CBSE Questions for Class 11 Commerce Economics Theory Of Consumer Behaviour Quiz 15 - MCQExams.com

Write true or false with a reason:
The rate at which the consumer can substitute Good-X for Good-Y tends to decline as we move downward along the price line.
  • True
  • False
Write true or false with a reason:
Indifference curve is not convex to the origin in case of two normal goods.
  • True
  • False
Write true or false with a reason:
In an indifference map, higher IC always points to higher level of satisfaction.
  • True
  • False

Marginal Utility must diminish as more and more standard units of a commodity are continuously consumed.
  • True
  • False
For perfect substitutability between factors X and Y _________.
  • $${MRTS}_{xy}$$ will be increasing
  • $${MRTS}_{xy}$$ will be decreasing
  • $${MRTS}_{xy}$$ will be constant
  • none of the above
Consumer equilibrium can be determined only if the law of diminishing marginal utility holds good.
  • True
  • False
Normal goods have ___________.
  • Zero income elasticity
  • Negative income elasticity
  • Positive income elasticity
  • Infinite income elasticity
At equilibrium, the slope of the indifference curve is
  • Equal to the slope of budget line
  • Greater than slope of budget line
  • Smaller than the slope of budget line
  • None of the above
Indifference curves between income and leisure for an individual are generally
  • Concave to origin
  • Convex to the origin
  • Negatively sloped straight lines
  • Positively sloped straight lines
In the event that aggregate demand is less than output, which of the following consequences can you expect?
  • A reduction in both employment and income in the economy.
  • An increase in both income and employment in the economy.
  • An increase in employment but a decrease in income in the economy.
  • An increase in income but a decrease in employment in the economy.
If demand is inelastic, a change in the price ___________________.
  • Will change the quantity in same direction
  • Will change total revenue in same direction
  • Will change total revenue in the opposite direction
  • Will not change total revenue
Identify the order of chronological development of the theory of demand.
Marshall's theory of demand
Indifference curves
Revealed preference theory
Weak Preference ordering theory of demand.
  • 1, 3, 4, 2
  • 4, 2, 1, 3
  • 1, 3, 2, 4
  • 1, 2, 3, 4
'In a particular time-period more some one consumes something, the utility and importance of the consumed item goes on falling for the person'. The situation is best explained by the economic idea.
  • Factorial Fall theory
  • Menu Cost Loss
  • Consumption Limit
  • None of the above
According to the monetarists, in the long-run, the Philips Curve is:
  • vertical
  • horizontal
  • downward sloping
  • upward sloping
In May 2013, firm was supplying 500kg of sugar at market price of Rs.30/-per kg. During June 2013, firm's supply of sugar had decreased to 450kg at price of Rs.20/-per kg. These changes show that supply of sugar is ______________.
  • Oerfectly elastic
  • Perfectly inelastic
  • Less elastic
  • More elastic
Select the suitable policy steps a government usually takes to boost demand and support the economy in deflationary situations using the code given below:
Lowering interest rates together with cutting direct taxes
Emphasising saving and enhancing salaries
Increasing government expenditure.
  • $$1$$ and $$2$$
  • $$2$$ and $$3$$
  • $$1$$ and $$3$$
  • $$1, 2$$ and $$3$$
Which one among the following pairs is not correctly matched?
  • When total product increases at an increasing rate : Marginal product increases
  • When total product increases at a diminishing rate : Marginal product declines
  • When total product reaches its maximum : Marginal product becomes zero
  • When total product begins to decline : Marginal product becomes positive
If due to fall in the price of good X, demand for good Y rises, the two goods are :
(Choose the correct alternative)
  • Substitutes
  • Complements
  • Not related
  • Competitive
On subsequent consumption of additional units, the utility ________.
  • reduces
  • increases
  • remains constant
  • fluctuates up and down
Indifference Curve's slope is measured by: 
  • Ratio of gain in good on Y axis to ratio of gain in good on X axis
  • Ratio of sacrifice of good on Y axis to ratio of sacrifice of good on X axis
  • Ratio of sacrifice of good on Y axis to ratio of gain in good on X axis
  • Ratio of gain in good on Y axis to ratio of sacrifice of good on X axis
All points on the indifference curve offer equal satisfaction to the consumer.
  • True
  • False
A consumer consumes 4 units of a commodity and gets a total utility of 30 utils. When she consumes 7 units, she gets a Total Utility of 39 utils. What is the Marginal Utility she gets at the consumption of 7th units of that commodity?
  • 39 utils
  • 30 utils
  • 9 utils
  • 3 utils
Suppose commodity X was originally being old at Rs.10 per unit and quantity demanded was 1000 units. If the price of commodity X changes to Rs.14 per unit as a result, quantity demanded changes to 500 units. The price elasticity of demand is
  • Ed < 1
  • Ed = 1
  • Ed = 0
  • Ed > 1
Utility is most closely related to the term _____.
  • Usefulness
  • Satisfaction
  • Necessity
  • None of the above
Law of diminishing marginal utility was originally propounded by _____.
  • Prof. Alfred Marshall
  • Prof. Hicks
  • Prof. Samuelson
  • Prof. Gossen
Law of DMU does not hold true in the absence of its assumptions. Choose from the option below.
  • True
  • False
  • Partially true
  • Incomplete statement
The want satisfying power of a good is known as _____.
  • Utility
  • Usefulness
  • Both A and B
  • None of the above
Which of the following is not an assumption of law of diminishing marginal utility? 
  • Cardinal measurement of utility
  • No change in consumers income
  • Different price for same commodity
  • All of the above
Which of the following are the assumptions of Law of DMU?
(i) Continuous consumption
(ii) Standard units of consumption
(iii) Price of good and income of consumer should remain constant
(iv) Marginal utility of money should remain constant
(v) Quality of goods should remain the same Choose from the options below.
  • (i), (ii) and (iv)
  • (ii), (iii) and (iv)
  • (iii), (iv) and (v)
  • (i), (ii), (iii), (iv) and (v)
Law of DMU doesnt hold true under which of the following situations?
  • Money
  • Hobbies
  • Addiction
  • All of the above
Law of diminishing marginal utility is also known as _____. 
  • Fundamental law of satisfaction
  • Fundamental psychological law
  • Both A and B
  • Neither A or B
According to Law of DMU, total utility is the slope of marginal utility. Choose from the option below.
  • True
  • False
  • Partially true
  • Incomplete statement
A consumer is in equilibrium, how will a consumer behave if $$MUx / Px < MUy / Py$$ ?
  • Consumer will consume more of good X and less of good Y.
  • Consumer will consume more of good Y and less of good X.
  • Consumer will consume more of both goods.
  • Consumer will consume less of both goods.
_____ shows various combinations of two products that give same amount of satisfaction. 
  • ISO cost curve
  • Indifference curve
  • Marginal utility curve
  • ISO quant
An indifference curve is always drawn for ______ commodities.
  • one
  • two
  • three
  • N-number
Marshall used the concept of elasticity only with reference to _____.
  • income changes
  • price Changes
  • quantity changes
  • related goods changes
The demand schedule shows the relationship between the quantity demanded of a commodity and ____________.
  • the income of the consumer
  • the price of the commodity
  • the tastes of consumer
  • the price of related commodities
The law of diminishing MRS means that ___________________.
  • the slope of indifference curve must always be decreasing as we move along it from left to right
  • the slope of indifference curve must always be increasing as we move along it from left to right
  • the slope of market demand curve must always be decreasing as we move along it from left to right
  • the slope of indifference curve must always be decreasing as we move along it from right to left
The sloping down indifference curve indicates that _____________.
  • there is inverse relationship between price and quantity demanded
  • the amount of one commodity in the combination is increased, the amount of other commodity is reduced
  • the amount of one commodity in the combination is increased, the amount of other commodity is also increased
  • none of the above
The ratio of exchange between two goods in indifference curve analysis is shown by _________.
  • the price line
  • the price consumption curve
  • the income consumption curve
  • ISLM curve
The indifference curve analysis is also known as _________.
  • ISO-Utility analysis
  • marginal utility analysis
  • cardinal utility analysis
  • gossens first law
The Marginal Utility Curve slopes downward from left to right indicating ________. 
  • a direct relationship between marginal utility and the stock of commodity
  • a constant relationship between utility and the stock of commodity
  • a proportionate relationship between marginal utility and th stock of commodity
  • an inverse relationship between marginal utility and the stock of commodity
a) The indifference curve can be used to indicate the supply of labour available at different .wage rates
b) The indifference curve technique can be used to analyse some taxation problems
  • Both (a) and (b) are true
  • (a) is true, but (b) is false
  • (a) is false, but (b) is true
  • Both (a) and (b) are false
The economist who uses indifference curve analysis for the measurement of consumers surplus is _______.
  • Pareto
  • Hicks
  • Gossen
  • Marshall
a) The price consumption curve is a useful tool of indifference curve analysis
b) If the slope of price consumption curve is negative, the elasticity of demand for the commodity is greater than unity
  • Both (a) and (b) are true
  • (a) is true, but (b) is false
  • (a) is false, but (b) is true
  • Both (a) and (b) are false
In indifference curve analysis, the fundamental condition of equilibrium is ___________.
  • $$MRS_{x,y}=\frac{P_x}{P_y}$$
  • $$MRS_{x,y}=\frac{P_y}{P_x}$$
  • $$MRS_{x,y}\neq \frac{P_x}P_{y}$$
  • Both A and B
If the disposal income of a household increases by 10% and the demand for bread falls by 5%. The goods can be considered _______.
  • essential goods
  • luxury goods
  • inferior goods
  • normal goods
Demand of a commodity mainly depends upon which of the following?
  • Willingness to pay
  • Ability to pay
  • Both A and B
  • None of the above
If the price of vegetable burger increases by 10% and the demand of egg burger increases by 8%, then the cross elasticity is ________.
  • 1.25
  • 0.8
  • 0.25
  • 0.5
A discount store has a special offer on CDs. It reduces their price from Rs.150 to Rs.Suppose the store manager observe that the quantity demanded increases from 700 CDs to 1,300 CDs. What is the price elasticity of demand for CDs?
  • -2.0
  • 1.25
  • -2.57
  • 0.8
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