Practice Indifference Curve (2.1.2.1) - Theory of Consumer Behaviour

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6 sample questions

Question 1.
What does an indifference curve represent?
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Think about consumer choices.
Question 2.
Explain what MRS means.
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How does increasing one good affect the other?
3Question 3.
What does the downward slope of an indifference curve indicate?
- Increased satisfaction
- Trade-offs between goods
- Two goods are bad
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Think about what happens to one good when more of the other is gained.
4Question 4.
The marginal rate of substitution is always diminishing.
- True
- False
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Consider how satisfaction affects choices.
Question 5.
A consumer faces two indifference curves representing different levels of utility. Explain the trade-off they would face when moving from one curve to another.
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Consider ratios of goods—what are they trading?
Question 6.
Given the MRS of bananas for mangoes is increasing, detail how this consumer would respond to a price increase of bananas assuming prices are held constant for mangoes.
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Link how price changes alter consumption choices.

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