1If a consumer cannot make up his or her mind as to whether (s)he prefers a bundle of goods labelled A to a bundle labelled B even though (s)he knows what goods are in each bundle, which of the following assumptions as to consumer preferences fails to hold:

AComplete preferences

BMonotonic preferences

CConsistent preferences

DDiminishing marginal utility from consumption

2Which of the following is false about the rational choice (neoclassical) model of consumer behaviour?

AConsumers experience reduced pleasure from each successive unit consumed of a given product, therefore they prefer a balance of goods in their basket rather than a market basket dominated by one item. This leads to indifference curves that are convex to the origin.

BConsumers are never satiated. They always want more rather than less so indifference curves located further to the northeast on a graph are preferred over those closer to the origin.

CIf you prefer an apple to an orange and an orange to a banana, then we do not have enough information to infer that you would choose an apple over a banana.

DConsumers are able to differentiate between minutely small differences in market baskets in order to rank all possibilities as preferred or not preferred to each other.

3The slope of the indifference curve represents

AHow much satisfaction a consumer is getting from consuming both goods

BHow much of one good the consumer must give up is she wants to increase her consumption of another good

CThe minimum amount of one good that a consumer is willing to give up for a unit of the other good

DThe maximum amount of one good that a consumer is willing to give up for a unit of the other good

4 A convex map of indifference curves implies:

AThe more you have of a good the less you desire more of it

BThe more you have of a good the more you desire more of it

CPreferences are not consistent

DPreferences are not monotonic