Ch.3 Consumer behaviour.pdf

Page 1 of 7 Department of Economics UNIVERSITY OF MELBOURNE ECON20002 Intermediate Microeconomics Practice Multiple Choice Questions Textbook: Chapter 3 Question 1 If a consumer prefers Apples to Bananas and prefers Bananas to Citrus Fruit, in order to satisfy assumptions about preferences she has to prefer: a) bananas to apples. b) citrus fruit to bananas. c) apples to citrus fruit. d) citrus fruit to apples. Question 2 The principle that More is better results in indifference curves: a) sloping downwards. b) not intersecting. c) reflecting greater preferences the further they are from the origin. d) all of the above. Question 3 Measuring y on the vertical axis and x on the horizontal axis, convexity of indifference curves implies that the MRS: a) is decreasing as x increases. b) is increasing as x increases. c) is constant as x increases. d) cannot be calculated for large levels of x. Page 2 of 7 Question 4 If two bundles are on the same indifference curve, then: a) the consumer derives the same level of utility from each. b) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. c) no comparison can be made between the two bundles since utility cannot really be measured. d) the MRS between the two bundles equals one. Question 5 If Freds marginal utility of pizza equals 10 and his marginal utility of salad equals 2, then: a) he would give up 5 pizzas to get the next salad. b) he would give up 5 salads to get the next pizza. c) he will eat five times as much pizza as salad. d) he will eat five times as much salad as pizza. Question 6 If Freds marginal rate of substitution (with pizza on horizontal axis) equals 5, then: a) he would give up 5 pizzas to get the next salad. b) he would give up 5 salads to get the next pizza. c) he will eat five times as much pizza as salad. d) he will