Total utility is maximum when

1

(a)

Marginal utility is zero

(b)

Marginal utility is at its highest point

(c)

Marginal utility is equal to average utility

(d)

Average utility is maximum

What does the area under the marginal utility curve depict?

1

(a)

Average Utility

(b)

Total Utility

(c)

Indifference Curve

(d)

Consumer Equilibrium

An indifference curve slopes down towards right since more of one commodity and less of another result in______________.

1

(a)

Same satisfaction.

(b)

Greater satisfaction.

(c)

Maximum satisfaction

(d)

Decreasing expenditure

When economists speak of the utility of a certain good, they are referring to________________.

1

(a)

The demand for the good

(b)

The usefulness of the good in consumption

(c)

The satisfaction gained from consuming the good

(d)

The rate at which consumers are willing to exchange one unit of good for another one

If X and Y are two commodities,  indifference curve shows____________.

1

(a)

X and Y are equally preferred

(b)

Y is preferred to X

(c)

X is preferred to Y

(d)

None of these

Which of the can be referred to as 'point of satiety'?

1

(a)

Marginal Utility is negative

(b)

Marginal utility is zero

(c)

Total Utility is rising

(d)

Total Utility is falling

Total utility increases as long as marginal utility is positive (+).

1

(a) False

(b) True

An indifference curve (IC) IS convex to the origin because of increasing MRS_xy

1

(a) True

(b) False

In case of single commodity, consumer will be in equilibrium when M.U. = Income

1

(a) True

(b) False

In case of indifference curve consumer is in equilibrium if MRS_xy=\(\frac { { P }_{ x } }{ { P }_{ y } } \)

1

(a) False

(b) True

At a grand family get-together party you go on eating and eating since you have not to pay.

1

(a) True

(b) False

What do you mean by the budget set of a consumer?

1

(a)

Budget set is the collection of all bundles of' goods that a consumer can buy with his income at the prevailing market prices.

If a consumer has monotonic preferences, can she be indifferent between the bundles (10, 8) and (8, 6)?

1

(a)

No, if a consumer has monotonic preferences, bundle (10, 8) is preferred to bundle (8, 6) as bundle (10, 8) has more units of both the goods

Define total utility

1

(a)

Total utility is the sum of all the utilities derived from consumption of all the units of a particular commodity.

What is consumer's equilibrium?

1

(a)

Consumer's equilibrium refers to a situation where a consumer gets the maximum satisfaction out of his given money income and given market price.

Why does an indifference curve slope downwards?

1

(a)

An Indifference curve slopes downwards because increase in units of one good requires decrease in the number of units of the other good to maintain the same level of satisfaction.

Give equation of Budget Line.

1

(a)

P₁X₁ + P₂X₂ = M.

What is the horizontal (X-axis) intercept of budget line?

1

(a)

\(\frac{money\ income}{price\ of\ commodity\ on\ horizontal\ axis}=\frac{M}{P1}\)

What is the Vertical (Y-axis)intercept of budget line?

1

(a)

Vertical intercept of budget line
\(\frac{money\ income}{price\ of the\ commodity\ on\ vertical\ axis}=\frac{M}{P2}\)

Why is budget line negatively sloped?

1

(a)

Budget line is downward sloping because if a consumer wants to buy more of one commodity, he has to buy less of other goods, given money income.