Q. An indifference curve slopes down towards right since more of one commodity and less of another result in: A. Same satisfaction B. Greater satisfaction C. Maximum satisfaction D. Decreasing Expenditure Answer: Same satisfaction
Q. The consumer is in equilibrium at a point where the budget line: A. Is above an indifference curve B. Is below an indifference curve C. Is tangent to an indifference curve D. Cuts an indifference curve Answer: Is tangent to an indifference curve
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Q. The elasticity of substitution between two perfect substitutions is: A. Zero B. Greater than zero C. Less than infinity D. Infinity Answer: Infinity
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Q. Which one is not a assumption of the theory of demand based on analysis of indifference curves? A. Given scale of preferences as between different combinations of two goods B. Diminishing marginal rate of substitution C. Constant marginal utility of money D. Consumers would always prefer more of a particular good to less
Q. The budget-line is also known as the: A. Iso-utility curve B. Production possibility line C. Isoquant D. Consumption possibility line Answer: Consumption possibility line
Q. In the case of a Giffen good, the demand curve will be: A. Horizontal B. Downward-slping to the right C. Backward falling to the left D. Upward-slopping to the right Answer: Backward falling to the left
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Q. If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be: A. Horizontal B. Vertical C. Positively sloped D. Negatively sloped Answer: Vertical
Q. In the case of an inferior good, the income elasticity of demand is: A. Positive B. Zero C. Negative D. Infinite Answer: Negative
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Q. Total utility is maximum when: A. Marginal utility is zero B. Marginal utility is at its highest point C. Marginal utility is equal to average D. Average utility is maximum Answer: Marginal utility is zero
Q. In respect of which of the following category of goods is consumer’s surplus highest? Giffen goods Necessities Luxuries Prestige goods Answer: Necessities
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