CBSE Questions for Class 11 Commerce Economics Theory Of Consumer Behaviour Quiz 14 - MCQExams.com

Consumer's equilibrium occurs when __________.
  • $$MRS > \dfrac{P_x}{P_y}$$
  • $$MRS = \dfrac{P_x}{P_y}$$
  • $$MRS < \dfrac{P_x}{P_y}$$
  • $$MRS = \dfrac{P_y}{P_x}$$
L-shaped indifference curve exists in case two goods are ____________.
  • perfect complements
  • perfect substitutes
  • substitutes
  • not related
A straight downward sloping indifference curve implies ________.
  • constant MRS
  • unchanged MRS
  • rising
  • none of the above
In case of giffen goods, the demand curve is:
  • backward sloping (or upward sloping)
  • negative sloping
  • horizontal
  • vertical
Apart from $$P_{x}$$, $$P_{z}$$, $$Y$$ and $$T$$, other factor affecting market demand are:
  • number of producers in the market
  • number of consumers, income distribution and age-sex composition of population
  • income groups and life expectancy
  • none of the above.
A rational producer will always operate on which portion of demand curve?
  • elastic
  • inelastic
  • unitary elastic
  • perfectly inelastic
At the point of consumer's equilibrium indifference curve and budget curve are __________.
  • passing through each other
  • intersecting
  • tangent
  • none of the above
How much of normal goods and how much of inferior goods does the consumer buy with increase in income?
  • Less of normal good and more of inferior good
  • More of normal good and less of inferior good
  • Same of normal good and less of inferior good
  • More of normal good and same of inferior good
Which assumption of consumer theory states that if the consumer prefers A to B, then he will not prefer B to A in another time period?
  • Transitivity
  • Preference
  • Rationality
  • Consistency
Which assumption implies the consumer aims at utility maximisation?
  • Rationality
  • Ordinality
  • Cardinality
  • None of the above
Substitution effect states that with fall in price of a good, its demand rises because _____________.
  • consumer finds that price of substitute good have fallen
  • consumer finds that price of complementary goods have fallen
  • consumer feels that price of related good have risen
  • consumer actually finds that price of related good have risen
In the 'kinked-demand curve' model, the lower portion of the demand curve is:
  • elastic
  • inelastic
  • perfectly elastic
  • unitary elastic

The graphic presentation of a table showing price and demand relationship for a commodity in the market is called ________.
  • individual demand curve
  • producer's demand curve
  • market demand curve
  • consumer's demand curve

The subject matter of elasticity of demand is __________.
  • direction of change in quantity in response to change in own price of the commodity
  • degree of change in quantity in response to change in own price of the commodity
  • absolute change in quantity response to change in own price of the commodity
  • None of these
Under perfect competition, price equals AR which is further equal to:
  • TR
  • MC
  • MR
  • AC
The kink occurs at:
  • prevailing price
  • any price
  • to be determined price
  • any quantity
In the 'kinked-demand curve' model, the upper portion of the demand curve is:
  • elastic
  • inelastic
  • perfectly elastic
  • unitary elastic
In case of normal goods, demand curve shows __________.
  • a negative slope
  • a positive slope
  • zero slope
  • none of these
What is that one effect which Marshall ignored but Hicks took into account?
  • Income effect
  • Substitution effect
  • Price effect
  • Output effect
Specific quantity to be purchased against a specific price of the commodity is called ______.
  • demand
  • quantity demanded
  • movement along the demand curve
  • shift in demand curve
When price of substitute good Z rises, then supply of X will _______.
  • not change
  • fall to zero
  • decrease
  • rise

$$E_d > 1$$ represents ________.
  • elastic demand
  • inelastic demand
  • unitary elastic demand
  • none of these

Substitution effect takes place when price of the commodity becomes ___________.
  • relatively cheaper
  • relatively dearer
  • stable
  • both (a) and (b)
An increase in the price of electricity will cause the demand for electric appliances to __________.
  • rise
  • fall
  • remains the same
  • none of these
If two goods are complementary then rise in the price of one results in ___________.
  • rise in demand for the other
  • fall in demand for the other
  • rise in demand for both
  • none of these
Law of demand must fail in case of ________.
  • normal goods
  • giffen goods
  • inferior goods
  • none of these
As a result of rise in consumer's income, the demand curve for coarse grain (inferior good) ___________.
  • becomes a horizontal straight line
  • becomes a vertical straight line
  • shifts to the right
  • shifts to the left

Law of demand is violated when ___________.
  • income effect is negative
  • substitution effect is negative
  • negative income effect is greater than substitution effect
  • negative income effect is less than substitution effect

Quantity demanded is a specific amount of a commodity that the consumer is ready to buy against a specific price at a particular time.
  • True
  • False

Demand for a commodity can exist independent of its price.
  • True
  • False

Demand for a commodity refers to the entire demand schedule.
  • True
  • False
In the case of substitute goods, a fall in the price of Good X causes a fall in demand for Good Y.
  • True
  • False
Law of diminishing marginal utility states that when more and more units of a commodity are consumed, marginal utility ___________.
  • begins to increase
  • remains constant
  • begins to decrease
  • becomes zero

For a family of four, demand schedule for rice should be the same for each member.
  • True
  • False
Write true or false with a reason:
Increase in income of the consumer is the only cause that leads to a parallel shift of budget line to the right.
  • True
  • False
In case of complementary goods, a rise in price of Good X causes a rise in demand for Good Y.
  • True
  • False
Quantity demanded (and not demand) for a commodity changes with respect to its own price.
  • True
  • False
A shift in the budget line, when prices are constant, is due to:
  • change in demand
  • change in income
  • change in preferences
  • change in utility
An indifference curve is related to:
  • consumer's income
  • prices of goods X and Y
  • total utility from goods X and Y
  • choice and preferences of the consumer
Diagrammatic presentation of consumer's utility set is called ______________.
  • indifference curve
  • utility curve
  • budget line
  • transformation curve
Budget line indicates __________.
  • price ratio
  • income ratio
  • cost ratio
  • none of these
A set of ICs drawn in a graph is called:
  • indifference curve
  • indifference map
  • budget line
  • budget set
As we move along the indifference curve (left to right), the slope of IC tends to:
  • unity
  • rise
  • zero
  • decline
Given the fact that MRS between goods X and Y is diminishing, IC is:
  • convex to the origin
  • concave to the origin
  • straight line
  • none of these
Marginal rate of substitution indicates:
  • slope of production possibility curve
  • slope of indifference curve
  • slope of budget line
  • slope of income line
Which of the following is an assumption of IC analysis?
  • Monotonic preferences of the consumer
  • Declining marginal rate of substitution
  • Cardinal numbers
  • All of these
Given the money income and the price, the line which shows all different combinations of two goods that a consumer can buy by spending all his income is called __________.
  • production line
  • budget line
  • iso-cost line
  • none of these
Write true or false with a reason:
All attainable combinations of Good-X and Good-Y are below the budget line of a consumer.
  • True
  • False
Write true or false with a reason:
Slope of indifference curve shows MRS.
  • True
  • False
In an indifference map, higher indifference curve (IC) Indicates:
  • lower level of satisfaction
  • same level of satisfaction
  • higher level of satisfaction
  • either same or higher level of satisfaction
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