Practice Optimal Choice Of The Consumer (2.3) - Theory of Consumer Behaviour

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6 sample questions

Question 1.
What does the budget set include?
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Think about the limits of what a consumer can buy.
Question 2.
Why is the budget line downward sloping?
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Consider the trade-offs involved.
3Question 3.
What is the budget set?
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Think about financial constraints and choices.
4Question 4.
True or False: The Marginal Rate of Substitution is always increasing.
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Consider consumer behavior with increasing amounts.
Question 5.
A consumer has a budget of $40 to spend on bananas ($2 each) and mangoes ($4 each). How many combinations of these two goods can the consumer buy, and how does the price change for each good affect the budget line?
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Focus on the equation representing the budget line.
Question 6.
Analyze a situation in which a sudden increase in income allows a consumer to buy two more units of both goods (bananas and mangoes). How will the budget line and indifference curves adjust?
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Think about how income affects choices.

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