Basics of General Economics - Utility Analysis and Consumer Behaviour
Exam Duration: 45 Mins Total Questions : 30
Utility is a -
- (a)
Subjective concept
- (b)
Objective concept
- (c)
Irrelevant concept
- (d)
Indeterminate concept
Which of the following is not a consumption:
- (a)
Burning of gas when cooking of food
- (b)
Burning of furniture in an accident of fire
- (c)
Eating of an Ice-Cream
- (d)
Burning of crackers on Diwali
All wants of an individuals are not of:
- (a)
Equal importance
- (b)
Immediate importance
- (c)
Fixed importance
- (d)
All of the above
Which of the following Utility approaches suggest that Utility can be measured and quantified?
- (a)
Cardinal
- (b)
Ordinal
- (c)
Both Cardinal and Ordinal
- (d)
Neither approach makes such suggestion
Under Marginal Utility analysis, Utility is assumed to be a -
- (a)
Cardinal Concept
- (b)
Ordinal Concept
- (c)
Indeterminate Concept
- (d)
Infinite Concept
Cardinal Measure of Utility is required in
- (a)
Marginal Utility Theory
- (b)
Indifference Curve Theory
- (c)
Revealed Preference Theory
- (d)
None of the above
Cardinal Approach to Utility analyse -
- (a)
One Commodity at a time
- (b)
Two Commodities at a time
- (c)
Many Commodities at a time
- (d)
Does not analyse any Commodity at all
Under Cardinal Approach to Utility, ______ is the measuring rod of Utility.
- (a)
Customer Satisfaction
- (b)
Relative Preference
- (c)
Money
- (d)
All of the above
_____ is the sum total of the Utility derived from additional units of a commodity.
- (a)
Average Utility
- (b)
Marginal Utility
- (c)
Total Utility
- (d)
Ordinal Utility
Total Utility -
- (a)
Will generally be positive
- (b)
Will generally be negative
- (c)
Can be positive or negative but not zero
- (d)
Can be positive or negative or zero
Marginal Utility will always show -
- (a)
Increasing trend
- (b)
Decreasing trend
- (c)
Both (a) and (b)
- (d)
Neither (a) nor (b)
No. of Units | Total Utility | Marginal Utility |
0 | 0 | |
1 | 3600 | |
2 | 6800 | |
3 | 9600 | |
4 | 12000 | |
5 | 14000 | |
6 | 15600 | |
7 | 16800 | |
8 | 17600 | |
9 | 18000 |
What is the Marginal Utility when consumption increases from 6 units to 7 units?
- (a)
3000
- (b)
1200
- (c)
2000
- (d)
1500
No. of Units | Total Utility | Marginal Utility |
0 | 0 | ? |
1 | 1800 | A |
2 | B | 1600 |
3 | 4800 | C |
4 | D | 1200 |
5 | 7000 | E |
6 | F | 800 |
7 | 8400 | G |
8 | 8800 | H |
9 | I | 200 |
10 | J | 0 |
11 | 8800 | K |
12 | L | -600 |
Find the value of "K" in the above Table.
- (a)
200
- (b)
-200
- (c)
11
- (d)
cannot be determined
The Law of Diminishing Marginal Utility states that the more a consumer consumes a product, he derives ______ from additional consumption.
- (a)
Equal Utility
- (b)
Higher Utility
- (c)
Lesser Utility
- (d)
Infinite Utility
Ordinal Approach to Utility analyses -
- (a)
One Commodity at a time
- (b)
Two Commodities at a time
- (c)
Many Commodities at a time
- (d)
Does not analyse any Commodity at all
______ Consumer Surplus indicates higher level of efficiency in the economy.
- (a)
Higher
- (b)
Lower
- (c)
Balanced
- (d)
Negative
While analyzing Marshall's measure of Consumer's Surplus, we assume -
- (a)
Imperfect Competition
- (b)
Perfect Competition
- (c)
Monopoly
- (d)
Monopsony
If a buyer's willingness to pay for a new car is Rs 12,00,000, and she is able to actually buy it for Rs 9,00,000, her Consumer Surplus is-
- (a)
Rs 12,00,000.
- (b)
Rs 3,00,000.
- (c)
Rs 9,00,000.
- (d)
Rs 0
In case of necessaries, the Marginal Utilities of the first few units are -
- (a)
Infinite
- (b)
Zero
- (c)
There is no Marginal Utility at all
- (d)
Nothing can be said
The concept of Consumer's Surplus is based on the assumption that Marginal Utility of Money is
- (a)
Zero
- (b)
Negative
- (c)
Constant
- (d)
Any of the above
Indifference Curve Approach is also called -
- (a)
Ordinal Utility Analysis
- (b)
Marshallian Approach
- (c)
Cardinal Utility Analysis
- (d)
All of the above
In Indifference Curve Analysis, the Customers' preferences are -
- (a)
Ranked / arranged in preference order
- (b)
Measured in terms of money
- (c)
Both (a) and (b)
- (d)
Neither (a) nor (b)
Which of the following statements regarding Indifference Curve is not true?
- (a)
An Indifference Curve always has a positive slope
- (b)
Indifference Curve slopes downward to the right
- (c)
Two Indifference Curves intersect each other at equilibrium
- (d)
Higher level of Indifference Curve shows higher level of Utility
Which of the following statements is incorrect?
- (a)
An Indifference Curve must be downward-sloping to the right
- (b)
Convexity of a Curve implies that the slope of the curve diminishes as one moves from left to right
- (c)
The Elasticity of Substitution between two goods to a Consumer is zero
- (d)
The total effect of a change in the price of a good on its quantity demanded is called the Price Effect.
______ indicates how much of one commodity is substituted for how much of another commodity.
- (a)
Marginal Utility
- (b)
Marginal Returns
- (c)
Marginal Rate of Substitution
- (d)
Marginal Income
When an Indifference Curve is L shaped, then two goods will be -
- (a)
Perfect Substitute Goods
- (b)
Substitute Goods
- (c)
Perfect Complementary goods
- (d)
Complementary goods
If marginal rate of substitution is increasing then shape of indifference curve is -
- (a)
Concave
- (b)
Convex
- (c)
L-shape
- (d)
None of these
Every Point below the Price Line represents -
- (a)
Over-spending by the Consumer
- (b)
Under-spending by the Consumer
- (c)
Full-spending by the Consumer
- (d)
Any of the above
At the equilibrium point on Indifference Curve which of the following equation is satisfied?
- (a)
MRSxy = MUx ÷ MUy < Px ÷ Py
- (b)
MRSxy < MU ÷ MUy = Px ÷ Py
- (c)
MRSxy = MUx ÷ MUy = Px ÷ Py
- (d)
None of the above
At the equilibrium point on Indifference Curve which of the following equation is satisfied?
- (a)
MRSxy =\(\frac { MUx }{ MUy } =\frac { Px }{ Py } \).
- (b)
\(\frac { MUx }{ Px } =\frac { MUy }{ Py } \).
- (c)
Both (a) and (b)
- (d)
Neither (a) nor (b)