1. A consumer reaches the point of equilibrium when;
Correct : C. MRSxy=Px/Py
2. A consumer will start buying less of good- X and more of Good-Y, when
Correct : B. MUx/Px < MUy/Py
3. The slope of indifference curve is equal to:
Correct : B. marginal rate of substitution
4. Why is indifference curve convex to origin?
Correct : C. Due to continuous decline of
5. Which of the following is not the property of indifference curve:
Correct : C. Indifference curve is concave to origin
6. Hicks and Allen believed that utility:
Correct : D. Can be measured in ordinal numbers
7. An indifference curve is related to:
Correct : D. choices and preferences of consumer
8. A shift in budget line, when prices are constant, is due to:
Correct : B. change in income
9. In case of normal goods, demand curve shows:
Correct : A. a negative slope
10. Law of demand must fail in case of:
Correct : B. giffen goods
11. Inferior goods are those whose income effect is:
Correct : A. negative
12. Which of the following pairs represents substitute goods?
Correct : B. juice and cold drink
13. Substitution effect takes place when price of the commodity becomes:
Correct : D. both (a) and (b)
14. Total utility is
Correct : D. All the above
15. Which of the following is called gossans first law
Correct : C. Law of diminishing
16. Other things being equal a decrease in demand can be caused by
Correct : B. A fall in income of the consumer
17. “Utility or satisfaction is a subjective concept; therefore it could only be ranked”. The statement supports
Correct : B. Ordinal utility theorist
18. The basic doctrine of consumers surplus is based on
Correct : D. Law of diminishing marginal utility
19. Indifference curve is always
Correct : B. Convex to the
20. Engel curve for giffen good is
Correct : B. Negatively sloped
21. Price effect is
Correct : C. Income effect + substitution
22. For a giffen good, when price falls
Correct : B. Demand decreases
23. Revealed preference theory assumes
Correct : B. WARP
24. Income consumption curve of an inferior commodity is
Correct : B. Backward bending
25. In case of a convex indifference curve
Correct : D. MRS xy is diminishing
26. ‘Higher the indifference curve higher will be level of satisfaction’. The statement is
Correct : A. Always true
27. Strong ordering means
Correct : A. Absence of indifference
28. If negative income effect is greater than positive substitution effect : the product will be
Correct : C. A giffen good
29. Suppose a rise in the price of peaches from Rs.5.50 to Rs. 6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is
Correct : A. 0.5
30. The price elasticity of demand can range between
Correct : B. zero and infinity
31. If the price elasticity is between 0 and 1, demand is
Correct : A. Inelastic
32. A good with a vertical demand curve has a demand with
Correct : C. Zero elasticity
33. Marginal utility for money is positive in case of
Correct : B. Risk lover
34. When the expected utility is greater than utility of the certail income
Correct : B. person is risk lover
35. The marginal utility curve of income curve is a straight line for