top of page
Untitled design(5).png

Economics multiple choice questions

A level

Behavioral economics

Multiple Choice Questions and Answers

A consumer seeks to maximise his utility. Up to what point should he continue to consume each good?
A until the marginal utility per dollar from each good is the same
B until the marginal utility from each good is the same
C until the marginal utility from each good reaches a maximum
D until the marginal utility from 'each good is zero
[J11/P3/Q1]


➡Answer A

Consumer can attain maximum satisfaction from his expenditure if he purchases the goods up to the point where utility from the last money unit ($) spent on each good becomes equal i.e.

Mua/Pa = Mub/ Pb ... Mue/Pe














For the purposes of measuring the income effect of a change in the price of a good, what is not held constant?
A consumer preferences
B relative prices
C the consumer’s money income
D the consumer’s real income


➡Answer D
Income effect of a price change is measured in terms of a change in real income.












A consumer who aims to maximise his utility will arrange his consumption so that

A the total utility obtained from each commodity is the same.
B the total utility per $ spent on each commodity is the same.
C the same utility is obtained from the last unit of each commodity.
D the same utility is obtained from the last unit of expenditure on each commodity.

[N12/P3/Q2]

➡Answer D

By definition














For the purposes of measuring the income effect of a change in the price of a good, what is not held constant?
A consumer preferences
B relative prices
C the consumer’s money income
D the consumer’s real income
[J15/P3/Q3]

➡Answer D

A change in price causes a change in real income assuming everything else is constant











When the price of a good falls the effect on the quantity demanded is the result of an income effect and a substitution effect. Which statement about these effects is correct?

A For inferior goods the income effect and the substitution effect work in the same direction.
B For inferior, but not Giffen, goods the income effect outweighs the substitution effect.
C For normal goods the income effect and substitution effect work in the same direction.
D For normal goods the income effect outweighs the substitution effect.

[J17/P3/Q5]

➡Answer C
For an inferior good substitution effect outweighs income effect thus all other options are incorrect

Subscribe to the Economics Study Pack and get access to
Economics Multiple Choice Workbook

Practice hundreds of MCQ questions, clasified topic by topic.

 

WORKBOOK CONTENTS:

  • Cambridge past paper questions classified by topic.

  • 120 A level (9706)  Questions

  • 145 AS level (9706) Questions

  • 135 O level (2281) Questions

  • Answers EXPLAINED

Economics Study Pack
bottom of page