitivity
Ignoring costs, it is noted that a consumer might prefer steak to hamburger but buy hamburger due to what reason?
Budget constraint
Which of the following is true regarding completeness of preferences in consumer theory?
Consumers can compare all possible baskets.
Learn about the basic 'workhorse' model in economics that simplifies assumptions to explain consumer choice and demand characteristics. This quiz discusses how consumer preferences affect decisions in purchasing market baskets and concert tickets.
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