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Questions and Answers
In consumer theory, what does the law of demand state?
In consumer theory, what does the law of demand state?
- As the price of a good decreases, the quantity demanded decreases, all else being equal.
- As the price of a good increases, the quantity demanded increases, all else being equal.
- As the price of a good increases, the quantity demanded decreases, all else being equal. (correct)
- As the price of a good decreases, the quantity demanded increases, all else being equal.
What is the primary focus of consumer theory?
What is the primary focus of consumer theory?
- The study of how consumers allocate their income to maximize utility. (correct)
- The study of how government policies impact consumer behavior.
- The study of how consumer preferences are formed.
- The study of how producers allocate their resources to maximize profit.
What does the concept of 'marginal utility' refer to in consumer theory?
What does the concept of 'marginal utility' refer to in consumer theory?
- The satisfaction gained from consuming the first unit of a good or service.
- The total satisfaction gained from consuming a good or service.
- The additional satisfaction gained from consuming one more unit of a good or service. (correct)
- The average satisfaction gained from consuming a good or service.
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