in economic theory?","back":"To maximise utility (satisfaction) subject to a budget constraint.","points":1,"mcqOptions":[{"text":"To maximise utility (satisfaction) subject to a budget constraint.","correct":true,"explanation":"A rational consumer selects the affordable combination of goods and services that provides the greatest possible satisfaction, given their limited income and prevailing prices."},{"text":"To maximise expenditure (spending) subject to a utility constraint.","correct":false,"explanation":"This reverses the consumer’s objective and constraint. A rational consumer aims to maximise utility, while income and prices create the budget constraint limiting available choices."},{"text":"To maximise consumption (quantity) subject to a minimum price.","correct":false,"explanation":"Rational consumers do not necessarily seek the largest physical quantity, because goods provide different levels of satisfaction. They maximise utility subject to their budget constraint."},{"text":"To minimise utility (satisfaction) subject to a budget constraint.","correct":false,"explanation":"This incorrectly reverses the objective of rational choice. Economic theory assumes consumers use their limited budget to maximise, rather than minimise, the utility they receive."}]},{"id":"26ba47e4-121d-4272-ad8f-d01b20d619fc","cardType":"basic","front":"How do economists define Marginal Utility (MU)?","back":"The extra satisfaction gained from consuming one additional unit of a good or service.","points":1,"mcqOptions":[{"text":"The extra satisfaction gained from consuming one additional unit of a good or service.","correct":true,"explanation":"Marginal utility measures the change in total utility caused by consuming one more unit. It therefore captures the additional satisfaction obtained from that specific extra unit."},{"text":"The total satisfaction gained from consuming all available units of a good or service.","correct":false,"explanation":"This describes total utility rather than marginal utility. Marginal utility is the extra satisfaction gained from consuming one additional unit of the good or service."},{"text":"The average satisfaction gained from consuming each available unit of a good or service.","correct":false,"explanation":"This confuses marginal utility with an average calculated across units consumed. Marginal utility measures only the extra satisfaction generated by consuming one additional unit."},{"text":"The extra expenditure required for consuming one additional unit of a good or service.","correct":false,"explanation":"This describes an additional cost, not an additional benefit. Marginal utility is the extra satisfaction gained when a consumer consumes one more unit of a good or service."}]}]}],"examCountdown":{"examDate":"2027-05-10","paperLabel":"Paper 1"},"heading":"1.2.1 Consumer behaviour","title":"Consumer behaviour Flashcards","topicSidebar":"$L40"}]}],"topicId":"35c7208e-1f03-50aa-9c77-4d591ea9c2d1","walled":"$L41"}],"$L42"]

1.2.1 Consumer behaviour

1.2.1 Consumer behaviour Flashcards

1.2.1 Consumer behaviour

1.2.1 Consumer behaviour Flashcards