Microeconomics: Consumer Equilibrium
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Questions and Answers

What does the slope of the indifference curve represent?

  • Marginal Rate of Substitution (MRS) (correct)
  • Budget constraint
  • Marginal utility
  • Rate of price change

    • Which assumption suggests that consumers prefer more goods to fewer goods?

  • Rationality
  • Transitivity
  • Non-satiability (correct)
  • Completeness

    • What is meant by 'consumer equilibrium'?

  • The point where budget constraint equals the slope of an indifference curve
  • The point where marginal utility of one product divided by its price equals the marginal utility of another product divided by its price (correct)
  • The point where marginal cost equals marginal revenue
  • The point where total expenditure equals total income

    • What does the cardinal approach of consumer equilibrium emphasize?

    <p>Utility measured in quantitative terms</p> Signup and view all the answers

    What is typically illustrated by an indifference curve?

    <p>All possible combinations of two goods that provide the same level of satisfaction</p> Signup and view all the answers

    Which assumption ensures consistency in consumer choices?

    <p>Transitivity</p> Signup and view all the answers

    What is the slope of the indifference curve from point a to point b if 6 apples are given up for 1 orange?

    <p>-6</p> Signup and view all the answers

    What does the move from point b to c on the indifference curve depict if 4 apples are given up for 1 orange?

    <p>MRS of -4</p> Signup and view all the answers

    What does the term 'non-satiability' imply in consumer theory?

    <p>Consumers never reach a point of full satisfaction</p> Signup and view all the answers

    What does 'completeness' assumption guarantee about consumer preferences?

    <p>All combinations of goods can be ranked in order of preference</p> Signup and view all the answers

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