Economics: Consumer Decision Making

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What occurs when people have inaccurate, incomplete, uncertain, or misunderstood data, leading to potentially 'wrong' choices?

Asymmetric information

Information failure (correct)

Moral hazard

Principal-agent problem

What is the term for the situation where buyers and sellers have different amounts of information?

Information gap

Asymmetric information (correct)

Symmetric information

Market failure

What is the problem that occurs when being insured makes individuals more careless?

Moral hazard (correct)

Principal-agent problem

Adverse selection

Information failure

What is the term for the situation where the goals of the principals are different from those of the agents?

Principal-agent problem Signup and view all the answers

What type of information is necessary for markets to work efficiently?

Symmetric information Signup and view all the answers

What is the consequence of information failure in a market?

Misallocation of scarce resources Signup and view all the answers

What is the term for when one party in a transaction has more information than the other?

Information Asymmetry Signup and view all the answers

What is the term for the problem that arises when the agent's goals are not aligned with the principal's goals?

Principal-Agent Problem Signup and view all the answers

What is the term for the situation where there is incomplete or asymmetric information in a market?

Information Failure Signup and view all the answers

What is an example of a government policy to address information failure?

All of the above Signup and view all the answers

What is the purpose of hard-hitting anti-speeding advertising campaigns?

To raise awareness of the risks of drink-driving Signup and view all the answers

What is the purpose of consumer protection laws?

To address information failure in the market Signup and view all the answers

What would cause a contraction of the Production Possibility Frontier (PPF)?

A decrease in the quantity of the factors of production Signup and view all the answers

What assumption of rational consumer behaviour states that consumers have fixed and consistent preferences?

Consumers make all choices independently Signup and view all the answers

What is the law that states that as a consumer buys and consumes more units of a good, the extra satisfaction gained diminishes?

Law of Diminishing Marginal Utility Signup and view all the answers

What is the term for the total satisfaction a consumer gets from purchasing units of a good?

Total utility Signup and view all the answers

What is the result of a rational consumer aiming to maximise their total utility?

They will make optimal choices given their preferences Signup and view all the answers

What is assumed in rational consumer behaviour about the information consumers have?

Consumers have full information Signup and view all the answers

Economics: Consumer Decision Making

Podcast Beta

Questions and Answers

What occurs when people have inaccurate, incomplete, uncertain, or misunderstood data, leading to potentially 'wrong' choices?

What is the term for the situation where buyers and sellers have different amounts of information?

What is the problem that occurs when being insured makes individuals more careless?

What is the term for the situation where the goals of the principals are different from those of the agents?

What type of information is necessary for markets to work efficiently?

What is the consequence of information failure in a market?

What is the term for when one party in a transaction has more information than the other?

What is the term for the problem that arises when the agent's goals are not aligned with the principal's goals?

What is the term for the situation where there is incomplete or asymmetric information in a market?

What is an example of a government policy to address information failure?

What is the purpose of hard-hitting anti-speeding advertising campaigns?

What is the purpose of consumer protection laws?

What would cause a contraction of the Production Possibility Frontier (PPF)?

What assumption of rational consumer behaviour states that consumers have fixed and consistent preferences?

What is the law that states that as a consumer buys and consumes more units of a good, the extra satisfaction gained diminishes?

What is the term for the total satisfaction a consumer gets from purchasing units of a good?

What is the result of a rational consumer aiming to maximise their total utility?

What is assumed in rational consumer behaviour about the information consumers have?

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Economics: Consumer Decision Making

Podcast Beta

Questions and Answers

What occurs when people have inaccurate, incomplete, uncertain, or misunderstood data, leading to potentially 'wrong' choices?

What is the term for the situation where buyers and sellers have different amounts of information?

What is the problem that occurs when being insured makes individuals more careless?

What is the term for the situation where the goals of the principals are different from those of the agents?

What type of information is necessary for markets to work efficiently?

What is the consequence of information failure in a market?

What is the term for when one party in a transaction has more information than the other?

What is the term for the problem that arises when the agent's goals are not aligned with the principal's goals?

What is the term for the situation where there is incomplete or asymmetric information in a market?

What is an example of a government policy to address information failure?

What is the purpose of hard-hitting anti-speeding advertising campaigns?

What is the purpose of consumer protection laws?

What would cause a contraction of the Production Possibility Frontier (PPF)?

What assumption of rational consumer behaviour states that consumers have fixed and consistent preferences?

What is the law that states that as a consumer buys and consumes more units of a good, the extra satisfaction gained diminishes?

What is the term for the total satisfaction a consumer gets from purchasing units of a good?

What is the result of a rational consumer aiming to maximise their total utility?

What is assumed in rational consumer behaviour about the information consumers have?

More Quizzes Like This

Class 12 Microeconomics Quiz: Consumer and Producer Interactions

Microeconomics: Consumer Behavior &amp; Equilibrium Quiz

Cardinal Utility Analysis Quiz and Flashcards: Understanding Consumer...

Microeconomics Theory Quiz: Consumer Behavior

Microeconomics: Consumer Behavior & Equilibrium Quiz