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11th Grade > Economics - 1

CONSUMER BEHAVIOR MCQs

Total Questions : 30 | Page 1 of 3 pages
Question 1. A consumer gets maximum satisfaction where the ___ are same.
  1.    Total utility and marginal utility
  2.    Price of commodity and marginal utility
  3.    Price of commodity and total utility
  4.    (A) and (B) both
 Discuss Question
Answer: Option C. -> Price of commodity and total utility
:
C
A consumer gets maximum satisfaction from his limited income when the marginal utility per rupee spent is equal for all goods.
Question 2. The basic difference between macroeconomics and microeconomics is:
  1.    microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade.
  2.    microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms.
  3.    microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
  4.    microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.
 Discuss Question
Answer: Option C. -> microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
:
C
Microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
Question 3. A professional basketball players' union negotiates a contract that dramatically increases all players' salaries. How would this influence the opportunity cost for a player who was considering giving up basketball to pursue a career in broadcasting?
  1.    it would not affect the opportunity cost of playing basketball or of broadcasting
  2.    it would increase the opportunity cost of continuing to play professional basketball
  3.    it would cause the production possibilities frontier to become convex
  4.    it would increase the opportunity cost of becoming a broadcaster
 Discuss Question
Answer: Option D. -> it would increase the opportunity cost of becoming a broadcaster
:
D
Opportunity cost is the value of a factor in its next best use. With an increase in salary for playing basketball, if a player is considering giving up basketball to pursue a career in broadcasting, his opportunity cost of becoming a broadcaster will increase.
Question 4. A shift in the budget line, when prices are constant, is due to
  1.    change in demand
  2.    change in income
  3.    change in preferences
  4.    change in utility
 Discuss Question
Answer: Option B. -> change in income
:
B
A budget line shows different combination of two goods, which a consumer can attain, given his income and market price of the goods. Therefore, any shift in the budget line, when prices are constant will be due to change in income of the consumer.
Question 5. Suppose a consumer has INR 100 to spend on two goods, shoes and shirts. If the price of a pair of shoes is INR 20 per pair and the price of a shirt is INR 15 each, which of the following combinations is unaffordable to the consumer?
  1.    0 pairs of shoes and 0 shirts
  2.    2 pairs of shoes and 4 shirts
  3.    5 pairs of shoes and 0 shirts
  4.    0 pairs of shoes and 7 shirts
 Discuss Question
Answer: Option D. -> 0 pairs of shoes and 7 shirts
:
D
The total price comes to INR 105 (7 shirts INR 15), which is greater than INR 100.
Question 6. The economizing problem involves the allocation of resources among competing wants. There is an economizing problem because there are:
  1.    unlimited wants
  2.    limited resources
  3.    both A and B
  4.    neither A nor B
 Discuss Question
Answer: Option C. -> both A and B
:
C
Both A and B. Economic problem is the problem of choice. It arises because resources are scarce and have alternative uses.
Question 7. Suppose your friend is indifferent to the bundles (4,6) and (6,6). Are the preferences of your friend monotonic?
  1.    Yes. He has reached his maximum level of satisfaction for Good-2 at (4,6).
  2.    No. He has not reached his maximum level of satisfaction for Good-1 yet.
  3.    Yes. He has reached his maximum level of satisfaction for both Good-1 and Good-2.
  4.    No. He has not reached his maximum level of satisfaction for either good.
 Discuss Question
Answer: Option B. -> No. He has not reached his maximum level of satisfaction for Good-1 yet.
:
B
If a consumer has monotonic preferences, he would prefer the bundle (6,6) to the bundle (4,6), because the bundle (6,6) has more of Good-1 as compared to the bundle (4,6)
Question 8. The limits imposed on household choices by income, wealth, and product prices are captured by the 
  1.    budget constraint
  2.    choice set.
  3.    assumption of perfect knowledge.
  4.    preference set.
 Discuss Question
Answer: Option A. -> budget constraint
:
A
Budget constraint captures the limits imposed on household choices by income, wealth, and product prices.
Question 9. Diagrammatic presentation of consumer's indifference set is called
  1.    indifference curve
  2.    utility curve
  3.    budget line
  4.    transformation curve
 Discuss Question
Answer: Option A. -> indifference curve
:
A
An indifference curve is a locus of all such points, which show different combinations offering the same level of satisfaction to the consumer. It is always related to the choice and preference of the consumer.
Question 10. Marginal Utility curve always
  1.    slopes downward
  2.    a drop in inflation
  3.    an increase in total production in India
  4.    an increase in the price of TATA Nano
 Discuss Question
Answer: Option A. -> slopes downward
:
A
Marginal Utility curve always slopes downwards.

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