Unit 6 Multiple Choice Questions (1-45)

1. Marginal utility refers to:

a) The total satisfaction a consumer gets from consuming a good.

b) The additional satisfaction a consumer gets from consuming one additional unit of a good.

c) The willingness of a consumer to pay for a good.

d) The number of units of a good a consumer consumes in a day.

2. The marginal rate of substitution (MRS) tells us:

a) How much a consumer values a good.

b) How much of one good a consumer is willing to give up to get more of another good.

c) The total amount a consumer spends on goods.

d) How much a consumer's income changes when the price of a good changes.

3. An indifference curve shows:

a) All the combinations of goods a consumer can afford.

b) All the combinations of goods that provide the consumer with the same level of satisfaction.

c) The combination of goods that provides the consumer with the most satisfaction.

d) The combination of goods that is most expensive for the consumer.

4. The slope of an indifference curve is typically:

a) Positive and increasing.

b) Positive and decreasing (convex).

c) Negative and increasing.

d) Negative and decreasing (concave).

5. Perfect substitutes are goods that:

a) Can completely replace each other in consumption.

b) Must be consumed together in a fixed proportion.

c) Have a high positive correlation in demand.

d) Have a high negative correlation in demand.

6. The indifference curve for perfect substitutes will be:

a) A straight line.

b) An L-shaped curve.

c) A circle.

d) A U-shaped curve.

7. Perfect complements are goods that:

a) Can completely replace each other in consumption.

b) Must be consumed together in a fixed proportion.

c) Have a high positive correlation in demand.

d) Have a high negative correlation in demand.

8. The indifference curve for perfect complements will be:

a) A straight line.

b) An L-shaped curve.

c) A circle.

d) A U-shaped curve.
9. The budget line shows:

a) All the combinations of goods a consumer can afford.

b) All the combinations of goods that provide the consumer with the same level of satisfaction.

c) The combination of goods that provides the consumer with the most satisfaction.

d) The combination of goods that is most expensive for the consumer.

10. The slope of the budget line is equal to the negative of the:

a) Price of good X.

b) Price of good Y.

c) Marginal utility of good X.

d) Price ratio of the two goods (Px/Py).

11. If the price of good X increases relative to the price of good Y, the budget line will:

a) Shift outwards.

b) Shift inwards, towards good X.

c) Shift inwards, towards good Y.

d) Not change.

12. An increase in consumer income will cause the budget line to:

a) Shift outwards.

b) Shift inwards.

c) Rotate clockwise.

d) Rotate counter-clockwise.

13. A decrease in consumer income will cause the budget line to:
 a) Shift outwards.

b) Shift inwards.

c) Rotate clockwise.

d) Rotate counter-clockwise.

14. At the point of tangency between the indifference curve and the budget line, the consumer is:

a) Maximizing their utility.

b) Minimizing their spending.

c) Consuming an unsustainable amount of goods.

d) Not consuming any goods.

15. If a consumer's income increases, they will likely move to a:

a) Higher indifference curve and a higher consumption level.

b) Higher indifference curve and the same consumption level.

c) Lower indifference curve and a higher consumption level.

d) Lower indifference curve and the same consumption level.

16. If the price of good X decreases relative to the price of good Y, the consumer will likely:

a) Consume more of good X and less of good Y.

b) Consume more of good Y and less of good X.

c) Maintain the same consumption ratio of X and Y, but buy more of both.

d) Consume the same amount of both goods.

17. If a consumer is indifferent between consuming bundles A and B, this implies:

 a) Bundle A provides more satisfaction than bundle B.

b) Bundle B provides more satisfaction than bundle A.

c) Both bundles provide the same level of satisfaction.

d) The consumer cannot afford either bundle.

18. A consumer with a fixed income faces a trade-off between consuming good X and good Y. This
trade-off is because:

a) The consumer prefers one good over the other.

b) The consumer's income is not enough to buy both goods in unlimited quantities.

c) The prices of both goods are constantly changing.

d) The consumer is indecisive about which good to buy.

19. An indifference curve that is further from the origin represents:

a) A lower level of satisfaction for the consumer.

b) A higher level of satisfaction for the consumer.

c) A lower budget for the consumer.

d) A higher budget for the consumer.

20. If a consumer experiences diminishing marginal utility for a good, it means:

a) The first unit of the good provides the most satisfaction.

b) The additional satisfaction from consuming each unit of the good remains constant.

c) The additional satisfaction from consuming each unit of the good decreases.
 d) The consumer's income is directly proportional to the amount of the good consumed.

21. The concept of opportunity cost, in consumer theory, refers to:

a) The monetary cost of purchasing a good.

b) The price of the good a consumer chooses to forgo when buying another good.

c) The total amount a consumer spends on all goods.

d) The time a consumer spends shopping for goods.

22. When the price of good X increases but the price of good Y remains the same, the consumer's
budget line will:

a) Remain unchanged.

b) Pivot inwards, towards good X.

c) Pivot inwards, towards good Y.

d) Shift outwards.

23. If a consumer is consuming a bundle of goods that lies below their budget line, it means:

a) They are maximizing their utility.

b) They can afford to consume more of at least one good.

c) They have spent all their income.

d) They are consuming an unsustainable amount.

24. The point of tangency between the indifference curve and the budget line represents the
consumer's:
 a) Maximum income level.

b) Optimal consumption bundle.

c) Minimum spending level.

d) Total utility derived from all goods.

25. When a consumer's income remains constant but the price of good X decreases, the budget line
will:

a) Remain unchanged.

b) Pivot inwards.

c) Pivot outwards, towards good X.

d) Pivot outwards, away from good X.

26. Indifference curves and the budget line are used in consumer theory to analyze:

a) How businesses set prices.

b) How governments allocate resources.

c) How consumers make decisions about consumption.

d) How the stock market fluctuates.

27. If a consumer has a strong preference for good X over good Y, their indifference curve will be:

a) A straight line with a positive slope.

b) A straight line with a negative slope.

c) A steeper curve, convex to the origin.

 d) A flatter curve, less convex to the origin.

28. Which of the following statements is NOT true about perfect substitutes?

a) Consumers can completely replace one good with the other.

b) The indifference curve for perfect substitutes is a straight line.

c) The marginal rate of substitution between perfect substitutes is constant.

d) The prices of perfect substitutes are always equal. (They can be different, but the marginal rate of
substitution will ensure you get the same satisfaction for your money)

29. Which of the following statements is NOT true about perfect complements?

a) Consumers must consume them together in a fixed proportion.

b) The indifference curve for perfect complements is an L-shaped curve.

c) The marginal rate of substitution between perfect complements is zero. (There is a fixed rate at
which you must consume them to get any satisfaction)

d) Consumers derive no satisfaction from consuming one perfect complement without the other.

30. In consumer theory, the concept of utility refers to:

a) The monetary value of a good.

b) The level of satisfaction a consumer derives from consuming a good or service.

c) The ease of obtaining a good or service.

d) The number of units of a good a consumer purchases.

31. An indifference map is:

 a) A single indifference curve representing all possible consumption choices.

b) A collection of indifference curves that show different levels of consumer satisfaction.

c) A graph showing the relationship between price and quantity demanded for a good.

d) A way to measure the total utility a consumer derives from all goods.

32. Compared to a lower indifference curve on an indifference map, a higher indifference curve
represents:

a) A lower level of satisfaction for the consumer.

b) A higher level of satisfaction for the consumer.

c) A lower budget constraint for the consumer.

d) A higher budget constraint for the consumer.

33. If a consumer experiences an increase in income and the prices of both goods remain constant, the
optimal consumption bundle will likely:

a) Move to a lower indifference curve and remain at the same point on the budget line.

b) Move to a higher indifference curve and remain at the same point on the budget line.

c) Move to a higher indifference curve and to a point on the budget line with more of both goods.

d) Move to a lower indifference curve and to a point on the budget line with less of both goods.

34. The law of diminishing marginal utility suggests that:

a) The first unit of a good always provides the most satisfaction.

b) As a consumer consumes more units of a good, the additional satisfaction from each unit
decreases.

c) Consumers are always willing to pay more for additional units of a good.

d) The marginal rate of substitution between two goods is constant.

35. When a consumer is experiencing diminishing marginal utility, this means:

 a) They should stop consuming the good altogether.

b) Their indifference curves will become steeper.

c) The price of the good must be very high.

d) The additional satisfaction they receive from consuming each extra unit of the good decreases.

36. The Millennium Development Goals (MDGs) were a set of goals established by the:

a) World Bank

b) International Monetary Fund (IMF)

c) United Nations (UN)

d) Group of Eight (G8)

37. Compared to the MDGs, the Sustainable Development Goals (SDGs) are:

a) Less ambitious and focus only on developing countries.

b) More specific and have targets for both developed and developing countries.

c) Primarily concerned with environmental sustainability.

d) Not as widely adopted by UN member states.

38. Agenda 2063 is a blueprint for sustainable development specifically for:

a) All developing countries.

b) All member states of the United Nations.

c) Africa

d) Countries in Latin America and the Caribbean.

39. A key lesson learned from implementing the MDGs that is applied to the SDGs is the importance of:
 a) Focusing solely on economic development.

b) Strengthening implementation capacity.

c) Reducing the number of goals to be more achievable.

d) Prioritizing social development over environmental concerns.

40. The 10-year Prosperity Plan of Ethiopia aims to achieve goals that are aligned with:

a) The goals of Agenda 2030 but not Agenda 2063.

b) The goals of Agenda 2063 but not Agenda 2030.

c) Both Agenda 2030 and Agenda 2063.

d) Neither Agenda 2030 nor Agenda 2063.

41. A challenge faced by Ethiopia in implementing the SDGs is:

a) A lack of clear national development priorities.

b) The goals being unrealistic and not ambitious enough.

c) Disagreement with the UN on how to achieve the goals.

d) Limited capacity to implement and execute national development policies.

42. The main focus of the Sustainable Development Goals (SDGs) is to achieve:

a) Rapid economic growth at any cost.

b) Poverty eradication and social inclusion alongside economic development.

c) Strict environmental regulations for all countries.

d) Political reforms and democratization in developing countries.

43. Agenda 2030 is a:

a) Binding international treaty requiring specific actions from member states.

 b) Shared blueprint for achieving peace, prosperity, and sustainability.

c) Primarily a financial aid program for developing countries.

d) Set of recommendations for best practices in international development.

44. Ethiopia has made significant progress on some of the MDGs. These goals likely focused on:

a) Reducing military spending and promoting peace.

b) Improving health, education, and reducing poverty.

c) Increasing international trade and foreign investment.

d) Establishing democratic institutions and human rights protections.

45. The concept of "Agenda 2063" suggests that African nations are striving for:

a) Increased dependence on foreign aid for development.

b) Greater integration and self-reliance on the continent.

c) A return to traditional ways of life and reduced focus on technology.

d) Primarily to address environmental concerns within Africa.