Consumer behaviour and demand: Practice Questions

Which of the following would lead to a rightward shift in the demand curve for a normal good?

A consumer continues to purchase a specific brand of bread every morning despite a newer brand being sold at half the price in the same store. This non-rational behaviour is best explained by:

A consumer habitually chooses the same brand of cereal every week, even after a competitor product, which offers superior nutritional value at a lower price, becomes available. This behaviour contradicts the assumption of consumer rationality and is best explained by the concept of:

A consumer continues to renew their insurance policy with the same provider every year without searching for cheaper alternatives, despite the availability of lower-priced competitors and the significant savings potential. This non-rational behaviour is best described as:

If the cross elasticity of demand (XED) between Good X and Good Y is calculated as \(-1.5\), what can be concluded about the relationship between the two goods?

A firm producing a good with a Price Elasticity of Demand (PED) of \( -0.4 \) decides to increase its price. Explain the predicted impact on the firm's total revenue.

Calculate the Income Elasticity of Demand (YED) for a good if a 5% rise in income leads to a 2% fall in the quantity demanded, and state whether the good is classified as normal or inferior.

If the Cross Elasticity of Demand (XED) between tea and coffee is \( +0.8 \), explain the relationship between these two goods and describe the expected market reaction for tea if the price of coffee rises significantly.