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This set of Micro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 1 Set 2
Q1 | Hicks Allen indifference theory is based on
- weak ordering
- strong ordering
- constant ordering
- multiple ordering
Q2 | Income consumption curve of an inferior commodity is
- positively sloped
- backward bending
- downward slopping straight line
- showing constant income effect
Q3 | In case of a convex indifference curve
- mrs xy is constant
- mrs xy is increasing
- mrs xy is negligible
- mrs xy is diminishing
Q4 | ‘Higher the indifference curve higher will be level of satisfaction’. Thestatement is
- always true
- always false
- sometimes true and sometimes false
- true only if price effect is positive
Q5 | As per indifference curve analysis, consumer always try to reach
- higher indifference
- lower indifference curve
- middle indifference curve
- lower income price line
Q6 | Which method is used by Hicks to eliminate the income effect when price of aproduct is changed
- compensating variation in income
- the cost difference
- the over compensation effect
- substituting variation in price
Q7 | The basic doctrine of consumers’ surplus is based on
- indifference curve analysis
- revealed preference theory
- law of substitution
- law of diminishing marginal utility
Q8 | According to Marshall, The law of diminishing marginal utility
- applies on money in the manner in which it applies on commodity
- do not applies on money except bank money
- does not applies on bank money but applies on cash
- applies on all commodities except money
Q9 | An indifference curve represent
- four commodities
- less than two commodities
- only two commodities
- only one commodity
Q10 | Indifference curve is always
- concave to the origin
- convex to the origin
- l shaped
- a straight line
Q11 | Engel curve for giffen good is
- positively sloped
- negatively sloped
- horizontal straight line
- vertical straight line
Q12 | Marginal utility is
- always zero
- increases at a diminishing rate
- the utility derived from last unit
- all the above
Q13 | Total utility is
- the sum total of marginal utilities
- entire utility derived from whole consumption
- increases at a diminishing rate
- all the above
Q14 | When Total utility is increasing at an decreasing rate, marginal utility is
- constant
- negative
- increasing
- decreasing
Q15 | Other things being equal a decrease in demand can be caused by
- a fall in price of the commodity
- a fall in income of the consumer
- a rise in price of the substitute
- none of these
Q16 | When price of a product falls, more of it is purchased because of
- the substitution effect
- the income effect
- neither substitution effect nor income effect
- both the substitution and income effects
Q17 | “Utility or satisfaction is a subjective concept; therefore it could only beranked”. The statement supports
- cardinal utility theorist
- ordinal utility theorist
- behavioral theorist of the firm
- none of the above
Q18 | Ordinal utility analysis is otherwise known as
- gossens second law
- cardinality approach
- indifference curve analysis
- rationality approach
Q19 | Ordinal utility analysis Was developed by
- j.r.hicks & r.j.d. allen
- samualson
- marshall and jevons
- slutsky
Q20 | Total utility curve
- always rises
- first falls then rises
- always falls
- first rises and then falls after reaching its maximum
Q21 | At saturation point MU of a commodity is
- positive
- negative
- zero
- increasing
Q22 | A consumer reaches equilibrium when
- marginal utility is equal to price
- marginal utility greater than price
- marginal utility less than price
- total utility is equal to price
Q23 | Marshalian cardinal utility analysis assumes
- marginal utility of money is zero
- marginal utility of money is decreasing
- marginal utility of money is increasing
- marginal utility of money is constant
Q24 | When individuals income rises (everything remain the same) his demand fora normal good
- rises
- falls
- remains the same
- negative
Q25 | When individuals income falls (everything remain the same) his demand fora normal good
- rises
- falls
- remains the same
- negative