Question 1

Which of the following best describes the three components of the buyer's problem in microeconomics?

Accepted Answer

Tastes and preferences, prices, and your budget

Question 2

Why does the demand curve typically have a negative slope?

Accepted Answer

Because as price increases, quantity demanded decreases due to the law of demand

Question 3

Given the budget constraint $50j + 25s = 300$, what does the slope of the budget line represent?

Accepted Answer

The opportunity cost of one good in terms of the other

Question 4

If jeans cost $50 and sweaters cost $25, and you have $300 to spend, what is the maximum number of jeans you can buy if you buy no sweaters?

Accepted Answer

$6$

Question 5

What is the opportunity cost of buying one more pair of jeans, in terms of sweaters forgone?

Accepted Answer

$2$ sweaters$

Question 6

Suppose you buy 4 pairs of jeans and 8 sweaters with your $300 budget. If you want to buy one more pair of jeans, how many sweaters must you give up?

Accepted Answer

$2$ sweaters$

Question 7

If the price of sweaters increases from $25 to $50, what happens to the budget line?

Accepted Answer

It pivots inward, reducing the maximum number of sweaters you can buy

Question 8

Which of the following statements about consumer surplus is correct?

Accepted Answer

Consumer surplus is the difference between what a buyer is willing to pay and what they actually pay

Question 9

If you have $300 to spend, jeans cost $50, and sweaters cost $25, what is the equation for your budget constraint?

Accepted Answer

$50j + 25s = 300$

Question 10

If you decide to buy only sweaters with your $300 budget and each sweater costs $25, how many sweaters can you buy?

Accepted Answer

$12$

Question 11

What does the concept of 'biggest bang for your buck' refer to in consumer theory?

Accepted Answer

Maximizing utility per dollar spent

Question 12

If the opportunity cost of sweaters is $\frac{1}{2}$ jeans, what does this mean?

Accepted Answer

You must give up $0.5$ jeans to buy one more sweater

Question 13

Which assumption about prices is made in the buyer's problem?

Accepted Answer

Prices are fixed and there is no negotiation

Question 14

Why do we assume that consumers only purchase whole units in the budget set?

Accepted Answer

Because goods are typically indivisible in real-world purchases

Question 15

If the budget constraint is $50j + 25s = 300$, what is the intercept of the budget line on the jeans axis (when $s=0$)?

Accepted Answer

$j = 6$

Question 16

If the budget constraint is $50j + 25s = 300$, what is the intercept of the budget line on the sweaters axis (when $j=0$)?

Accepted Answer

$s = 12$

Question 17

Which of the following is NOT an assumption made in the buyer's problem?

Accepted Answer

Consumers can borrow or save money

Question 18

If you move from buying 2 jeans and 8 sweaters to 4 jeans and 4 sweaters, what is the opportunity cost of the additional 2 jeans?

Accepted Answer

$4$ sweaters$

Question 19

Why is the budget line downward sloping?

Accepted Answer

Because buying more of one good requires buying less of the other due to limited budget

Question 20

If the budget constraint is $50j + 25s = 300$, what is the equation for $s$ in terms of $j$?

Accepted Answer

$s = 12 - 2j$

Consumer Behaviour and the Buyer's Problem in Microeconomics

Study Guide - Practice Questions