Question 1

Which of the following statements is correct?
A)The theory of consumer choice provides a more complete understanding of supply, just as the theory of the competitive firm provides a more complete understanding of demand.
B)The theory of consumer choice provides a more complete understanding of demand, just as the theory of the competitive firm provides a more complete understanding of supply.
C)Monetary theory provides a more complete understanding of demand, just as the theory of the competitive firm provides a more complete understanding of supply.
D)The theory of public choice provides a more complete understanding of supply, just as the theory of the competitive firm provides a more complete understanding of demand.

Accepted Answer

The theory of consumer choice helps us understand the behavior of individual buyers in the market and how they make decisions about purchasing goods and services, which is crucial in understanding demand. On the other hand, the theory of the competitive firm helps us understand the behavior of firms in the market and how they produce goods and services, which is crucial in understanding supply. Therefore, statement B is correct.

Question 2

The theory of consumer choice
A)underlies the concept of the demand for a particular good.
B)underlies the concept of the supply of a particular good.
C)ignores, for the sake of simplicity, the trade-offs that consumers face.
D)can be applied to many questions about household decisions, but it cannot be applied to questions concerning wages and labor supply.

Accepted Answer

The theory of consumer choice is the foundation for understanding the demand for a particular good. This theory helps us understand how consumers make choices based on their preferences and budget constraints, which ultimately determines the quantity of a good that consumers are willing and able to purchase at different prices.

Question 3

The theory of consumer choice most closely examines which of the following Ten Principles of Economics?
A)People face trade-offs.
B)Governments can sometimes improve market outcomes.
C)Trade can make everyone better off.
D)Markets are usually a good way to organize economic activity.

Accepted Answer

The answer of The theory of consumer choice most closely...

Question 4

When a consumer spends less time enjoying leisure and more time working, she has
A)lower income and therefore cannot afford more consumption.
B)lower income and therefore can afford more consumption.
C)higher income and therefore cannot afford more consumption.
D)higher income and therefore can afford more consumption.

Accepted Answer

When a consumer spends less time enjoying leisure and more time working, she earns more income, which allows her to afford more consumption.

Question 5

The theory of consumer choice is to demand as the theory of
A)public goods is to supply.
B)oligopoly is to supply.
C)the competitive firm is to supply.
D)comparative advantage is to supply.

Accepted Answer

The theory of consumer choice is concerned with how individuals make decisions about what goods and services to consume based on their preferences and budget constraints. Similarly, the theory of competitive firms is concerned with how firms make decisions about how much output to produce based on the market price and their production costs. Both theories are focused on analyzing the behavior of economic agents in response to market incentives. Thus, choice C is the best answer as it represents a comparable level of analysis and relevance to the theory of consumer choice.

Question 6

The theory of consumer choice illustrates the
A)importance of property rights in creating efficient markets.
B)ability of a single economic actor to have a substantial influence on market prices.
C)the trade-offs that people face in their role as purchasers.
D)All of the above are correct.

Accepted Answer

The answer of The theory of consumer choice illustrates the
A)importance...

Question 7

Which of the following statements is not​ true?
A)​When consumers purchase more of one good, they are giving up the ability to buy as much of other goods.
B)​When consumers choose to take more leisure time, they are giving up the ability to consume as much as before.
C)​Consumers face consumption tradeoffs because they have limited income.
D)​Consumers face consumption tradeoffs because they have limited preferences for goods.

Accepted Answer

Consumers face consumption tradeoffs because they have limited income and resources. Preferences for goods may vary but they do not limit consumption tradeoffs.

Question 8

The theory of consumer choice examines how
A)firms make profit-maximizing decisions.
B)consumers make utility-maximizing decisions.
C)wages are determined in competitive labor markets.
D)prices are determined in competitive goods markets.

Accepted Answer

The theory of consumer choice focuses on how consumers make decisions about which goods and services to purchase in order to maximize their utility (satisfaction). It does not directly address how firms make profit-maximizing decisions, how wages are determined, or how prices are determined.

Question 9

The theory of consumer choice provides the foundation for understanding the
A)structure of a firm.
B)profitability of a firm.
C)demand for a firm's product.
D)supply of a firm's product.

Accepted Answer

The theory of consumer choice explains how consumers make decisions about what goods and services to purchase based on their preferences and budget constraints. This, in turn, affects the demand for a firm's product. Understanding consumer choice is crucial for firms to determine what products to produce and how to market them to consumers. Options A, B, and D are not directly related to the theory of consumer choice.

Question 10

The theory of consumer choice examines
A)the determination of output in competitive markets.
B)the tradeoffs inherent in decisions made by consumers.
C)how consumers select inputs into manufacturing production processes.
D)the determination of prices in competitive markets.

Accepted Answer

The theory of consumer choice specifically deals with the tradeoffs that consumers have to make when choosing between different goods and services. It examines how consumers decide which combinations of goods to purchase based on their preferences and budget constraints. The other options listed are not related to the theory of consumer choice.

Quiz 21: The Theory of Consumer Choice

Which of the following statements is correct?

The theory of consumer choice

The theory of consumer choice most closely examines which of the following Ten Principles of Economics?

When a consumer spends less time enjoying leisure and more time working, she has

The theory of consumer choice is to demand as the theory of

The theory of consumer choice illustrates the

Which of the following statements is not true?

The theory of consumer choice examines how

The theory of consumer choice provides the foundation for understanding the

The theory of consumer choice examines