Lesson 4.1.2.3

4.1.2.3 Aspects of behavioural economic theory Quiz: AQA Economics, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Lesson 4.1.2.3, Aspects of behavioural economic theory: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. Bounded rationality refers to the idea that:

    • people's decision making is limited by cognitive capacity, time and available information.
    • people never consider the costs of their decisions, because a consumer's first thought is always the pleasure of the purchase itself.
    • people are unable to make any decisions at all, so that the market relies entirely on government planning to allocate resources.
    • people always make perfectly rational choices with full information, so that every decision they make is the best possible one available.

  2. Bounded self-control describes:

    • a government's ability to control inflation through changes in interest rates and the money supply in the economy as a whole.
    • a firm's ability to control its production costs by reducing wages and cutting back on investment in new plant and equipment.
    • an individual's ability to resist short-term temptations that conflict with long-term goals.
    • a consumer's willingness to buy only necessities, so that spending is kept within a budget set by the household each month.

  3. Anchoring bias occurs when:

    • people ignore all prices when shopping, focusing instead on the packaging and the advertising that surrounds each product on the shelf.
    • people always choose the cheapest option available, regardless of the quality, brand or features of the goods on offer in the shop.
    • people base decisions on the most recent news only, ignoring the longer-term evidence that is available about the product being considered.
    • people rely heavily on the first piece of information they receive when making a judgement.

  4. Availability bias means that people:

    • judge the likelihood of an event by how easily examples come to mind.
    • always choose products that are available in every shop, so that the range of goods on the high street shapes all of their purchases.
    • wait until a product is available before deciding to buy, which is why many goods are bought only after a long delay in the market.
    • ignore products that have been advertised, because the adverts make them seem less useful than the goods that are not promoted at all.

  5. A consumer who buys extra insurance after hearing about a recent flood in the news is most likely showing:

    • anchoring bias.
    • altruism.
    • availability bias.
    • bounded self-control.

  6. Rules of thumb, or heuristics, are best described as:

    • contracts that bind consumers to a particular supplier.
    • precise mathematical formulas that always give the optimal answer.
    • laws passed by government to regulate markets.
    • simple decision shortcuts that save time but may lead to errors.

  7. A shopper decides to buy the second-cheapest wine on a list, reasoning that it is probably of good value. Which tendency is most likely at work?

    • Diminishing marginal utility.
    • Altruism, because the shopper is helping the seller.
    • Price elasticity of demand.
    • Rule of thumb, with a mid-range heuristic.

  8. Social norms influence economic decisions because:

    • people only care about their own financial gain, which means that social norms never change what anyone chooses to buy in the market.
    • social norms always reduce the level of demand for goods, since people who follow community habits spend less overall than others do.
    • social norms are set entirely by firms, which decide what consumers should buy and then use advertising to make those choices seem normal.
    • people's choices are affected by what others around them do or expect.

  9. Why do behavioural economists argue that altruism matters for economic decisions?

    • Because people never care about anyone other than themselves, so altruism is a concept that behavioural economists reject entirely.
    • Because altruism always reduces the demand for goods, as people who help others spend less on their own consumption each year.
    • Because altruism is only observed in command economies, where central planners ask citizens to give up part of their income.
    • Because people sometimes give up their own gains to help others, which traditional models may not capture.

  10. Which of the following is an example of perceptions of fairness affecting economic behaviour?

    • A firm increases output to reduce its average costs, which is a decision that reflects the firm's view of what is fair to its customers.
    • A worker refuses a pay offer they consider unfair, even though it is higher than their alternative.
    • A consumer buys the cheapest product regardless of quality, because price is the only factor that the consumer considers.
    • A government raises income tax to fund roads, a policy decision that has nothing to do with the public's perceptions of fairness.

  11. Which statement best contrasts traditional economic theory with behavioural economics?

    • Traditional theory assumes people are irrational, driven by habit; behavioural economics assumes they are rational and informed.
    • Both assume people never consider prices, so that neither theory uses price as a determinant of consumer choice in any market.
    • Both assume altruism is the main driver of decisions, which is why neither theory gives any weight to the self-interest of individuals.
    • Traditional theory assumes people are rational utility maximisers; behavioural economics questions that assumption.

  12. A consumer's first-noticed price for a jacket is £300, and then she sees it reduced to £150 and thinks it is a bargain. Which bias is most likely?

    • Anchoring bias, because the £300 price influences her judgement of value.
    • Bounded rationality, because she has no information at all about the quality of the jacket or its usual market price in the shops.
    • Altruism, because she wants to help the shop by buying an item that the retailer has reduced in price to clear its stock.
    • Availability bias, because she recalls past discounts on jackets that she has seen in shops and online over several previous seasons.

  13. Which of the following best explains why people may fail to save enough for retirement, despite knowing it is important?

    • Because people always save more than they need, so that retirement savings are often much larger than anyone requires in later life.
    • Because altruism causes people to prefer saving for others, so that the savings they make are given away to family members instead.
    • Because retirement savings are illegal in most countries, which means that households are not allowed to set money aside for later years.
    • Because bounded self-control leads to giving in to immediate spending.

  14. Which of the following would be most consistent with the presence of altruism in an economic decision?

    • A person buys the product with the highest personal utility regardless of others.
    • A person donates part of their income to a charity without expecting a return.
    • A firm reduces prices solely to drive out competitors.
    • A consumer buys a good only because it is on sale.

  15. Evaluate the significance of bounded rationality for policy design. Which statement is most appropriate?

    • Policy should assume people always decide perfectly, so intervention is unnecessary because the market finds the best outcome.
    • Policy should ignore human behaviour altogether, because the economy follows fixed rules that do not depend on how people think.
    • Policy can be improved by recognising that people may need simplified choices or guidance to decide well.
    • Policy has no role in markets with imperfect information, since the market corrects any information gap without government.

  16. A firm sets a high recommended price on a product so that buyers will see later discounts as good value. Which behavioural idea is being exploited?

    • Anchoring.
    • Diminishing marginal utility.
    • Opportunity cost.
    • Economies of scale.

  17. Which of the following best describes the consequence of availability bias for resource allocation?

    • Resources are always allocated perfectly regardless of bias, because firms and governments use complete data on every risk before deciding.
    • Resources are only allocated to firms with the highest profits, so that the perception of risk plays no part in deciding where funds go.
    • Resources are never affected by how people perceive risk, since the allocation of money is decided purely by the cost of each project.
    • Resources may be overallocated to risks that are vivid or recent and underallocated to less visible risks.

  18. Which statement best evaluates the traditional assumption that consumers always maximise utility?

    • The assumption is only valid in planned economies, where central planners maximise utility on citizens' behalf.
    • The assumption is entirely accurate and needs no revision, because consumers have been shown to maximise utility in every study ever run.
    • The assumption is a useful simplification, but behavioural evidence shows systematic biases that can lead to deviations from it.
    • The assumption is irrelevant because consumers never make choices, so there is no need to model their behaviour in any detail.

  19. Which of the following is the best example of social norms influencing consumption?

    • A household buys a holiday because it has unused savings, which it decides to spend on a trip abroad during the summer period.
    • A household reduces spending because interest rates have risen, which makes borrowing more costly and reduces the amount of spending.
    • A household buys bread because the price has fallen, so that the lower cost of bread leads the household to buy more of it each week.
    • A household buys an electric car because neighbours have done so and it is seen as the done thing.

  20. Why might a consumer who displays bounded self-control benefit from a commitment device, such as an automatic savings plan?

    • Because it makes all spending unnecessary, since the commitment device covers every expense the consumer might face in the future.
    • Because it locks in long-term saving before present temptations can interfere.
    • Because it guarantees a higher interest rate, which means that the saver earns a larger return than the market offers in general.
    • Because it removes the need for any decision about saving, so that the consumer no longer has to think about money at all.

All AQA Economics quizzes