JAMB Economics questions: Theory of consumer behaviour

15 questions with answers and explanations. Tap an option to check yourself.

1. Question 1· Theory of consumer behaviour· JAMB

   If a consumer's income increases while prices stay the same, the budget line

   • Abecomes steeper only
   • Bshifts inwards
   • Cshifts outwards parallel to the original
   • Ddoes not change

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   Explanation and discussion

2. Question 2· Theory of consumer behaviour· JAMB

   Consumer surplus is the difference between

   • Awhat a consumer is willing to pay and what he actually pays
   • Btotal and marginal utility
   • Cincome and expenditure
   • Dprice and cost of production

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3. Question 3· Theory of consumer behaviour· JAMB

   The marginal utilities of the first three oranges eaten are 10, 8 and 6 utils. Find the total utility of the three oranges.

   • A30 utils
   • B6 utils
   • C8 utils
   • D24 utils

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   Explanation and discussion

4. Question 4· Theory of consumer behaviour· JAMB

   A consumer buying two goods, A and B, is in equilibrium when

   • AMUa/Pa = MUb/Pb
   • BMUa = MUb
   • CPa = Pb
   • Dtotal utility is falling

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5. Question 5· Theory of consumer behaviour· JAMB

   An indifference curve shows

   • Acombinations of two goods that give a consumer equal satisfaction
   • Bthe prices of two goods
   • Cthe consumer's income
   • Dthe cost of production

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6. Question 6· Theory of consumer behaviour· JAMB

   The total utility from 3 units of a good is 30 utils and from 4 units is 36 utils. Find the marginal utility of the 4th unit.

   • A66 utils
   • B36 utils
   • C9 utils
   • D6 utils

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7. Question 7· Theory of consumer behaviour· JAMB

   The law of diminishing marginal utility states that as more units of a good are consumed,

   • Athe consumer's income rises
   • Btotal satisfaction falls immediately
   • Cthe price of the good falls
   • Dthe additional satisfaction from each extra unit falls

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8. Question 8· Theory of consumer behaviour· JAMB

   When marginal utility is negative, total utility

   • Ais at its maximum
   • Brises
   • Cfalls
   • Dis zero

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9. Question 9· Theory of consumer behaviour· JAMB

   The paradox of value (water and diamonds) is explained by

   • Atotal cost
   • Bmarginal utility
   • Csupply only
   • Dadvertising

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   Explanation and discussion

10. Question 10· Theory of consumer behaviour· JAMB

    An indifference curve is convex to the origin because of

    • Aperfect substitutes
    • Bincreasing marginal utility
    • Cconstant prices
    • Da diminishing marginal rate of substitution

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    Explanation and discussion

11. Question 11· Theory of consumer behaviour· JAMB

    A consumer is in equilibrium on an indifference map where

    • Athe budget line is tangent to the highest attainable indifference curve
    • Btwo indifference curves cross
    • Cincome is zero
    • Dthe budget line is vertical

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12. Question 12· Theory of consumer behaviour· JAMB

    A consumer spends all his income on X and Y. MUx = 20, Px = ₦4, MUy = 30 and Py = ₦6. The consumer is

    • Ain equilibrium
    • Bbuying too much X
    • Cbuying too much Y
    • Dnot maximising satisfaction

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13. Question 13· Theory of consumer behaviour· JAMB

    A budget line shows

    • Acombinations of goods a consumer can afford with given income and prices
    • Butility levels
    • Csupply
    • Dcosts

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    Explanation and discussion

14. Question 14· Theory of consumer behaviour· JAMB

    The budget (price) line shows

    • Athe cost of production
    • Bthe satisfaction from two goods
    • Cthe supply of goods
    • Dcombinations of two goods a consumer can buy with a given income

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15. Question 15· Theory of consumer behaviour· JAMB

    The law of diminishing marginal utility states that

    • Amarginal utility always rises
    • Btotal utility always falls
    • Ceach additional unit consumed gives less extra satisfaction
    • Dutility is constant

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    Explanation and discussion