2. Which of the following is called gossans first law
Correct : C. law of diminishing marginal utility
3. When individuals income falls (everything remain the same) his demand for
an inferior good
Correct : A. rises
4. If negative income effect is greater than positive substitution effect : the
product will be
Correct : C. a giffen good
5. Which of the following statement is FALSE with regard to marginal utility
Correct : D. marginal utility increases at a diminishing range
6. According to Marshall consumer surplus is:
Correct : C. total utility derived – price
7. If both the products X & Y are normal goods
Correct : B. slopes up towards right
8. Which of the following statement is TRUE with regard to total utility
Correct : B. total utility increases at a diminishing range
9. If negative income effect is less than positive substitution effect : the product
will be
Correct : B. an inferior good
10. Which of the following statements is true
Correct : B. slutsky substitution effect is greater than hicksian substitution effect
11. According to Hicks substitution effect is
Correct : C. the movement along an indifference curve
12. Strong ordering means
Correct : A. absence of indifference
13. In the fundamental theorem of consumption and to prove the law of demand,
Samualson uses
Correct : C. the over compensation effect
14. If negative income effect is greater than positive substitution effect : price
effect will be
Correct : B. negative
15. As per indifference curve analysis consumer equilibrium is attained when
Correct : B. slopes of both indifference curve and income price line are equal
16. The slope of a budget line is
Correct : C. the price ratio of both the commodities under consideration
17. At the point of tangency the slope of indifference curve is
Correct : C. is the same
18. The slope of a budget line throughout its length is
Correct : C. the price ratio of both the commodities under consideration
19. The income effect for a commodity is
Correct : D. determines the nature of the commodity
20. The substitution effect for a commodity is
Correct : A. is always positive
21. Price effect is
Correct : C. income effect + substitution effect
22. For a giffen good, when price falls
Correct : B. demand decreases
23. Inferior goods are the goods with
Correct : C. negative income effect
24. Indifference curves are
Correct : D. both b and c
25. Revealed preference theory assumes
Correct : B. strong ordering
26. Hicks Allen indifference theory is based on
Correct : A. weak ordering
27. Income consumption curve of an inferior commodity is
Correct : B. backward bending
28. In case of a convex indifference curve
Correct : D. mrs xy is diminishing
29. ‘Higher the indifference curve higher will be level of satisfaction’. The
statement is
Correct : A. always true
30. As per indifference curve analysis, consumer always try to reach
Correct : A. higher indifference
31. Which method is used by Hicks to eliminate the income effect when price of a
product is changed
Correct : A. compensating variation in income
32. The basic doctrine of consumers’ surplus is based on
Correct : D. law of diminishing marginal utility
33. According to Marshall, The law of diminishing marginal utility
Correct : D. applies on all commodities except money
34. An indifference curve represent
Correct : C. only two commodities
35. Indifference curve is always
Correct : B. convex to the origin
36. Engel curve for giffen good is
Correct : B. negatively sloped
37. Marginal utility is
Correct : C. the utility derived from last unit
38. Total utility is
Correct : D. all the above
39. When Total utility is increasing at an decreasing rate, marginal utility is
Correct : D. decreasing
40. Other things being equal a decrease in demand can be caused by
Correct : B. a fall in income of the consumer
41. When price of a product falls, more of it is purchased because of
Correct : D. both the substitution and income effects
42. “Utility or satisfaction is a subjective concept; therefore it could only be
ranked”. The statement supports
Correct : B. ordinal utility theorist
43. Ordinal utility analysis is otherwise known as
Correct : C. indifference curve analysis
44. Ordinal utility analysis Was developed by
Correct : A. j.r.hicks & r.j.d. allen
45. Total utility curve
Correct : D. first rises and then falls after reaching its maximum
46. At saturation point MU of a commodity is
Correct : C. zero
47. A consumer reaches equilibrium when
Correct : A. marginal utility is equal to price
48. Marshalian cardinal utility analysis assumes
Correct : D. marginal utility of money is constant
49. When individuals income rises (everything remain the same) his demand for
a normal good
Correct : A. rises
50. When individuals income falls (everything remain the same) his demand for
a normal good
Correct : B. falls
51. The concept of utility was introduced by
Correct : C. geremy bentham
52. Cardinal utility analysis to consumer equilibrium was developed by
Correct : A. marshall
53. MC at any level of output is given by
Correct : C. slope of either tc or tvc
54. If a firm’s average cost is Rs.32 at 6 units of output and Rs.34 at 7 unit, which
one among the following is the marginal cost of producing the 7th unit
Correct : A. 46
55. The cost that cannot be recovered once spent
Correct : B. fixed cost
56. The saucer-type of modern Short run Average Variable Cost (SAVC) represents
Correct : B. managerial costs
57. The Long run Average Cost curve (LAC) in modern cost theory is
roughly
Correct : D. rectangular hyperbola
58. Under increasing returns to scale, which of the following is the nature of the
long run average cost curve?
Correct : D. identical to short run average cost curve
59. Which of the following has a U shape?
Correct : C. average variable cost curve
60. AFC curve will always be
Correct : D. downward sloping
61. Implicit cost of a factor of production is determined by its
Correct : A. sunk cost
62. Economic cost include both
Correct : A. explicit cost and implicit cost
63. The U shape of MC curve reflects
Correct : D. law of variable proportion
64. Envelope curve is
Correct : D. none of the above
65. In long run, which factor of production is fixed?
Correct : B. capital
66. The U shape of the average total cost curve reflects
Correct : A. ldmu
67. The total fixed cost is a
Correct : A. horizontal straight line
68. When AC minimum in short run
Correct : B. ac > mc
69. The shape of TVC and TC are
Correct : A. rectangular hyperbola
70. The cost expressed not in terms of money but in terms of efforts of workers
undergone for making the commodity
Correct : C. sacrifice cost
71. The MC curve cuts the AC curve at
Correct : B. the initial point
72. The minimum point of ATC is at ...................position of the minimum point of AVC
Correct : B. left
73. If the long run cost curve shifts down wards it is an indication of
Correct : C. both of these
74. The U shape of the LAC reflects
Correct : A. law of variable proportions
75. A production possibility curve is concave to the point of origin because of
Correct : C. both of the above
76. The deductive method is also called
Correct : D. all the above
77. An Essay on the Nature and Significance of Economic Science was written by
Correct : C. lord robbins
78. The word ‘Micro Economics and Macro Economics’ were first coined by
Correct : B. ragnar frisch
79. Excess demand for money, according to Say’s law in the Economy:
Correct : D. There is no relationship between excess demand for money and Say’s Law
80. Which of the following is not an assumption of classical theory?
Correct : B. Unemployment
81. In classical theory the equality between saving and investment is brought about by:
Correct : A. Rate of interest
82. The normal condition of a capitalist economy in classical theory is:
Correct : B. Full employment
83. The classical economists believed that the demand for labour is a function of:
Correct : D. Real wage rate
84. In classical theory of employment, there is the possibility of:
Correct : A. Voluntary unemployment
85. The idea that a general cut in wages will finally lead to a state of full employment was
suggested by :
Correct : D. A.C.Pigou
86. The aggregate production function implied under classical theory is :
Correct : A. Long run
87. In the Cambridge equation of M = kPR, the value of k is:
Correct : B. 1/V
88. As a result of an increase in capital, ceteris paribus, ------ the marginal productivity of
labour:
Correct : B. Increase
89. In the classical theory, one of the following is an important assumption:
Correct : B. There is full employment
90. In the Fisher’s extended equation of exchange MI VI represents:
Correct : A. Credit money
91. In Fisher’s transaction velocity model, one of the following is not an assumption:
Correct : D. P is considered as an active factor
92. The cash balance equation M = KPO was given by:
Correct : D. Marshall
93. “Supply creates its own demand “is a law of:
Correct : D. Market
94. In the equation MV+ MI VI = PT, ‘M ‘denotes:
Correct : B. Money in circulation
95. I classical demand for money, the relationship between money supply and price level is:
Correct : B. Non-proportional
96. As per classical theory saving is:
Correct : A. An increasing function of rate of interest
97. The Cambridge version of the quantity theory of money was developed by:
Correct : C. Pigou
98. In classical system which of the following keeps the economy at full employment:
Correct : D. Adjustment in money wages
99. In Fisher’s equation of exchange MV=PT, the variation of which produces a
proportional change in price:
Correct : A. M
100. According to classical economists, variations in savings are due to: