Consumer Behaviour and Demand Test

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Consumer Behaviour and Demand Test - 7

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Weekly Quiz Competition

Question 1
1 / -0.25

An indifference curve is always?

A
Concave to the origin

B
A vertical straight line

C
Convex to the origin

D
L-shaped

Solution

In the case of normal goods indifference curve is always convex.
Question 2
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According to Marshall, the law of diminishing marginal utility applies on ___________?

A
Cash but not on bank money

B
All commodities except money

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

D
Bank money

Solution

As per Alferd marshall MU of money is constant.
Question 3
1 / -0.25

Consumer ’s equilibrium means?

A
The position of rest or maximum satisfaction with given income and prices

B
The point from where the consumer starts his consumption

C
The position which the consumer cannot attain because his income is low

D
The position of frequent movement in all directions

Solution

consumer equilibrium is a state of balance for the consumer from where he doesn ’t want to move either forward or backward. This is achieved when consumer gets maximum satisfaction with given income and he doesn ’t want to change his way of existing expenditure.
Question 4
1 / -0.25

MU1 + MU2 + ……..MUn represents?

A
Total utility of a commodity

B
Total marginal utility

C
Total average utility

D
None of the above

Solution

Total utility is the total satisfaction received from consuming a given total quantity of a good or service. It is the sum of marginal utility which can be expressed as:

TU = (MU₁ + MU₂ + ............ MU_n )
Question 5
1 / -0.25

A budget constraint line is a result of?

A
Market price of commodity Y

B
Market price of commodity X

C
Income of the consumer

D
All of above

Solution

A budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices.
Question 6
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An indifference curve indicates, ceteris paribus?

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

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

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

D
A consumer ’s preference for any two goods

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 7
1 / -0.25

The coefficient of price elasticity of demand is always

A
Positive

B
Zero

C
Negative

D
Undefined

Solution

There is a negative relation between price of the commodity and its quantity demanded,due to which elasticity coffecient is always negative.
Question 8
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Utility of a good can be explained as a?

A
Desire to consume

B
Difference between what a consumer is willing to pay and actually pays

C
Satisfaction that a consumer derives from the consumption of a particular good.

D
Monetary value a consumer gains from consuming a particular good

Solution

Utility represents satisfaction experienced by the consumer from a good.
Question 9
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Which of the following statements regarding ordinal utility is true?

A
Utility can neither be measured nor can be ranked in order of preferences.

B
Utility can be measured, but cannot be ranked in order of preferences.

C
Utility can be measured and can also be ranked in order of preferences.

D
Utility cannot be measured, but can be ranked in order of preferences.

Solution

The Ordinal Utility approach is based on the fact that the utility of a commodity cannot be measured in absolute quantity, but however, it will be possible for a consumer to tell subjectively(by ranking) whether the commodity derives more or less or equal satisfaction when compared to another.
Question 10
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Which of the following curve has a negative slope and cannot interest each other?

A
None of above

B
Indifference curves

C
Demand and supply curves

D
Isoquants

Solution

IC slopes downward because as the consumer increases the consumption of one commodity, he has to give up certain units of other commodity in order to maintain the same level of satisfaction.

two indifference curves represent two different levels of satisfaction. If these indifference curves intersect each other, the intersection will represent same level of satisfaction, which is impossible.

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Re-Attempt Weekly Quiz Competition

Consumer Behaviour and Demand Test - 7

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Consumer Behaviour and Demand Test - 7

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SHARING IS CARING

Question 1

Concave to the origin

A vertical straight line

Convex to the origin

L-shaped

Solution

Question 2

Cash but not on bank money

All commodities except money

Money in the same manner as it applies on the commodity

Bank money

Solution

Question 3

The position of rest or maximum satisfaction with given income and prices

The point from where the consumer starts his consumption

The position which the consumer cannot attain because his income is low

The position of frequent movement in all directions

Solution

Question 4

Total utility of a commodity

Total marginal utility

Total average utility

None of the above

Solution

Question 5

Market price of commodity Y

Market price of commodity X

Income of the consumer

All of above

Solution

Question 6

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

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

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

A consumer ’s preference for any two goods

Solution

Question 7

Positive

Zero

Negative

Undefined

Solution

Question 8

Desire to consume

Difference between what a consumer is willing to pay and actually pays

Satisfaction that a consumer derives from the consumption of a particular good.

Monetary value a consumer gains from consuming a particular good

Solution

Question 9

Utility can neither be measured nor can be ranked in order of preferences.

Utility can be measured, but cannot be ranked in order of preferences.

Utility can be measured and can also be ranked in order of preferences.

Utility cannot be measured, but can be ranked in order of preferences.

Solution

Question 10

None of above

Indifference curves

Demand and supply curves

Isoquants

Solution

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