Quiznetik

Micro Economics 1 | Set 1

1. Total utility is maximum when

Correct : A. marginal utility is zero

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:

Correct : B. Rate of interest