Consumer Theory Quiz PDF

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Questions and Answers

What is the main focus of consumer theory?

  • Maximizing producer profits through pricing strategies
  • Minimizing consumer spending on luxury goods
  • Maximizing consumer satisfaction given limited resources (correct)
  • Minimizing government intervention in consumer choices

In consumer theory, what does the law of diminishing marginal utility suggest?

  • Consumers will only purchase goods with high advertising exposure
  • As consumption of a good increases, the additional satisfaction from each unit decreases (correct)
  • Consumers will always choose the cheapest option available
  • The more expensive a good is, the more satisfaction it provides

What is the primary purpose of an indifference curve in consumer theory?

  • To indicate the total utility derived from consuming a single good
  • To illustrate the impact of advertising on consumer preferences
  • To show combinations of goods that provide equal levels of satisfaction (correct)
  • To demonstrate how prices affect consumer demand

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