Lesson 1.2.1

1.2.1 Rational decision making Quiz: Pearson Edexcel Economics, Unit 1

20 questions

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Lesson 1.2.1, Rational decision making: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 1: Theme 1: Introduction to markets and market failure, written with Revision Ninja.

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The 20 questions

  1. In rational economic theory, what are consumers assumed to aim to maximise?

    • Profit
    • Revenue
    • Market share
    • Utility

  2. In rational economic theory, what are private firms assumed to aim to maximise?

    • Profit
    • Tax revenue
    • Utility
    • Consumer surplus

  3. A firm earns total revenue of £12,000 and incurs total costs of £9,500. What is its profit?

    • £2,500
    • £3,500
    • £2,000
    • £21,500

  4. At what output level does a price-taking firm maximise its total profit?

    • MC equals zero
    • AC equals price
    • MR equals zero
    • MC equals price

  5. What do traditional economic models assume rational consumers aim to maximise?

    • Profit
    • Revenue
    • Market share
    • Utility

  6. How many units of a four pound good can a consumer buy with a twenty pound budget?

    • 6 units
    • 20 units
    • 4 units
    • 5 units

  7. What is assumed to be the main objective of private sector firms in classical economic theory?

    • Utility maximisation
    • Sales maximisation
    • Revenue maximisation
    • Profit maximisation

  8. What happens to total revenue when price falls if demand is price inelastic?

    • It remains constant
    • It doubles
    • It increases
    • It decreases

  9. Which factor can prevent consumers from rationally maximising their utility?

    • Perfect information
    • Bounded rationality
    • Constant prices
    • Profit motive

  10. What formula defines a firm's total profit?

    • Price times quantity
    • Price minus cost
    • Revenue plus cost
    • Revenue minus cost

  11. What term describes the economic satisfaction a consumer gains from consuming a good?

    • Profit
    • Utility
    • Revenue
    • Consumer surplus

  12. What relationship between price and quantity demanded does a standard demand curve show?

    • Proportional
    • Direct
    • Inverse
    • Unrelated

  13. At what point does any firm achieve profit maximisation?

    • AR equals AC
    • MR equals zero
    • TR equals TC
    • MR equals MC

  14. For a price taker, what is marginal revenue equal to?

    • Zero
    • Total cost
    • Fixed cost
    • Market price

  15. What do rational consumers aim to maximise when making economic choices?

    • Utility
    • Market share
    • Profit
    • Total revenue

  16. What exists when one party in a transaction has more relevant knowledge than the other?

    • Bounded rationality
    • Information asymmetry
    • Habitual behaviour
    • Sunk cost

  17. Fixed costs are £50,000 and contribution is £6 per unit. How many units break even?

    • 5,000 units
    • 12,500 units
    • 50,000 units
    • 8,333 units

  18. According to the law of demand, what happens to quantity demanded when price increases?

    • It doubles
    • It stays constant
    • It falls
    • It rises

  19. What is the underlying assumption about a firm's main objective in traditional economic theory?

    • Revenue maximisation
    • Profit maximisation
    • Sales maximisation
    • Market share growth

  20. A consumer repeatedly buys the same coffee brand without considering cheaper alternatives. What behaviour is this?

    • Herding behaviour
    • Computation weakness
    • Altruism
    • Habitual behaviour

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