(MCQs) MULTIPLE CHOICE QUESTIONS and

(MROs) MULTIPLE RESPONSE QUESTIONS

fallowing Questions, there may De 0ne or more than one correct answer. You have to mark al the correct answers.

is a property of indifference curve?

Which of these
curve slopes downwards
(aIndifference
curve is concave to the origin
(b) Indifference
cunve is convex to the origin
(e Indifference
curve represents higher level of satisfaction.
(GHigher indiference
curves are convex to the origin because of:
2. Indifference
(a) Increasing MRS (Diminishing MRS
Law of Diminishing Marginal Utility (d) Law of Equi-Marginal Utility
(c) in of two
condition under utility approach to attain consumer's equilibrium case
3. The necessary
commodity is: 1P

MUx_MUUy (6) MRSy =Px

Px Py Py
(d) None of these
(c) MU,=P get: MP
consumption of all the units of the commodities,
we
When add up utility derived from
4. we
(b) Initial utility
Total Utility None of these
(c) Marginal Utility (d)
in terms of money is equal to: IMp
5. Marginal Utility (MU)
Marginal Utility of one rupee
Marginal Utilityinutils (b) utils
Marginal Utility of one rupee
Marginal Utility in

utils
()arginalUtility in (d) None of these
Price of the Commodity
satisfaction obtained from consumption of each
to the Law of diminishing marginal utility,
Oring
Successive unit: M
(a) Increases (eDécreases
decreases
(d) Either increases or
(c) Remains same
7. Indifference Map refers to: curve
(b) Lowest Indifference
(a) Highest Indifference curve
(d) None of these
Family of indifference curves
8. Budget set includes: 1 P
( se combinations consumer already possesses
of two goods which a

s e combinations of two goods which a consumer cannot arford

C)
i s e Combinations of two goods which a consumer is willing to Dluy
t n o s e combinations of two goods which a consumer canaiod
9. Indifference curves are:
(aConcave to the origin
Convex to the origin
(c) Upward
(d) None of slopingstraight passing from the origin
line
these
 c o n s u n m e r s

10r
of these is
a
condition
urve
1 Which MUx MUy Consumers Equilibrium
2.49

(D) PxPy
(a) Muy=
(d) MU,= MUy
MRSp 4
C2
consumer should:
MUx MUy then to reach the equilibrium position,
11. If s
O12 34 X
Py Apples (A)
(b) Buy botn ine
(a) Stop buying any commodity. commodities in equal,q derived from MU?
(d) Buy more of Y and less of X. 19. How is TU
o Buy more of X and less of Y. (a) TU= MU (D) TU=U+U2+Ua +Uu
(d) TU,=MU,- MU-
12. If the consumption of an additional unit of a commodity causes no change in TU, then tha (c) TU= MU,
+
MU,-
maximum?
MU is: TMP
de/Zero
Thh t05T K khon 06 20.
Positive Sotie What happens
(a)
(c)
MU is negative

MU is decreasing9
tO MO when IUis
(6) MU is Zero
(d) MU is increasing

() Negative (d) Constant i n d i f f e r e n c e Curve always:

An
21. from left to right. (6) Slopes upwards from left to right
13. An indiference curve is best described as a series of points which show: (a) Slopes downwards

to the Y-axis. (d) Is parallel to the X-axis,

(a) Combinations of tWo Commodities which give the consumer same (c) Is parallel
satisfaction. of c a r a i n a l utiny approaCn, utiity IS measured in:
22. In case
(b) Combinations of two goods, such that co0st of each combination is D) Ranks
Consumer
equal to
money income (a) Rupees
(o) None Of these
c) Utils
(c) Combinations of the two goods which a The consumer will be in equilibrium
where there is tangency between price line and indifference curve
consumer can afford, given his income and 23.
(d) None of these. prices in then because at this
pon
14. Total Uilty is
(a) MRS<Price Ratio
at the point of satiety: (6) MRS> Price Ratio
(a) Minimum (c) MRS= Price Ratio
(C) Zero
(6) Maximum (d) Slope of Indifference Curve
=
Slope of Budget Line

15. (d) None of these 24. "Cardinality" means utility can be

Marginal Utility (M0) of n unit is calculated (a) Measured (6) Ranked
as:
(a) MU,=TU,-TU (d) none of these
(c) Not measured
(C)
MU,=TU, +TU , (6) MU,=TU, +TUna1 line case of commodities X and Y) is given by:
25. The slope of price (in commodities
16. In (d) MU,=TU,-TU-1 (b) Prices of both the
case of single (a) aste and preferences of consumer
commodity, consumers (d) Price of commodity Y alone
(a) MUy> Px equilibrium is achieved when:
() Price of commodity X alone
units ol a product, tne Uly
consumer consumes more
and more
0wnicn Law states that: "When a
) MUy Px (6) MUy <Px
derived from each additional unit decreases
17. Law of Satistaction
measures the (d) MUy-=Px (a) Law of Equi-Marginal Utility (D)
Fundamental

slope of of Diminishing Marginal Utny

(a) Budget Line indiference curve. (C) Law of Cardinal Utility (d) Law

(C)
Marginal Rate of
Transformation (6) context of Indifference Curve Analysis, MRS stands for:
. in(a)theMarginal
18. In the Marginal Rate of Substitution Rate of Substitution
(6) Marginal Rate of Satistaction
following diagram of d) None of of Satistacion
(a) Bundle which cost budget line, point "D" these (C) Marginal Return of Substitution (d) Marginal
Return

(b) Bundle which cost equal

to
money income of represents: Cnsumers equilibrium to be stable, the requireme
less than
(c) Bundle which cost money income of consumer (a) Constant MRS (b) IncreasingMRS
(0) None of these greater than money consumer (C) Diminishing MRSs (d) None of these
income of 7 apple is
Utnlity of the
consumer derived by Shyam by eating 6 apples is
300 utils. Marginal
S0 utis. The total
y
utiis.
utility for 7 apples will oD
 Xat equilibrium
2.50 (b) 20 p n s u m e r sE q u i b n u n

OY 1s
0 . t t h e
price of Yis will be
d) 40 and
oy ) 30
330 importance of
Of X is
MUy R12
c) 300 of mo y
means that Co41. )

30. The assumption of "Constant

rginal utilit Decreasing
None of
these
a)
15 urve
is t r o m
the origin, then:
(d)
I n d i f e r e n c e

a) ncreasing the
to: The farther level

Same product,
tney drererering 42. is the
s a t i s t a c t i o n

a certain Higher level

speak of the utility of
a) satistaction

is the obtained
nenEconomists Lower be
(b) l e v e l will

(a) d for the product s a t i s f a c t i o n

of the product in consumption

Same satisfaction
ness (c) said
about

Satistaction gained from consuming su product anotner Nothing

c a n be
Ouy trom a Commodity equals:
one g000 Tor (d) w n e n arginair
to exchange is in
equilibrum
Rate at which consumers are willing consumer (D) Supply of that Commodity
Commodity
that
for (d) All of these
Demand
to time
32. Utility: (D) Differs from ime (a) Commodity
of the
a)
Dfers trom person to person
(d) All of these Pnce
represenis ail mose comolnatons of wo goods which give:
C) Can be easily measured
prices of A 4 An Indifference Curve (b) Lower satistaction to the Consumer

commodities Aand BiS at equilibrium. The

Consumer
to the

d3. AConsumer
10 and 20 consumptionand
inrespectively two marginal utity of product5Is S0. wnat will be the marginal
of the (a) No
satistaction

to the
Consumer (d) Equal satisfaction to the Consumer
satisfaction

(c) Higher at a point where the budget line:

ol productA? consumer is in equilibrium
The (6) Is below an indifference curve.
100 )
(b) 25 45. indirerence
curve.
above an
(d) 4 (a) 1s
curve? (a) Cuts an indifference curve.
c) 250 1s tangent to
an
indifference

34. The Law of Diminishing Marginal Utility will not hold good if Income of the consumer: (c) total utility?
s h a d e d a r e a in the diagrams below represent
a) Increases (6) Decreases 46. Which of the

(C) Remans constant (0) Elher (a) or (b)

35. As per Ordinal Approach:

(a) Measurement of Uility is not possible through money
(b) Measurement of Utlity is possible but it can not be ranked
(c) Measurement of Utility is not possible in cardinal numbers but it can be rankedd
(d) Ordinal utility is the utility expressed in ranks
36. Marginal Utility:
MU MU MU MU
Units Consumed
a) 1s always positive Units Consumed Units Consumed
Units Consumed
(b) ls always negative (d)
(c) Can be positive or negative but not zero b)
(0) Can be positive or negative or the
37. Mollie derives total 2ero the Indifference curve will be: (choose
utility of 10 utils after If Marginal Rate of Substitution is constant throughout,
s9.What is having
marginal ubility tor the 5" mang0?mangoes
4 and total utility on 47.
+1 util
her
consumingo ia correct alternative)
concave.
b) Outil (a) Parallel to the x-axis. (b) Downward sloping
c) -1 util
0) g utls (c) Downward sloping convex. (d) Downward sloping straight line.
38. After reaching the point of
satiety, consumption of additional the Indifference Curve will be: (Choose tne
(a) TU talls and MU
increases units of the . Marginal Rate of Substitution is increasing throughout,
) TU talls and MU talls
and becomes (b) Both TU and MU commodity caus correct alternative)
negative increase
39. According to one ot the assumplion of Law of (d) TU becomes negative and MU (a) Downward sloping convex (6) Downward sloping concave
between the consumpuion of one unit
and Diminishing Marginal Utility, there falls (c) Downward sloping straight line (d) Upward sloping Convex
a)
Equal time gap another unit. should D Consumes only two goods. If price of one of the goods falls,
the indiference cuner(o
(c) Long time gap (b) No time u r
gap the correct alternative)
40. Budget line shows:
(d) Any of these
(a) Possible combinaon o1 wo (a) Shifts upwards (6) Shifts downwards
go00s that a C)
prices
consumer cant Can shift both
upwards or downwards (0) Does not shift
(D) P
(c)
ble
combination of wo g00ds which n g his entire income
at they Consumer consumes only two goods X and Y both priced at 4 per
unit. f tne co
Possible combination of wo cost
less than Or 4, then
(d) All the these go00s among which or
equal to
equal fa(a)
Or these two Substitution equal to
goods with Marginal Rate of e e
the consumer's money inco
consumer's
consumer is indifferent. Buy more units of X (6) Buy more units of
(c) Buy units of both, X andY
more units of both, X
and Y (d) Buy less
 Introductory M
3 and7 4
2.52 Y
whose prices are
per unit
only two goods Xand utilty of Xer
mers EquiDnum
253
A Consumer
consumes

chooses a
combination of the Two
go0us
wu

consumer
nidrginal

will:
qual to 4 nsu
(a)
Decrease
in price ot Apples (o) Increase in price of Appiles
consumer then tnhe
then Bananas
U m, in price of (d) Decrease in price al Bananas
to 3, 1s the
consumer in equilibrium, ) Ru
Buy nmore units of Y and
less of x (c)
Increase

qua of both, X and

Y
(d) Buy less units of both, X and Y Marginal utlity is:
more units
a) Buy
of X and less of
ol the utility from
first unit of a
Commodity consumed.
C Buy more units EquoddFoint of Satiety ar (a)
82. In the following diagram, the
situation of Consumers 1y are re (D) the utility trom tne last
unit

of
consumed.

units consumed
divideo oy number
total utility
by the points: (c)
vays positive.
d)
Total utity 1s
57. sum of marginal
utities
-Prce (a)
the
from irst unit
x n u m b e r of
units consumed
utility
(c) always increasing

x number of units consumed

Units trorm tast unit
(d) utility
Consurmed c a n De relerred to as point of satiety?
Which of the tolloing
(a) Point Cand Point E (b) Point E and Point B 58. Utility 1s negative (D) Marginal utility is zero
(c) Point B and Point E (d) Point B and Point C (a) Marginal
1s rising (d) Total Utility is falling
(o) Total Unity
53. Which Indifference Curve represents the highest level of satisfaction?
the Point of Satiety:
59. At
(a) MU is Negative P M ero

(c) MU is Hising (a) None of these

A consumer consumes
oniy wo good5. T price or one o1 the goods talls, the indifference curve
60. (0) Shits nghtward
(a) Shifts lettward

Can shift both leftward and rightward (d) Does not shift
(c)
OCommodiyX 61. Slope of an Indifference Curve is measured by:
0) Marginal Hate of Transformation
Marginal Rate of Substitution
b) (C)Marginal Opportunity Cost (d) None of these
c) C 1C2
(0) None of these
54. An increase in income will lead to the
folowing change in Budget Line:
62. 11(a)MU,= 20; MU,
14
= 60; Price ofY =R4, then what
will bethe Price of X at Equilibrium:
()312 d) 4

Market Rate of also denotes:

63. (a) Slope of PPC
Exchange
(b) Slope of Budget Line

(C) Slope of Indiference Curve (d) None of these

54. When marginal utility is zero, total utility is:

Zero (b) Minimum
GO00 A
A A A
P) Maximum (d) Negative
55. The rotation Good X
of Good X 63. Suppose, Mayank consumes Burger and Garlic Bread. Which of the following bundle at Burgrcnd
budget ine in he
following diagram is due to: (O)
oic EreadAwil Mayank choose if he has monotonic preference?
(a) Bundle
(5, 7) (D) Bundle B(4,7)
(C) BundleC (5, 6) (a) None of these
66. Which is the First Law of Gossen?
(a) Law of Unity
(C) Law of
Equi-marginal Utility joLaw of Diminishing Marginal
Supply (d) Law of Demand
D.
Which of the
following is a characteristic of utility
Apples (a) Utility is Subjective (b) Utlity is a relative concept
Ouiny 1s a
Psychological phenomenon All of these
2.54
conome
I n t r o d u c t o yM i c r o e c o

68. Which of the

(a) As
following statement is not true? MU is
2zero
negas
long MU is positive, increases
as hen b e c o m e s

(c) TU starts TU (b) TU is zero

of satiety,
MU

decreasing when MU is negative Arer the point

12. (a);13,(a
11. (C);
10. (c);
Ans. 1.
(a), (c), (d); 2. (b); 3. (a); 4. (a); 5. (a); 6. (b);: 7. 8 9. (b); 23. (C), (a); 24.(e
(c);. (8.d(0),
); (a): 22. ( (b); 34. (
(b); 19
14. (D);
15. (d); 16. (d); 17. (b); 18.
18. (b): 19. (a). (b);
20.21. (c): ( 44. (d); 45. (
32.
25. (b); 26. (b), (d); 27.
(a); 28. (c): 29. (a); 30. ( 42. (a); 43. (
35,( . (d); 36. (d); 37. (o); 38. (c); 39. (b); 40. (a); 41. (O (d):55. (a) 5 c
46. (C); 47. (d); 48. (b); 49. (d); 50. (a); 51. (C); 52. (b): 53. (C 67. (G};
0-
66. (b): oo-(0
58. (6); 59. (b); 60. (d): 61. (a); 62. (c); 63. (b); 64. (©);