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Consumer Theory vs. Real Consumers MCQs

Consumer Theory vs. Real Consumers MCQs cover how economists model consumer choice with budget lines and preferences, and how real buying behaviour responds to changes in price and income. They help economics students and civil service candidates, and every question reveals its correct answer the moment you choose an option.

Question 01 Consumer Theory vs. Real Consumers

What is the limit on the consumption bundles a consumer can afford called?

Correct answer B. The budget constraint

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Question 02 Consumer Theory vs. Real Consumers

What shape are the indifference curves for perfect substitutes?

Correct answer D. Straight lines

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Question 03 Consumer Theory vs. Real Consumers

A consumer chooses between sandwiches and pizza, with pizza on the horizontal axis and sandwiches on the vertical axis. If a pizza costs Rs10 and a sandwich costs Rs5, what is the slope of the budget constraint?

Correct answer B. 2

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Question 04 Consumer Theory vs. Real Consumers

Which statement does NOT describe a standard property of indifference curves?

Correct answer D. Indifference curves are bowed outward

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Question 05 Consumer Theory vs. Real Consumers

Which of the following holds at a consumer’s optimum consumption bundle?

Correct answer E. All of these answers are true

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Question 06 Consumer Theory vs. Real Consumers

If a consumer buys more of a good when his income rises, what kind of good is it?

Correct answer A. A normal good

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Question 07 Consumer Theory vs. Real Consumers

What is the change in consumption called when a price change moves the consumer along a given indifference curve?

Correct answer B. Substitution effect

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Question 08 Consumer Theory vs. Real Consumers

If leisure is a normal good, what effect will a rise in the wage have?

Correct answer B. It will increase the amount of labour supplied if the substitution effect outweighs the income effect

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Question 09 Consumer Theory vs. Real Consumers

A change in the relative prices of which pair of goods would probably produce the smallest substitution effect?

Correct answer C. Right shoes and left shoes

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Question 10 Consumer Theory vs. Real Consumers

Which statement about the result of a consumer’s optimisation process is NOT true?

Correct answer A. The consumer is indifferent between any two points on his budget constraint

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Question 11 Consumer Theory vs. Real Consumers

What is the slope at any point on an indifference curve called?

Correct answer C. The marginal rate of substitution

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Question 12 Consumer Theory vs. Real Consumers

At what point does a consumer make the optimal purchase of any two goods?

Correct answer B. Where the consumer reaches the highest indifference curve while remaining on the budget constraint

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Question 13 Consumer Theory vs. Real Consumers

With good X on the horizontal axis and good Y on the vertical axis, indifference curves are bowed inward. Moving from a bundle with plenty of X to one with plenty of Y, what happens to the marginal rate of substitution of Y for X (the slope of the indifference curve)?

Correct answer B. It rises

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Question 14 Consumer Theory vs. Real Consumers

If a rise in a consumer’s income leads her to buy less of a good, what kind of good is it?

Correct answer C. An inferior good

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Question 15 Consumer Theory vs. Real Consumers

What happens to the budget line if income doubles and all prices also double?

Correct answer C. It stays the same

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Question 16 Consumer Theory vs. Real Consumers

If consumption when young and consumption when old are both normal goods, what will an increase in the interest rate do?

Correct answer C. It will increase the quantity of saving if the substitution effect outweighs the income effect

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About Consumer Theory vs. Real Consumers MCQs

This topic examines the standard model of consumer choice. Questions ask about the budget line, its slope as the ratio of prices, and what happens when income and all prices double, which leaves the line unchanged. You will also separate the substitution effect, the change in consumption from a shift in relative prices, from the income effect, and identify inferior goods, whose consumption falls when income rises. Graph-based items ask you to read exhibits showing choices between two goods. These tools are standard in microeconomics papers and economics lecturer tests.

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Frequently asked questions

What happens to the budget line if income and prices both double?

If income and the prices of both goods double, the budget line does not change. The maximum quantity of each good the consumer can buy, income divided by price, stays the same, and so does the slope, which is the ratio of the two prices. Real purchasing power is therefore unchanged.

What is an inferior good?

An inferior good is one whose demand falls when consumer income rises, and rises when income falls. Examples often given are low-quality staple foods or second-hand items, which people replace with better alternatives as they become richer. Its income elasticity of demand is negative.

How many Consumer Theory vs. Real Consumers MCQs are on MCQs360?

There are 20 Consumer Theory vs. Real Consumers MCQs on MCQs360. They are free to practise without an account, and each one shows its correct answer instantly, so you can check budget line and effect questions quickly.

Last reviewed October 2026