BM1704

eLMS REVIEW: CONSUMER BEHAVIOR

I. TRUE OR FALSE. (10 items x 2 points)

1. In consumption theory, both borrowing and saving is considered a normal part

of consumer behavior.

2. Transitivity in consumer choice means that consumers know how much utility
each bundle of goods can give them.

3. Indifference curves are bowed towards the origin because people prefer to have
a variety of goods than a lot of just one thing.

4. The marginal rate of substitution diminishes along an indifference curve.

5. A budget line's slope shows the total price of the bundle of goods.

6. Consumers prefer gifts in-kind rather than gift certificates.

7. Individuals must sacrifice more working hours if they want more income.

8. Customers would always want to have more of a good.

9. When analyzing consumer behavior, only a seller is expected to know

information about the product.

10. Consumption bundles are chosen by the consumer.

II. ESSAY (1 item x 10 points)

1. How does the budget constraint affect consumer choices?

05 eLMS Review 1 *Property of STI

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