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Consumer Decision-Making: Utility, Budgets, and Choice Online Quiz Questions

Use this free practice quiz with 30 questions to review Consumer Decision-Making: Utility, Budgets, and Choice, test your knowledge, and prepare for your next test or exam.

30 questions
01
True or false
1 point

True or false: In economics, utility is subjective, so two consumers may receive different satisfaction from consuming the same item.

  1. A

    True

  2. B

    False

02
Choose one
1 point

Which statement best defines a consumer’s budget set?

  1. A

    Only combinations that use exactly all available income

  2. B

    All combinations that cost no more than the consumer’s income

  3. C

    Only combinations containing positive quantities of both goods

  4. D

    The combination that gives the consumer the greatest utility

03
True or false
1 point

True or false: If a consumer’s income increases while both prices remain unchanged, the budget line shifts outward in a parallel manner.

  1. A

    True

  2. B

    False

04
Written response
1 point

A consumer has $90 of income and good X costs $10 per unit. What is the maximum quantity of X the consumer can buy?

05
Fill in the blank
1 point

The additional satisfaction received from consuming one more unit of a good is called .

06
Choose one
1 point

A student has a fixed budget. Books cost $15 each and meals cost $6 each. What is the opportunity cost of purchasing one additional book, measured in meals given up?

  1. A

    0.4 meals

  2. B

    1.5 meals

  3. C

    2.5 meals

  4. D

    9 meals

07
Choose all
1 point

Select all effects that generally occur when the price of good X decreases while income and the price of good Y remain constant.

  1. A

    The good becomes cheaper relative to substitutes.

  2. B

    The consumer’s real purchasing power increases.

  3. C

    The budget line shifts inward along the axis of the good whose price fell.

  4. D

    The budget line pivots outward along the axis of the good whose price fell.

  5. E

    Quantity demanded must increase by exactly the same percentage as the price decrease.

08
Written response
1 point

A consumer’s total utility from pizza is 30 utility units at one slice and 52 utility units at two slices. What is the marginal utility of the second slice?

09
Fill in the blank
1 point

When a student’s income increases, the student buys more fresh meals and fewer instant noodles. Fresh meals are a , while instant noodles are an .

10
Choose one
1 point

Which rule best describes consumer equilibrium for an interior choice between two goods?

  1. A

    Choose the good with the highest total utility, regardless of price.

  2. B

    Allocate spending until marginal utility per dollar is equal across goods, when an interior solution is possible.

  3. C

    Buy equal physical quantities of each good.

  4. D

    Spend all income on the good with the highest price.

11
Choose all
1 point

A student paid $20 for a concert ticket but becomes sick before the concert. Select all statements that correctly apply marginal analysis and the sunk-cost principle.

  1. A

    The $20 ticket payment should be excluded from the current comparison because it cannot be recovered.

  2. B

    The student should attend solely because otherwise the $20 payment would be wasted.

  3. C

    The student should compare the benefit of attending with the opportunity cost of spending the evening elsewhere.

  4. D

    A current decision should be based on marginal benefits and marginal costs that still can change.

12
Open ended
1 point

Explain how a decrease in the price of one good affects a consumer’s choice. Your answer should distinguish the substitution effect from the income effect and describe what happens to the budget constraint.

13
Choose one
1 point

Income is $48, good X costs $8, and good Y costs $6. Which bundle is unaffordable?

  1. A

    (2, 3), because it costs $34

  2. B

    (4, 2), because it costs $44

  3. C

    (5, 3), because it costs $58

  4. D

    (6, 0), because it costs $48

14
True or false
1 point

True or false: Diminishing marginal utility means that total utility must decrease whenever a consumer consumes more units of a good.

  1. A

    True

  2. B

    False

15
True or false
1 point

True or false: In economics, utility is subjective, so two consumers may receive different amounts of satisfaction from the same good.

  1. A

    True

  2. B

    False

16
Choose one
1 point

Which statement best defines a consumer's budget set?

  1. A

    Only combinations that use exactly all available income

  2. B

    All combinations that cost no more than the consumer's income

  3. C

    Only combinations that maximize total utility

  4. D

    Only combinations containing equal quantities of both goods

17
Written response
1 point

A consumer's total utility from coffee is 35 utility units at 2 cups and 45 utility units at 3 cups. What is the marginal utility of the third cup?

18
True or false
1 point

True or false: If income increases while the prices of both goods remain constant, the budget line shifts outward in parallel and its slope does not change.

  1. A

    True

  2. B

    False

19
Choose one
1 point

A consumer has income of $90. Good X costs $10 per unit and good Y costs $15 per unit. What is the X-intercept of the budget line?

  1. A

    6 units

  2. B

    8 units

  3. C

    9 units

  4. D

    15 units

20
Written response
1 point

Books cost $15 each and meals cost $6 each. What is the opportunity cost of one additional book, measured in meals?

21
Choose all
1 point

Select all effects that can result when the price of good X falls while income and the price of good Y remain constant.

  1. A

    The good becomes cheaper relative to substitute goods.

  2. B

    The consumer's real purchasing power increases.

  3. C

    The consumer's real purchasing power decreases.

  4. D

    The budget line pivots outward along the axis of the good whose price fell.

22
Written response
1 point

A student buys fewer instant noodles when the student's income rises, holding other factors constant. What is the economic classification of instant noodles for this student?

23
Fill in the blank
1 point

Complete the statements: is the total satisfaction from a given quantity consumed, while is the additional satisfaction from consuming one more unit.

24
Choose one
1 point

A snack costs $3 and provides 24 units of marginal utility. A streaming rental costs $2 and provides 14 units of marginal utility. Which purchase provides the greater marginal utility per dollar?

  1. A

    Purchase the first snack

  2. B

    Purchase the first streaming rental

  3. C

    The options provide equal utility per dollar

  4. D

    Purchase neither because the prices are different

25
Written response
1 point

A consumer has income of $48; good X costs $8 and good Y costs $6. With X on the horizontal axis and Y on the vertical axis, what is the slope of the budget line?

26
Choose one
1 point

Which statement best describes a consumer's budget set?

  1. A

    A bundle costing more than the consumer's income

  2. B

    A bundle costing less than or equal to the consumer's income

  3. C

    Only bundles that spend every dollar of income

  4. D

    Only bundles containing equal quantities of both goods

27
Choose one
1 point

A consumer's income increases while the prices of two goods remain constant. What happens to the consumer's budget line?

  1. A

    It pivots inward because both goods become more expensive

  2. B

    It pivots outward around the intercept of one good

  3. C

    It shifts outward in parallel while keeping the same slope

  4. D

    It remains unchanged because prices did not change

28
Choose one
1 point

Income and the price of good Y remain constant, but the price of good X falls. How does the budget line change when X is on the horizontal axis and Y is on the vertical axis?

  1. A

    The line pivots outward along the X-axis

  2. B

    The line shifts outward in parallel

  3. C

    The line pivots inward along the Y-axis

  4. D

    The line does not change

29
Choose one
1 point

A consumer's total utility from pizza is 0, 30, 52, 68, and 78 for 0 through 4 slices. Which conclusion follows from these values?

  1. A

    Total utility must decrease after the first unit

  2. B

    Each additional slice provides the same utility

  3. C

    Marginal utility is found by dividing total utility by the number of slices

  4. D

    The successive marginal utilities are 30, 22, 16, and 10

30
Choose one
1 point

The price of coffee falls while the price of tea stays the same. Which statement correctly describes one effect of this change?

  1. A

    Only the income effect occurs because money income is unchanged

  2. B

    The substitution effect encourages coffee consumption because coffee is relatively cheaper

  3. C

    The substitution effect necessarily reduces coffee consumption

  4. D

    A price decrease affects neither relative prices nor purchasing power