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1 Preferences and Indifference Curves Online Quiz Questions

Use this free practice quiz with 20 questions to review 1 Preferences and Indifference Curves, test your knowledge, and prepare for your next test or exam.

20 questions
01
Choose one
1 point

A consumer has bundles A and B. The consumer regards A as at least as good as B, but does not regard B as at least as good as A. What is the relationship between the bundles?

  1. A

    A is strictly preferred to B.

  2. B

    A and B are indifferent.

  3. C

    B is strictly preferred to A.

02
Choose one
1 point

A consumer ranks a fruit basket at least as highly as a snack box, and the snack box at least as highly as a sandwich. If the consumer's preferences are transitive, what must follow?

  1. A

    The sandwich must rank at least as highly as the fruit basket.

  2. B

    The fruit basket must rank at least as highly as the sandwich.

  3. C

    The fruit basket and sandwich must be indifferent.

03
Choose one
1 point

Which statement correctly describes possible indifference-curve shapes for two special cases?

  1. A

    Perfect substitutes have kinked curves, and perfect complements have straight curves.

  2. B

    Both perfect substitutes and perfect complements must have bowed curves.

  3. C

    Perfect substitutes can have straight curves, and perfect complements can have kinked curves.

04
Choose one
1 point

A consumer model includes pollution as one of its variables. How should the model treat the assumption that “more is better”?

  1. A

    The model need not assume that more pollution is preferred, because pollution is a bad rather than a desirable good.

  2. B

    Monotonicity requires consumers to prefer more of every variable, including pollution.

  3. C

    The presence of pollution makes preferences incomplete.

05
Choose one
1 point

Under complete and transitive preferences, what does it imply if two distinct indifference curves appear to cross?

  1. A

    A crossing is required whenever preferences are complete.

  2. B

    A crossing would conflict with the rankings implied by complete and transitive preferences.

  3. C

    A crossing is possible only when both goods are desirable.

06
Choose all
1 point

Select all statements that correctly describe completeness of preferences.

  1. A

    For every pair of bundles, at least one weak-preference ranking holds.

  2. B

    Every pair of bundles must have a strict ranking in one direction.

  3. C

    Both weak-preference directions may hold, indicating indifference.

  4. D

    Completeness alone rules out every cycle in rankings.

07
Choose all
1 point

Select all statements that correctly describe the roles of continuity, convexity, and local nonsatiation.

  1. A

    Continuity rules out abrupt ranking reversals from small changes in bundles.

  2. B

    Convexity means averages of equally preferred bundles are at least as good as the bundles averaged.

  3. C

    Local nonsatiation means that a nearby bundle preferred to a given bundle can always be found.

  4. D

    Completeness and transitivity alone guarantee all three of these properties.

08
True or false
1 point

True or false: Completeness and transitivity alone guarantee convex preferences.

  1. A

    True

  2. B

    False

09
True or false
1 point

True or false: A preference relation ranks consumption bundles by whether they are affordable.

  1. A

    True

  2. B

    False

10
Written response
1 point

What preference assumption says that small changes in bundles do not produce abrupt reversals in ranking?

11
Written response
1 point

What assumption says that, however close a bundle is, there is always another nearby bundle the consumer prefers?

12
Fill in the blank
1 point

In consumer theory, a bundle is a .

13
Fill in the blank
1 point

A collection of indifference curves is called an .

14
Open ended
1 point

Explain why the familiar indifference-curve picture is often downward-sloping and bowed toward the origin, and identify the assumptions behind those features.

15
Choose one
1 point

A consumer has the preference relation A⪰BA \succeq B. What can be concluded from this information alone?

  1. A

    Bundle A is affordable and bundle B is not.

  2. B

    Bundle A ranks at least as highly as bundle B, but affordability cannot be inferred.

  3. C

    Bundle A is strictly preferred to bundle B.

  4. D

    The consumer is indifferent between the two bundles.

16
Choose one
1 point

Which condition expresses completeness of preferences for two bundles AA and BB?

  1. A

    The consumer must strictly prefer A to B.

  2. B

    The consumer must be indifferent between A and B.

  3. C

    The consumer can rank A at least as highly as B, or B at least as highly as A, or both.

  4. D

    The consumer must be able to afford both bundles.

17
Written response
1 point

What is the name for the set of bundles a consumer regards as equally good?

18
Choose one
1 point

A consumer ranks a fruit basket at least as highly as a snack box, and the snack box at least as highly as a sandwich. If preferences are transitive, what must follow?

  1. A

    The fruit basket must rank at least as highly as the sandwich.

  2. B

    The snack box must be strictly preferred to both other options.

  3. C

    The consumer must be indifferent between the fruit basket and the sandwich.

  4. D

    No conclusion about the fruit basket and sandwich is possible.

19
Written response
1 point

Which preference assumption says that however close a bundle is, there is always another nearby bundle the consumer prefers?

20
True or false
1 point

True or false: Completeness means any two bundles can be compared, while transitivity requires consistent rankings across comparisons.

  1. A

    True

  2. B

    False