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Questions and Answers
What is the main focus of consumer theory?
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?
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?
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
