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JAMB questions for "Economics :: The Theory of Consumer Behaviour"
Q1
One of the assumptions of ordinal utility theory is that
A
choice is not consistent
B
total utility is a function of price
C
utility can be ranked
D
satisfaction is measurable
E
Q2
The law of diminishing marginal utility explains why
A
the slope of a normal demand curve is negative
B
the slope of a normal demand curve is positive
C
an abnormal demand curve slopes upward
D
the consumption of inferior goods increases with income
E
Q3
If a consumer plans to spend 120k on four oranges but spent 80k, his consumer surplus is
A
N1.50
B
N1.00
C
N0.40
D
N2.00
E
Q4
A major assumption in cardinal utility theory is that
A
utility is measurable
B
utility is not measurable
C
total utility equals marginal utility
D
total utility is constant
E
Q5
As long as marginal utility is positive, total utility must be
A
negative
B
increasing
C
zero
D
decreasing
E
Q6
Diminishing marginal utility implies that
A
total utility decreases as consumption increases
B
marginal utility increases as consumption increases
C
marginal utility decreases as consumption increases
D
marginal utility decreases as consumption decreases
E
Q7
The excess benefit derived by from the purchase of good over the amount paid for them is referred to as consumer
A
rationality
B
surplus
C
sovereignty
D
credit
E
Q8
If the marginal propensity to consumer is 0.6 and consumption expenditure changes by N10million, the equilibrium level of income will change by
A
N15.0 million
B
N4.0 million
C
N2.5 million
D
25.0 million
E
Q9
At point P, the marginal rate of substitution is
A
unity
B
less than one
C
greater that one
D
zero
E
Q10
A movement from K to M will
A
leave the consumer's utility unchanged
B
increase the price of the commodity
C
increase the consumer's utility
D
decrease the consumer's utility
E
Q11
If the marginal utility of good X exceeds that of good Y, this implies that
A
a rational consumer will pay less of X
B
Y is an inferior good
C
X will be cheaper than Y
D
consuming more of X will increase tatol utility
E
Q12
A straight line indifference curve indicates that the two products are
A
perfect substitutes
B
close substitutes
C
normal goods
D
inferior goods
E
Q13
A buyer who haggles in the market is applying the principle of
A
choice
B
price mechanism
C
opportunity cost
D
utility maximization
E
Q14
When the marginal utility of a commodity is zero the total utility is
A
at its minimum
B
upward-sloping
C
downward-sloping
D
at its maximum
E
Q15
If the marginal utility of the last unit of commodity X at N2 is 16 and that of commodity Y at N4 is 24, the consumer will be at equilibrium when
A
the price-quantity ratios are equal
B
equal amounts of X and Y are consumed
C
less of Y and more of X are consumed
D
less of X and more of Y are consumed
E
Q16
One of the assumptions of ordinal utility in consumer behaviour is that
A
utility can only be ranked
B
marginal rise continuously
C
utility is measurable
D
consumers are irrational
E
Q17
In the diagram below, ST is the budget line while I, II and II represent indifference curves. A rational consumer will choose to continue at point
A
M
B
L
C
J
D
K
E
Q18
In the table above, the price of commodity y is N2 and that of x is N1 while the individual has an income of N12. Determine the combination of the two commodities the individual should consume to maximise his utility
A
6y and 4x
B
3y and 6x
C
5y and 5x
D
3y and 3x
E
Q19
Utility is the satisfaction derived from
A
demand
B
production
C
distribution
D
consumption
E
Q20
In a closed economy, the marginal propensity to consume is 0.6 and the average propensity to consume is 0.8. The value of the multiplier is
A
2.7
B
2.6
C
2.4
D
2.5
E
Q21
If goods P and Q are purchased by a consumer, a fall in the price of P with the price of unchanged will cause the budget line to
A
rotate outwards away from the origin
B
shift parallel inwards
C
rotate inwards away from the origin
D
shift parallel outwards
E
Q22
A consumer's scale of preference is an arrangement of his
A
scare resources in order of importance
B
needs in order of importance
C
sources of income and their importance
D
requirements and how to satisfy them
E
Q23
The diagram below shows the total utility curve. At the point M, marginal utility
A
increases
B
is unity
C
diminishes
D
is zero
E
Q24
At consumer equilibrium, the slope of the difference curve is
A
half the slope of the budget constraint line
B
equal to the slope of the budget constraint line
C
greater than the slope of the budget constraint line
D
less than the slope of the budget constraint line
E
Q25
A central argument of cardinal utility is that utility is
A
psychological
B
measurable
C
ranked
D
intangible
E
Q26
In the diagram beside, the consumer attains equilibrium at point
A
G
B
H
C
J
D
K
E
Q27
A utility maximizing household will allocate its expenditure so that
A
more naira is spent on commodities with the highest utility
B
less naira is spent on commodities with the lowest utility
C
the utility of the last naira spent on each commodity is equal
D
the amount spent on each commodity is equal
E
Q28

The shaded triangle in the diagram below is known as

A

excess supply

B

consumer surplus

C

excess consumption

D

producer surplus 

E
Q29
From the above, the total utility for the individual who consumes 3 units of commodity X is
A
50 utils
B
150 utils
C
230 utils
D
250 utils
E
Q30
Given: Investment = N100 million Consumption = N200 m + 0.75Y Y= C + 1 where, Y = Income, C = Consumption and I - Investment. What is the Income level to the nearest million?
A
N100 million
B
N300 million
C
N1,000 million
D
N1200 million
E
Q31
With a given level of money income, a consumer maximizes satisfaction from the consumption of goods and services when the
A
total utility derived from each good or service is increasing at an increasing rate
B
marginal utility derived from each good or service is increasing at the same rate
C
marginal utility derived per naira spent is the same for all the goods and services
D
total utility derived from all the goods and services is large
E
Q32
In the circular flow of income below, the direction of flow of payments for consumption purchases is shown by the arrow
A
K
B
L
C
M
D
N
E
Q33
If the marginary propensity to consume is 0.80 and the investment expenditure changes from N100 million to N140 million in a given economy, find the level of equilibrium in he given economy, using the formular K = 1/ 1 - MPC (K = Multiplier, MPC = Marginal Propensity to Consume)
A
N20 million
B
N40 million
C
N 80 million
D
N200 million
E
Q34
In the diagram below, the marginal propensity to consume (MPC) is equal to
A
RP/TP
B
TP/RP
C
RT/RP
D
RT/TP
E
Q35
The law of diminishing marginal utility indicates that if a consumer increases his consumption of a commodity continuously, his
A
total utility must fall
B
marginal utility must fall
C
marginal utility may rise even through his total utility is falling
D
marginal utility may fall even though his total utility may be rising
E
Q36
The Law of Diminishing Returns begins to operate when
A
total product begins to rise
B
total product begins to fall
C
marginal product begins to fall
D
marginal product begins to rise
E
Q37
If all goods were free, a rational consumer would consume
A
an infinite amount of each good
B
the amount where marginal utility becomes zero
C
the same as when and at where each good had a price
D
the amount where marginal utility is highest
E
Q38
If aggregate income is N500.00 and aggregate consumption is N 400.00, this means that the average propensity to consume is
A
0.20
B
0.80
C
1.25
D
2.00
E
Q39
In which of the diagrams above is the consumer surplus correctly shaded?
A
I
B
II
C
II
D
IV
E
Q40
Statistical information available in most West African countries suggests that
A
the marginal propensity to save is high
B
the marginal propensity to consume is high
C
the consumption pattern is negative
D
there exists perfect correlation between consumption and savings
E
Q41
Under normal circumstances the concept of consumer sovereignty implies that
A
the consumer and not the producer owns the means of production
B
the producer and not the consumer determines what is to be produced
C
the consumer and not the producer determines what is to be produced
D
both the consumer and the producer determines what is to be peoduced
E
Q42
What fundamentally determines how much a consumer spends in a producer's shop?
A
Individual's propensity to consume
B
Level of his taxation
C
Level of his income
D
individual's taste of fashion
E
Q43
A society which forgoes present consumption
A
is forced to do so because of excessive consumption within the country in the past
B
is devoting new resources to new capital formation
C
is merely devoting resources to the replacement of capital
D
expects to consume only that amount tomorrow which was forgone today
E
Q44
The table above illustrates the law of
A
diminishing marginal utility
B
diminishing marginal productivity
C
diminishing returns
D
increasing returns
E
increasing total utility
Q45
At every point on an indifference curve, the
A
total utility is decreasing
B
price of all goods are constant
C
consumer is satiated
D
level of utility is constant
E
level of utility is increasing
Q46
Demand for a commodity by a consumer is the quantity of the commodity that the consumer
A
demands at a given price at a point in time
B
demands at a given price
C
actually digests
D
produces, given its price
E
can store away during bad weather
Q47
When demand is elastic, it means that consumers
A
react more proportionately to price change
B
are not sensitive to price change
C
will stop buying when price increases
D
react less proportionately to price change
E
react equally to price change
Q48
The equilibrium market price id determined at a point where
A
consumer can buy all they desire
B
sellers can dispose of all their wares
C
the price is moderate
D
quantity consumers desire equals quantities sellers offer
E
sellers and buyers are not quarrelling
Q49

Utility of a commodity means

A

its usefulness 

B

power to satisfy a want

C

price of the commodity

D

satisfaction derived from the production of a commodity

E

its adaptability 

Q50
By utility we mean
A
usefulness
B
power of satisfying a want
C
beneficial
D
advantageous
E
consumable
Q51

In most cases, the marginal utility derived from a particular good

A

increase as additional units are consumed

B

increase at a decreasing rate as additional units are consumed

C

decrease at a constant rate as additional units are consumed

D

decrease as additional units are consumed

E

remain constant as additional units are consumed

Q52
As consumption of beer increases, its marginal utility to a drinker will
A
increase
B
remain constant
C
fluctuate
D
decrease
E
change proportionately
Q53
A rational consumer will adjust his spending pattern so that:
A
he buys only the item that gives him the most total satisfaction
B
the marginal utility he gets from the last unit of each item is the same
C
the marginal utility he gets from the last naira spent on each is the same
D
the total utility he gets from each item is the same
E
the total amount of money he spends on each item is the same