PART 1 SOCSCI 4.011.CONSUMER BEHAVIOR AND THEORY OF PRODUCTION
1. What is the primary focus of consumer behavior in microeconomics?
A. Preferences and Tastes
B. Total Utility
C. Advertising and Marketing
D. Income
Answer: A. Preferences and Tastes
Explanation: Consumer behavior in microeconomics primarily focuses on understanding the preferences and tastes of individuals, which influence their purchasing decisions.
2. According to the law of diminishing marginal utility, what happens as a person consumes more of a good?
A. Total Utility increases proportionally
B. Marginal Utility increases
C. Diminishing Marginal Utility occurs
D. Preferences become more pronounced
Answer: C. Diminishing Marginal Utility occurs
Explanation: The law of diminishing marginal utility states that as a person consumes more of a good, the additional satisfaction (marginal utility) derived from each additional unit decreases.
3. How does income influence consumer behavior?
A. It directly determines preferences
B. It has no impact on purchasing power
C. Higher income leads to increased spending
D. It decreases total utility
Answer: C. Higher income leads to increased spending
Explanation: Income affects consumer behavior by influencing purchasing power. Higher income typically leads to increased spending on goods and services.
4. What is the measure of the additional satisfaction from consuming one more unit of a good?
A. Total Utility
B. Marginal Cost
C. Marginal Utility
D. Advertising Effectiveness
Answer: C. Marginal Utility
Explanation: Marginal utility refers to the additional satisfaction or pleasure gained from consuming one more unit of a good or service.
5. Which factor significantly shapes individual preferences and tastes in consumer behavior?
A. Price of Goods and Services
B. Expectations
C. Income
D. Cultural and Social influences
Answer: D. Cultural and Social influences
Explanation: Cultural and social influences significantly shape individual preferences and tastes by affecting values, norms, and social interactions.
6. In utility maximization, what does a consumer aim to achieve regarding the last dollar spent on each good?
A. Maximize total utility
B. Equalize marginal utility to price ratio
C. Increase income
D. Minimize preferences
Answer: B. Equalize marginal utility to price ratio
Explanation: In utility maximization, a consumer seeks to equalize the marginal utility per dollar spent across all goods to achieve the maximum total utility.
7. How does the theory of utility explain the relationship between the satisfaction derived from consuming more units of a good?
A. Diminishing Marginal Utility
B. Increasing Marginal Utility
C. Constant Marginal Utility
D. Fluctuating Marginal Utility
Answer: A. Diminishing Marginal Utility
Explanation: The theory of utility suggests that as more units of a good are consumed, the additional satisfaction (marginal utility) decreases.
8. What role does advertising and marketing play in influencing consumer behavior?
A. Determines total utility
B. Shapes preferences and tastes
C. Establishes income levels
D. Regulates prices of goods
Answer: B. Shapes preferences and tastes
Explanation: Advertising and marketing play a significant role in shaping consumer preferences and tastes by influencing perceptions of products and their desirability.
9. Which economic concept suggests that consumers may buy more of a good when they expect prices to rise in the future?
A. Total Utility
B. Advertising Effectiveness
C. Expectations
D. Income Elasticity
Answer: C. Expectations
Explanation: Expectations about future prices influence current consumer behavior. If consumers anticipate prices will rise, they may buy more of a good now to avoid higher future costs.
10. According to the theory of utility, when does total utility increase at a decreasing rate?
A. When marginal utility is constant
B. When income is high
C. When the price of goods is low
D. Due to diminishing marginal utility
Answer: D. Due to diminishing marginal utility
Explanation: According to the theory of utility, as more of a good is consumed, total utility continues to increase, but at a decreasing rate, due to diminishing marginal utility.
YOU ARE READING
BSED Major in Social Studies 2
Non-FictionThese materials provide lecture notes, quizzes, and resources for BSED Social Studies students, covering key topics such as history, geography, economics, and political science. Marjhon Mascardo shares a personal note, reflecting on his college jour...
