# Intermediate Micro Economics 1 Solved MCQs

1.

## A consumer reaches the point of equilibrium when;

A. MRSxy>Px/Py
B. MRSxy < Px/Py
C. MRSxy=Px/Py
D. MRSxy=Px/Py=MU/TU
2.

## A consumer will start buying less of good- X and more of Good-Y, when

A. MUx/Px = MUm
B. MUx/Px < MUy/Py
C. MUy/Py = MUm
D. MUx/Px>MUy/Py
3.

## The slope of indifference curve is equal to:

A. One
B. marginal rate of substitution
C. Marginal utility
D. zero
Answer» B. marginal rate of substitution
4.

## Why is indifference curve convex to origin?

A. Due to law of diminishing marginal utility
B. Due to monotonic preferences
C. Due to continuous decline of
D. Both a and b
Answer» C. Due to continuous decline of
5.

## Which of the following is not the property of indifference curve:

A. Higher the indifference curves higher the level of satisfaction
B. Two indifference curves cannot intersect each other
C. Indifference curve is concave to origin
D. Indifference curve is downward sloping
Answer» C. Indifference curve is concave to origin
6.

## Hicks and Allen believed that utility:

A. Cannot be measured
B. Cannot be expressed
C. Can be measured in cardinal
D. Can be measured in ordinal numbers
Answer» D. Can be measured in ordinal numbers
7.

## An indifference curve is related to:

A. Consumer’s income
B. prices of goods X and Y
C. Total utility from goods X and Y
D. choices and preferences of consumer
Answer» D. choices and preferences of consumer
8.

## A shift in budget line, when prices are constant, is due to:

A. change in demand
B. change in income
C. change in preferences
D. change in utility
9.

## In case of normal goods, demand curve shows:

A. a negative slope
B. a positive slope
C. zero slope
D. none of these
10.

## Law of demand must fail in case of:

A. normal good
B. giffen goods
C. inferior goods
D. none of these
11.

A. negative
B. positive
C. zero
D. none of these
12.

## Which of the following pairs represents substitute goods?

A. car and petrol
B. juice and cold drink
D. all of these
Answer» B. juice and cold drink
13.

## Substitution effect takes place when price of the commodity becomes:

A. relatively cheaper
B. relatively dearer
C. stable
D. both (a) and (b)
Answer» D. both (a) and (b)
14.

## Total utility is

A. The sum total of marginal utilities
B. total level of satisfaction
C. Increases at a diminishing rate
D. All the above
15.

## Which of the following is called gossans first law

A. Law of substitution
B. Law of equi marginal utility
C. Law of diminishing
D. None of the above
16.

## Other things being equal a decrease in demand can be caused by

A. A fall in price of the commodity
B. A fall in income of the consumer
C. A rise in price of the substitute
D. None of these
Answer» B. A fall in income of the consumer
17.

## “Utility or satisfaction is a subjective concept; therefore it could only be ranked”. The statement supports

A. Cardinal utility theorist
B. Ordinal utility theorist
C. Behavioral theorist of the firm
D. None of the above
18.

## The basic doctrine of consumers surplus is based on

A. Indifference curve analysis
B. Revealed preference theory
C. Law of substitution
D. Law of diminishing marginal utility
Answer» D. Law of diminishing marginal utility
19.

## Indifference curve is always

A. Concave to the origin
B. Convex to the
C. L shaped
D. A straight line
20.

## Engel curve for giffen good is

A. Positively sloped
B. Negatively sloped
C. Horizontal straight line
D. Vertical straight line
21.

## Price effect is

A. Income effect – substitution effect
B. Substitution effect – income effect
C. Income effect + substitution
D. Income effect + substitution effect-
Answer» C. Income effect + substitution
22.

## For a giffen good, when price falls

A. Demand increases at a faster rate
B. Demand decreases
C. Demand remains constant
D. Demand curve has a negative slope
23.

## Revealed preference theory assumes

A. SARP
B. WARP
C. Both A and B
D. None of the above
24.

## Income consumption curve of an inferior commodity is

A. Positively sloped
B. Backward bending
C. Downward slopping straight
D. Showing constant income effect
25.

## In case of a convex indifference curve

A. MRS xy is constant
B. MRS xy is increasing
C. MRS xy is negligible
D. MRS xy is diminishing
Answer» D. MRS xy is diminishing
Tags
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