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This set of Micro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 1 Set 1
Q1 | Total utility is maximum when
- marginal utility is zero
- marginal utility is maximum
- marginal utility increases
- average utility is maximum
Q2 | Which of the following is called gossans first law
- law of substitution
- law of equi marginal utility
- law of diminishing marginal utility
- none of the above
Q3 | When individuals income falls (everything remain the same) his demand foran inferior good
- rises
- falls
- remains the same
- we cannot say without additional information
Q4 | If negative income effect is greater than positive substitution effect : theproduct will be
- a normal good
- an inferior good
- a giffen good
- a complementary good
Q5 | Which of the following statement is FALSE with regard to marginal utility
- marginal utility is the utility derived from last unit
- as consumption increases marginal utility goes on diminishing
- at saturation point marginal utility is zero
- marginal utility increases at a diminishing range
Q6 | According to Marshall consumer surplus is:
- total utility – marginal utility
- total utility + marginal utility
- total utility derived – price
- price – marginal utility
Q7 | If both the products X & Y are normal goods
- slopes down towards right
- slopes up towards right
- slopes up towards left
- slopes down towards left
Q8 | Which of the following statement is TRUE with regard to total utility
- total utility is the utility derived from last unit
- total utility increases at a diminishing range
- as consumption increases total utility goes on diminishing
- at saturation point total utility is negative
Q9 | If negative income effect is less than positive substitution effect : the productwill be
- a normal good
- an inferior good
- a giffen good
- a complementary good
Q10 | Which of the following statements is true
- hicksian substitution effect is greater than slutsky substitution effect
- slutsky substitution effect is greater than hicksian substitution effect
- hicksian substitution effect is same and equal to slutsky substitution effect
- hicksian substitution effect is the reverse of slutsky substitution effect
Q11 | According to Hicks substitution effect is
- the movement to a higher indifference curve
- the movement to a lower indifference curve
- the movement along an indifference curve
- the movement to a decreased consumption
Q12 | Strong ordering means
- absence of indifference
- presence of indifference
- no difference between different combinations
- none of the above
Q13 | In the fundamental theorem of consumption and to prove the law of demand,Samualson uses
- compensating variation in income
- the cost difference
- the over compensation effect
- substituting variation in price
Q14 | If negative income effect is greater than positive substitution effect : priceeffect will be
- zero
- negative
- positive
- positive and greater than one
Q15 | As per indifference curve analysis consumer equilibrium is attained when
- slope of indifference curve is constant
- slopes of both indifference curve and income price line are equal
- slopes of both indifference curve and income price line are opposite
- both income price line and indifference curve are parallel.
Q16 | The slope of a budget line is
- the satisfaction level of both the commodities
- the income level of the consumer
- the price ratio of both the commodities under consideration
- price level of a country
Q17 | At the point of tangency the slope of indifference curve is
- differ from point to point
- is equal on the other side of the mid point
- is the same
- is increasing
Q18 | The slope of a budget line throughout its length is
- the satisfaction level of both the commodities
- the income level of the consumer
- the price ratio of both the commodities under consideration
- price level of a country
Q19 | The income effect for a commodity is
- is always positive
- is always negative
- depends upon price effect
- determines the nature of the commodity
Q20 | The substitution effect for a commodity is
- is always positive
- depends upon the nature of the commodity
- depends upon price effect
- sometimes negative and sometimes positive
Q21 | Price effect is
- income effect – substitution effect
- substitution effect – income effect
- income effect + substitution effect
- income effect + substitution effect- negative effects
Q22 | For a giffen good, when price falls
- demand increases at a faster rate
- demand decreases
- demand remains constant
- demand curve has a negative slope
Q23 | Inferior goods are the goods with
- falling income effect
- rising income effect
- negative income effect
- positive marshallian effects
Q24 | Indifference curves are
- always parallel
- may be parallel
- may not be parallel
- both b and c
Q25 | Revealed preference theory assumes
- weak ordering
- strong ordering
- constant ordering
- multiple ordering