1) Worth a rupee to a consumer is called: Show (a) Marginal utility of money ✔ utility of money 2) A consumer attains equilibrium, in case of one commodity, when: (a) MUx= Px ✔ 3) Consumer equilibrium in case of two commodities(say X and Y) is struck when: (a) MUx/Px= MUm (b)MUx/Px>MUy/Py (d)MUx/Px 4) A consumer reaches the point of equilibrium when; (a) MRSxy>Px/Py 5) A consumer will start buying less of good-X and more of Good-Y, when: (a) MUx/Px = MUm (d)MUx/Px>MUy/Py 6) According to IC approach, at the point of equilibrium: (a)slope of IC > slope of price line (b)slope of IC < slope of price line (c)slope of IC # slope of price line (d)slope of IC=slope of price line✔ 7) Additional utility derived from the consumption of an additional unit of a commodity is called: (a) Average utility 8) The slope indifference curve is equal to: (a) One 9) Why is indifference curve convex to origin? (a)Due to law of diminishing marginal utility (c) Due to continuous decline of marginal rate of substitution ✔ 10)It is the property of indiffe-rence curve that no two IC can intersect each other. The reason behind this is: (a) Consumer preferences are monotonic (c) Same combination of two goods cannot give different level of satisfaction ✔ (d) Diminishing marginal rate of substitution 11) Slope of budget line is: (a)Px/Py ✔ 12) Which of the following is not the property of indifference curve: (a)Higher the indifference curves higher the level of satisfaction (b)Two indifference curves cannot intersect each other (c) Indifference curve is concave to origin✔ (d)Indifference curve is downward sloping 13) An Indifference curve slope down towards right since more of one commodity and less of another result in: (a) Same satisfaction ✔ (d)Decreasing expenditure 14) Hicks and Allen believed that utility: (a) Cannot be measured numbers 15) An indifference curve is related to: (a)Consumer’s income (c) Total utility from goods X and Y 16) As we move down the indifference curve left to right, the slope of indifference curve tends to: (a) Unity 17) A shift in budget line, when prices are constant, is due to: (a) change in demand (c) change in preferences 18) Marginal rate of substitution of X for Y is calculated as: (a)Px/Py 19) A set of ICs drawn in a graph is called: (a) Indifference curve (c)budget line 20) In indifference map, higher IC indicates: (a) Lower level of satisfaction (c)Higher level of satisfaction ✔ 21) MRS is determined by: (a) satisfaction level of the consumer (c) taste of the consumer 22) In a situation when MRS>Px/Py, the consumer would react by: (a) Diminishing the consumption of commodity-x (b)Increasing the consumption of commodity-y (c) Increasing the consumption of commodity-x✔ (d) None of these 23) Two indifference curves cannot cut each other because: (a) They slope downwards. (b) They are convex to origin (c) They represent those combinations of two goods that give the same satisfaction (d) Each indifference curve represents a different level of satisfaction✔ 24) Specific quantity to be purchased against a specific price of the commodity is called: (a) Demand 25) The graphic presentation of a table showing price and relationship[ for a commodity in the market is called: (a)Individual demand curve (c) Market demand curve ✔ 26) Downward slope of the demand curve shows: (a) Positive relationship between price and quantity demanded (b) Inverse relationship between price and quantity demanded✔ (c) No relationship between price and quantity demanded (d) None of these 27) How two goods (apple and orange) are related when, as a result of rise in the price of apples, demand for oranges increases? (a) Substitute goods ✔ (c) normal goods 28) In case of normal goods, demand curve shows: (a) a negative slope ✔ 29) Law of demand must fail in case of: (a) normal good s 30) Inferior goods are those whose income effect is: (a) negative ✔ 31) Which of the following pairs represents substitute goods? (a) car and petrol 32) In case of Giffen’s paradox, the slope of demand curve is: (a) negative 33) As a result of rise in consumer’s income, demand curve for coarse grain(inferior good): (a) becomes a horizontal straight line (c) shifts to the right 34) If two goods are complementary then rise in the price of one results in: (a) rise in demand for the other (b) fall in demand for the other✔ (c) rise in demand for both 35) Demand curve is upward sloping for: (a) normal goods 36) Movement along the demand curve occurs due to change in: (a) own price of the commodity ✔ (c) both (a) and (b) 37) An increase in the price of electricity will cause the demand for electric appliances to: (a) rise 38) Shift in demand curve means: (a) Fall in demand due to rise in own price of the (b) Rise in demand due to fall in own price of the (c) Change in demand due to factors other than own price of the commodity✔ (d) None of these 39) A fall in income of the consumer (in case of normal goods) will cause: (a) Upward movement on the demand curve (b) Downward movement on the demand curve (c) Rightward shift of the demand curve (d) Leftward shift of the demand curve✔ 40) Change in quantity demanded of a commodity due to change in its own price, other things remaining constant, is called: (a) cross price effect 41) In case of contraction of demand, we move: (a) From lower point to upper point on the same demand curve✔ (c) From upper point to lower point on the same demand curve (d) To left on the another demand curve 42) Increase in demand occurs due to: (a) Decrease in price of the complementary good consumer (43) Assumptions of the law of demand refer to: (a) constant own price of the commodity (c) constant cost of production (d) none of these 44) Law of demand is violated when: (a) income effect is negative less than substitution effect 45) A fall in own price of the commodity leads to: (a) increase In real income of the consumer consumer 46) Substitution effect takes place when price of the commodity becomes: (a) relatively cheaper 47) Different quantities purchased at different possible prices of a commodity is called: (a) demand schedule ✔ (c) demand function 48) Diagrammatic presentation of demand schedule of an individual buyer of a commodity in the market yields: (a) market demand schedule 49) Goods are demanded because these possess: (a) utility ✔ 50) Complementary goods: (a) complete the demand for each other (c) are demanded together 51) In case of normal goods, the relationship between income and quantity demanded is: (a) negative 52) In case of normal goods, the relationship between own price of the commodity and its quantity demanded is: (a) constant 53) An exception to the law of demand is: (a) normal good (c) article of distinction 54) Distribution of income is a determinant of: (a) individual demand function (b) market demand function ✔ 55) In case of giffen goods, demand curve is: (a) upward sloping ✔ (c) parallel to X-axis 56) When increase in the price of one good causes an increase in demand for the other, the goods are: (a) substitutes ✔ 57) In case of inferior goods: (a) income effect is negative ✔ (b) (c) income effect is zero 58) Shift in demand curve occurs when demand for a commodity changes due to change in: (a) own price of commodity 59) Change in quantity demanded of a commodity due to change in real income of the consumer caused by change in own price of the commodity is called: (a) cross price effect (c) income effect ✔ 60) When income of the consumer rises in case of a normal good: (a) demand curve shifts to the left (c) there is upward movement along the demand curve movement along the demand curve 61) An increase in the price of computer will cause the demand for internet services to: (a) rise 62) The concept of utility was introduced by (a) Marshall 63) Cardinal utility analysis to consumer equilibrium was developed by (a) Marshall ✔ 64) Ordinal utility analysis is otherwise known as (a) Gossens second law (c) Indifference curve analysis✔ 65) Ordinal utility analysis Was developed by (a) J.R.Hicks & R.J. R.J.D. Allen✔ (c) Marshall and Jevons 66) Total utility curve (a) Always rises (c) Always falls 67) Total utility is maximum when (a) Marginal utility is zero ✔ (c) Marginal utility increases 68) Marginal utility is (a) Always zero (c) The utility derived from last unit ✔ 69) Total utility is (a) The sum total of marginal utilities (c) Increases at a diminishing rate 70) When Total utility is increasing at an decreasing rate, marginal utility is (a) Constant 71) Which of the following is called gossans first law (a) Law of substitution (c) Law of diminishing marginal utility ✔ 72) At saturation point MU of a commodity is (a) Positive 73) A consumer reaches equilibrium when (a) Marginal utility is equal to price ✔ (c) Marginal utility less than price 74) Marshalian cardinal utility analysis assumes (a) Marginal utility of money is zero (c) Marginal utility of money is increasing 75) When individuals income rises (everything remain the same) his demand for a normal good (a) Rises ✔ 76) When individuals income falls (everything remain the same) his demand for a normal good (a) Rises 77) When individuals income falls (everything remain the same) his demand for an inferior good (a) Rises (c) Remains the same 78) Other things being equal a decrease in demand can be caused by (a) A fall in price of the commodity (c) A rise in price of the substitute 79) When price of a product falls, more of it is purchased because of (a) The substitution effect (c) Neither substitution effect nor income effect 80) “Utility or satisfaction is a subjective concept; therefore it could only be ranked”. The statement supports (a) Cardinal utility theorist (c) Behavioral theorist of the firm 81) The basic doctrine of consumers surplus is based on (a) Indifference curve analysis (b) Revealed preference theory (c) Law of substitution 82) According to Marshall, The law of diminishing marginal utility (a) Applies on money in the manner in which it applies on commodity (b) Do not applies on money except bank money (c) Does not applies on bank money but applies on cash (d) Applies on all commodities except money ✔ 83) An indifference curve represent (a) Four commodities (c) Only two commodities ✔ 84) Indifference curve is always (a) Concave to the origin (c) L shaped 85) Engel curve for giffen good is (a) Positively sloped (c) Horizontal straight line 86) Price effect is : (c)Income effect+substitution effect ✔ 87) For a giffen good, when price falls (a) Demand increases at a faster rate (c) Demand remains constant 88) Inferior goods are the goods with (a) Falling Income effect (c) Negative income effect ✔ 89) Indifference curves are (a) Always parallel (c) May not be parallel 90) Revealed preference theory assumes (a) Weak ordering (c) Constant ordering 91) Hicks Allen indifference theory is based on (a) Weak ordering ✔ (b) (c) Constant ordering 92) Income consumption curve of an inferior commodity is (a) Positively sloped (c) Downward slopping straight line 93) In case of a convex indifference curve (a) MRS xy is constant (c) MRS xy is negligible 94) ‘Higher the indifference curve higher will be level of satisfaction’. The statement is (a) Always true ✔ (c) Sometimes true and sometimes false 95) As per indifference curve analysis, consumer always try to reach (a) Higher indifference curve ✔ (c) Middle indifference curve 96) As per indifference curve analysis consumer equilibrium is attained when (a) Slope of indifference curve is constant (c) Slopes of both indifference curve and income price line are opposite (d) Both income price line and indifference curve are parallel. 97) The slope of a budget line is (a) The satisfaction level of both the commodities (b) The income level of the consumer (c) The price ratio of both the commodities under considerat-ion ✔ (d) Price level of a country 98) At the point of tangency the slope of indifference curve is (a) Differ from point to point (c) Is the same ✔ 99) The slope of a budget line throughout its length is (a) The satisfaction level of both the commodities consumer (d) Price level of a country 100) The income effect for a commodity is (a) Is always positive (c) Depends upon price effect When there is two commodities X and Y consumer's equilibrium will be?Suppose a consumer consumes only two goods, X and Y. They will attain equilibrium only if they allocate their given income on the purchase of X and Y in such a way that per rupee, the MU of both the products are equal and the consumer gets the maximum TU.
Which combination of X and Y will determine consumer equilibrium?According to the law of equi-marginal utility a consumer will be in equilibrium when the ratio of marginal utility of a commodity to its price equals the ratio of marginal utility of other commodity to its price. MUx/Px= MUY/PY= MU of last rupee spent on each good, or simply MU of Money.
What are the two conditions of consumer's equilibrium?Conditions of Consumer's Equilibrium
The state of equilibrium for consumers is possible under the following conditions: The (MU)marginal utility of commodity X cost of product in terms of cost is equal to the cost of the commodity X in cost (MUx = Px).
When consumer purchases only one commodity say X equilibrium will be?Consumer will achieve equilibrium only when the price of the commodity which consumer is willing to pay matches the utility which the consumer is getting from the consumption in the units of money ie MUX=PX.
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