What are the underlying assumptions of rational economic decision making?

Rational decision making, demand and the elasticities of demand

Quiz
•
Other
•
11th Grade
•
Hard
Mrs Snow
FREE Resource
11 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Consumers aim to maximise utility and firms aim to maximise profits.
Consumers always act irrationally and firms seek to minimise profits.
Consumers ignore prices and firms ignore costs.
Consumers and firms make decisions randomly without any objectives.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the distinction between movements along a demand curve and shifts of a demand curve?
Movements along a demand curve are caused by changes in price, while shifts of a demand curve are caused by changes in other factors (conditions of demand).
Movements along a demand curve are caused by changes in income, while shifts are caused by changes in price.
Movements along a demand curve are caused by advertising, while shifts are caused by changes in the quantity demanded.
Movements along a demand curve are caused by changes in supply, while shifts are caused by changes in consumer preferences.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Name one factor that may cause a shift in the demand curve (the conditions of demand).
Income, tastes and preferences, prices of related goods, expectations, number of buyers.
The color of the product packaging.
The day of the week the product is sold.
The alphabetical order of the product name.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the concept of diminishing marginal utility and how does it influence the shape of the demand curve?
Diminishing marginal utility means that as a person consumes more of a good, the additional satisfaction from each extra unit decreases, leading to a downward sloping demand curve.
Diminishing marginal utility means that as a person consumes more of a good, the total satisfaction from each extra unit increases, leading to an upward sloping demand curve.
Diminishing marginal utility means that as a person consumes more of a good, the additional satisfaction from each extra unit remains constant, leading to a horizontal demand curve.
Diminishing marginal utility means that as a person consumes more of a good, the additional satisfaction from each extra unit increases, leading to a vertical demand curve.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is price elasticity of demand?
Price elasticity of demand measures how much the quantity demanded of a good responds to a change in its price.
Price elasticity of demand measures the change in supply due to a change in consumer income.
Price elasticity of demand measures the total revenue generated from sales of a product.
Price elasticity of demand measures how much the cost of production changes with output.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is NOT a type of price elasticity of demand?
Unitary elastic
Perfectly elastic
Perfectly inelastic
Marginally elastic
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is income elasticity of demand?
Income elasticity of demand measures how much the quantity demanded of a good responds to a change in consumers' income.
Income elasticity of demand measures the change in supply due to a change in price.
Income elasticity of demand measures the responsiveness of price to changes in demand.
Income elasticity of demand measures the effect of advertising on demand.
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