Consumers Equilibrium and Demand Test

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Consumers Equilibrium and Demand Test - 2

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Weekly Quiz Competition

Question 1
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An indifference curve indicates, ceteris paribus?

A
A consumer’s preference for any two goods

B
Combinations of goods which yield to a producer different levels of satisfaction

C
Combinations of goods which yield to a consumer equal degrees of satisfaction

D
Combinations of goods which yield to a consumer different levels of satisfaction

Solution

An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.
Question 2
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Which of the following utility approach suggests that utility is a measurable and quantifiable entity?

A
Ordinal approach

B
Cardinal approach

C
Both cardinal & ordinal

D
None of these

Solution

In cardinal utility approch utility is measured in numerical terms.And unit used for measurement is known as utils.
Question 3
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The value of elasticity in case of a horizontal line will be

A
One

B
Infinity

C
Zero

D
Greater than one

Solution

price elasticity of demand = % change in quantity demanded / % change in price,

which tends to infinity in case of horizontal demand curve
Question 4
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Which of the following statements regarding utility is not true?

A
Utility is always measurable.

B
It is purely a subjective entity.

C
It is a satisfying power of a commodity.

D
It helps consumers to make choices.

Solution

Utility is a subjective concept and varies from person to person, at different times and at different places. There cannot be a standardised measure for utility. Therefore, the point that utility always measurable is not true.
Question 5
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When the total utility is increasing at an increasing rate, marginal utility is___________?

A
Decreasing

B
Negative

C
Constant

D
Increasing

Solution

MU is addition to TU,

so if MU is rising TU will rise with higher rate.

MU never rises as per LDMU
Question 6
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According to Marshall, the law of diminishing marginal utility applies on ___________?

A
Money in the same manner as it applies on the commodity

B
All commodities except money

C
Bank money

D
Cash but not on bank money

Solution

As per Alferd marshall MU of money is constant.
Question 7
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At the point of tangency the slope of the indifference curve is ___________?

A
Less than the price line

B
Greater than the price line

C
The same as the price line

D
None of these

Solution

At point of tagency MRE=MRS.
Question 8
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Utility is measured in terms of?

A
Seconds

B
Centimeter

C
Gram

D
Utils

Solution

Measurement unit for utility is known as utils.
Question 9
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An indifference curve is always?

A
Convex to the origin

B
L-shaped

C
A vertical straight line

D
Concave to the origin

Solution

In the case of normal goods indifference curve is always convex.
Question 10
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The doctrine of consumer’s surplus is based on?

A
Revealed preference theory

B
Indifference curve analysis

C
Law of diminishing marginal utility

D
Law of substitution

Solution

The theory of consumer's surplus is based on the law of diminishing marginal utility. The law of diminishing marginal utility claims that as you consumer more of a commodity, the marginal utility derived from it decreases eventually

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Re-Attempt Weekly Quiz Competition

Consumers Equilibrium and Demand Test - 2

Result

Consumers Equilibrium and Demand Test - 2

Score

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Rank

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SHARING IS CARING

Question 1

A consumer’s preference for any two goods

Combinations of goods which yield to a producer different levels of satisfaction

Combinations of goods which yield to a consumer equal degrees of satisfaction

Combinations of goods which yield to a consumer different levels of satisfaction

Solution

Question 2

Ordinal approach

Cardinal approach

Both cardinal & ordinal

None of these

Solution

Question 3

One

Infinity

Zero

Greater than one

Solution

Question 4

Utility is always measurable.

It is purely a subjective entity.

It is a satisfying power of a commodity.

It helps consumers to make choices.

Solution

Question 5

Decreasing

Negative

Constant

Increasing

Solution

Question 6

Money in the same manner as it applies on the commodity

All commodities except money

Bank money

Cash but not on bank money

Solution

Question 7

Less than the price line

Greater than the price line

The same as the price line

None of these

Solution

Question 8

Seconds

Centimeter

Gram

Utils

Solution

Question 9

Convex to the origin

L-shaped

A vertical straight line

Concave to the origin

Solution

Question 10

Revealed preference theory

Indifference curve analysis

Law of diminishing marginal utility

Law of substitution

Solution

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