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- Consumer Theory vs. Real Consumerseconomics-mcqs › consumer-theory-vs-real-consumers
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
Which statement is incorrect about the result of a consumer's optimization process?
Multiple choice question for Consumer Theory vs. Real Consumers. Select an option, then review the explanation below.
Explanation
In consumer optimization, the marginal utility per dollar spent is balanced across goods (A), the marginal rate of substitution equals the price ratio (B), the indifference curve is tangent to the budget constraint (C), and the consumer reaches the highest attainable indifference curve within their budget (D). However, the consumer is not indifferent between all points on the budget constraint (E); only the tangency point represents the optimal choice.
More Consumer Theory vs. Real Consumers MCQs
Practice related questions from the same subject.
- 1.Assuming that consumption during youth and old age are both normal goods, how does a rise in the interest rate affect the amount saved?
- 2.What happens to the budget line if both income and prices double simultaneously?
- 3.Based on Exhibit 4, assume a consumer has €100 to spend and must decide between purchasing socks or belts. How would you classify a pair of socks in this scenario?
- 4.Refer to Exhibit 4. Assume a consumer is deciding between purchasing socks and belts, with an income of €100. If the price of socks decreases from €5 to €2 per pair, which movement illustrates the substitution effect?
- 5.When a rise in a consumer's income leads to a reduction in the amount of a product they buy, how is this product classified?