Micro Economics 1 Set 1 MCQs

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