3. Which of the following statements regarding utility is not true?

A. It is a satisfying power of a commodity.

B. It is purely a subjective entity.

C. Utility is always measurable.

D. It helps consumers to make choices.

4. Which of the following utility approach is based on the theory of Alfred Marshall?

A. Ordinal utility approach

B. None of these

C. Cardinal utility approach

D. Independent variable approach

5. _____________ is the addition to total utility by the consumption of one additional unit of the
commodity?

A. Total utility

B. Ordinal utility

C. Average utility

D. Marginal utility

6. Which of the following utility approach suggests that utility is a measurable and quantifiable
entity?

A. None of these

B. Ordinal approach

C. Cardinal approach

D. Both cardinal & ordinal

7. According to the law of diminishing marginal utility, _________?

A. Additional consumption always yields extra utility

B. Additional consumption leads to lower average total utility

C. Additional consumption always yields negative utility

D. After a point any addition in the consumption causes a reduction in total utility.

8. The want satisfying power of a commodity is known as:

A. Supply

B. Consumption

C. Utility

D. Demand

9. What is called point of satiety?

A. The point where marginal utility becomes less than zero

B. The point where marginal utility becomes greater than zero

C. The point where marginal utility becomes zero.

D. None of above

10. The total utility divided by the number of units consumed is known as?

A. Total utility

B. Average utility

C. Marginal utility

D. None of above

11. Utility is measured in terms of?

A. Utils

B. Centimetre

C. Gram

D. Seconds

12. The concept of marginal utility was developed by?

A. Alfred Marshall B. Robbins C. Hicks & Allen D. Paul Samuelson

13. Indifference curve represents?

A. More than two commodities

B. Four commodities

C. Only two commodities

D. Less than two commodities

14. The addition of utilities obtained from all units of a goods is called:
(a) Marginal Utility (b) Total Utility (c) Maximum Satisfaction (d) Additional Utility

15. When marginal utility is negative, then total utility:

(a) is maximum (b) Starts decreasing (c) increases at decreasing rate (d) None of these

16. According to the law of equi-marginal utility, the condition for consumer’s equilibrium is:

(a) MUA/PA = MUB/PB (b) MUB = PB (c) Both (a) and (b) (d) Undefined

17. What is the law that defines the demand curve to slope downward known as?

A) Diminishing marginal utility

B) Utility maximization

C) Utility minimization

D) Consumer equilibrium

18. When the marginal utility is equal to zero, what will the total utility be?

A) Maximum

B) Laws of return

C) Minimum

D) None of the above

19. Which of the following is the basis of diminishing marginal utility?

A) Law of demand

B) Laws of return

C) Law of supply

D) None of the above

20. A consumer is in equilibrium when the marginal utilities are ___________.

A) Increasing

B) Equal

C) Minimum

D) Highest

21. Marshallian cardinal utility analysis assumes

A) marginal utility of money is zero

B) marginal utility of money is decreasing

C) marginal utility of money is increasing

D) marginal utility of money is constant

23. Which of the following statement is FALSE with regard to marginal utility

A) Marginal utility is the utility derived from last unit

B) as consumption increases marginal utility goes on diminishing

C) at saturation point marginal utility is zero

D) Marginal utility increases at a diminishing range

24) Which of the following statement is TRUE with regard to total utility

A. total utility is the utility derived from last unit

B. total utility increases at a diminishing rate

C. as consumption increases total utility goes on diminishing

D. at saturation point total utility is negative

26. Cardinal utility theory assumes that consumers can

A. rank baskets of goods as to their given preference

B. determine the number of utils that can be derived from

consuming all goods.

C. avoid the law of diminishing marginal utility.

D. all of the above

27. Cardinal utility theory assumes that consumers can

A. Rank Baskets of Goods As To Their Given Preference

B. Determine The Number of Utils That Can Be Derived From Consuming All Goods.

C. Avoid the Law of Diminishing Marginal Utility.

D. All of The Above

28. A consumer is consuming two goods X and Y and is in equilibrium. The prices of X and Y
are Rs. 10 and Rs. 20 respectively and MU of good Y is 50 units. What will be MU of good X?

A) 100 B) 25 C) 250 D) 4
29. A consumer consumes only two goods X and Y whose prices are Rs 3 and Rs 4 respectively. If
the consumer chooses a combination of the two goods with MU of X equal to 4 and that of Y equal
of 3, then the consumer will_____

A) Buy more units of both X and Y

B) Buy more units of Y and less of X

C) Buy more units of X and less of Y

D) Buy less units of the both, X and Y

30. When someone says they experienced 75 utils of enjoyment from going to a movie, which of
these concepts did they use?

A. Ordinal utility

B. Individual demand

C. Cardinal utility

D. Useful utility

33. A consumer with a fixed income will maximize utility when each good is purchased in amounts
such that the:

A) total utility is the same for each good.

B) marginal utility of each good is maximized.

C) marginal utility per rupee spent is the same for all goods.

D) marginal utility per rupee spent is maximized for each good.

34. If a rational consumer is in equilibrium, then:

A) the marginal utility obtained from one product is equal to the

marginal utility obtained from any other product.

B) a reallocation of income would increase the consumer's total

utility.

C) the marginal utility per last dollar spent is the same for all

goods consumed.

D) total utility becomes zero.

Table below showing the marginal utility schedules for product X and product Y for a hypothetical
consumer. The price of product X is Rs.4/- and the price of product Y is Rs. 2/-. The income of the
consumer is Rs. 20/-.

Quantity of MUx Quantity of MUy

Commodity X Commodity Y
1 32 1 24
2 28 2 20
3 24 3 16
4 20 4 12
5 16 5 8
If the consumer can only buy product X, how much will the consumer buy and what will be the total
utility?

A) 4X and 20 B) 4X and 104 C) 5X and 16 D) 5X and 120

If the consumer buys both product X and product Y, how much will the consumer buy of each to
maximize utility?

A) 4X and 2Y B) 3X and 4Y C) 4X and 3Y D) 5X and 3Y

When the consumer purchases the utility-maximizing combination of product X and product Y,
total utility will be:

A) 72. B) 84. C) 136. D) 156.

A consumer is in equilibrium and is spending income in such a way that the marginal utility of
product X is 40 units and Y is 16 units. The unit price of X is Rs. 5. The price of Y is:

A) Rs.1 per unit.

B) Rs. 2 per unit.

C) Rs. 3 per unit.

D) Rs. 4 per unit.

Which is an explanation for why the demand curve is downward sloping?

A) normal goods

B) the law of supply

C) the law of diminishing marginal utility

D) the law of increasing opportunity cost

4. Which of the following describes a utility characteristic?

A. Utility is subjective

B. The utility is a relative concept

 C. The utility is a psychological phenomenon

D. All of the above

Answer: D) All of the above

9. What is the most important factor in determining demand?

A. Availability of adequate resources

B. Desire to consume
C. Willingness to consume
D. All of the above

Answer: D) All of the above

10. In which goods does a decrease in price not lead to an increase in demand?

A. Comfort Goods
B. Necessities Goods
C. Luxuries Goods
D. None of the preceding

Answer: B) Necessities Goods

11. A demand function is defined as which of the following?

A. DX = PX
B. Dx = (Px)
C. PX
D. None of these

Answer: B) Dx = (Px)

12.Which of the below is a cause of reduced demand?

1.

A. Fall in Number of Buyers

B. Fall in Income

C. Fall in Taste of Consumer

D. All the above

Answer: D) All the above

13. As the price of coffee rises, so makes the demand for tea:

A. Remains stable

B. Falls
 C. Rises

D. None of these

Answer: C) Rises

14.What is the cause of the shift in demand?

1.

A. Change in price of related goods

B. Population increase

C. Change in consumer’s income

D. All of these

Answer: D) All of these

15. There is no fluctuation for which of the following changes?

1.

A. Change in income

B. Change in price

C. Change in taste and fashion

D. None of these

Answer: D) None of these

16. When prices rise, demand for ‘Giffin’ goods:

1.

A. Decreases

B. Remains constant

C. Increases

D. Becomes unstable

Answer: C) Increases

17. Which commodities do consumers reduce their consumption when their income rises?

1.

A. Normal goods
 B. Giffin goods

C. Inferior goods

D. All the three

Answer: B) Giffin goods

18. Which one of the following has less than one elasticity?

1.

A. Comforts

B. Luxuries

C. Necessity Goods

D. All of the Above

Answer: D) All of the Above

19.What approach is used to determine the elasticity of demand?

1.

A. Point Method

B. Percentage or Proportionate Method

C. Total Expenditure Method.

D. All of the above

Answer: D) All of the above

20.Who was the first to propose the proportionate or percentage approach to calculating demand
elasticity?

1.

A. Flux

B. Hicks

C. Marshall

D. None of these

Answer: A) Flux

21. How many different types of demand elasticity does demand have?

1.
 A. Five

B. Six

C. Three

D. Seven

Answer: A) Five

22. Which of the following influences demand elasticity?

1.

A. Price Level

B. Nature of Goods

C. Income Level

D. All of these

Answer: D) All of these

23. In which analyses may utility be expressed as a precise number, such as 1, 2, 3, and so on?

1.

A. Ordinal utility analysis

B. Cardinal utility analysis

C. Both (a) and (b)

D. None of these

Answer: B) Ordinal utility analysis

24. The ordinal utility notion expresses utility in terms of:

1.

A. level of satisfaction

B. Constants

C. Units

D. none of these

Answer: A) level of satisfaction

25. The overall usefulness of a commodity____________ as we use more units of it ever, but at a
decreasing rate:
 1.

A. Decreases

B. Increases

C. becomes zero

D. remains constant

Answer: B) Increases

26. Does indifference curve analysis require one of the following assumptions?

1.

A. Declining marginal rate of substitution

B. Cardinal numbers

C. Monotonic preference of the consumer

D. All of the above

Answer: C) Monotonic preference of the consumer

27. The slope of IC tends to ___________ drop as we walk along the indifference curve (left to
right).

1.

A. Zero

B. Rise

C. Decline

D. Unity

Answer: C) Decline

28. When the following conditions are met, total utility is at its peak:

1.

A. The marginal utility is Zero

B. The average utility is maximum

C. The average utility is Zero

D. Marginal utility is maximum

Answer: D) Marginal utility is Zero

29. _______displays numerous combinations of these two products that provide the same level of
satisfaction:

1.

A. Indifference curve

B. Marginal utility curve

C. ISO cost curve

D. ISO quant

Answer: A) Indifference curve

30. Which of the statements below is correct?

1.

A. The utility is a function of the intensity of desire

B. The desire for consumption gives birth to utility

C. Utility means want-satisfying power

D. All of the above

Answer: D) All of the above

31. When the price of commodities ‘X’ declines, increasing in demand for goods ‘Y,’ both goods
are:

1.

A. Complementary goods

B. Substitute goods

C. Not related

D. Competitor

Answer: A) Complementary goods

32. The following is a diagrammatic representation of the set of consumer indifference:

1.

A. budget line

B. utility curve

C. indifference curve
 D. transformation curve

Answer: c) indifference curve

33. Indifference curve analysis requires which of the following assumptions?

1.

A. Declining marginal rate of substitution

B. Cardinal numbers

C. Monotonic preference of the consumer

D. All of the above

Answer: C) Monotonic preference of the consumer

34. When only one unit is utilized, the following results are obtained:

1.

A. MU=TU

B. MU> TU

C. MU=0

D. MU+TU

Answer: A) MU=TU

35. When two commodities are used, equilibrium is reached when the rupee value of satisfaction
is the same for both:

1.

A. True

B. False

C. can not say

D. none of these

Answer: A) true

36. The Demand Curve has a general slope of:

1.

A. Downward from left to right

B. Parallel to X-axis
 C. Parallel to Y-axis

D. Upward from left to right

Answer: A) Downward from left to right

37. The line that depicts all different combinations of two things that a consumer can buy by
spending all of his income, given the money income and the price, is called:

1.

A. production line

B. iso-cost line

C. price ratio

D. budget line

Answer: D) budget line

38. The budget line denotes:

1.

A. cost-benefit analysis

B. percentage of income

C. Ratio of output

D. the cost-benefit ratio

Answer: A) cost-benefit analysis

39. It must be true that when the marginal is negative,

1.

A. The average is negative

B. The average is positive

C. The total is decreasing

D. The total is negative

Answer: C) The total is decreasing

40. Since they are convex to the origin, indifference curves are convex as,

1.

A. Two goods are imperfect substitutes

 B. Two goods are perfect substitutes

C. Two goods are perfect complementary goods

D. None

Answer: A) Two goods are imperfect substitutes

41. When Marginal Utility = 0, Total Utility is

1.

A. Laws of return

B. Minimum

C. Maximum

D. None of the above

Answer: C) Maximum

42. The concept of diminishing marginal value is the foundation of

1.

A. Laws of return

B. Law of demand

C. Law of supply

D. None

Answer: B) Law of demand

43. If MU is positive, TU will be

1.

A. Is highest

B. Remains constant

C. Decreases

D. Increases

Answer: D) Increases

44. The utility is a term that is used to describe ______.

1.
 A. Necessary

B. Useless

C. Useful

D. Satisfaction

Answer: D) Satisfaction

45. Demand elasticity is defined as:

1.

A. Quantitative Statement

B. Qualitative Statement

C. Both (a) and (b)

D. None

Answer: A) Quantitative Statement

46. Which of the following factors influences demand elasticity?

1.

A. Price Level

B. Income Level

C. Nature of Goods

D. All

Answer: D) all

47. The demand for a good is inelastic, according to the total outlay method, when:

1.

A. When the price of goods decreases and money spent decreases

B. Expenditure remains the same, even if the price falls

C. Expenditure decreases with the price increase.

D. Price will fall with the increase in the amount spent

Answer: A) When the price of goods decreases and money spent decreases.

48. The elasticity of demand is: If demand for goods changes by 60% as a result of a 40% price
adjustment, the elasticity of demand is:
 1.

A. -1.5

B. Zero

C. 0.5

D. 1

Answer: A) -1.5

49. The demand elasticity at the midpoint of a line segment demand curve is:

1.

A. The result will be zero.

B. There will be a sense of belonging.

C. There shall be no limit.

D. None of the above

Answer: B) There will be a sense of belonging.

50. What is the elasticity of demand for essentials?

1.

A. Unlimited

B. Greater than unity

C. Less than unity

D. Zero

Answer: D) Zero

51. Who proposed the percentage or proportionate approach to calculating demand elasticity?

1.

A. Flux

B. Hicks

C. Marshall

D. None of the above

Answer: A) Flux
52.Demand has a steep slope. The curve of a normal good is _____.

A. Negative

B. Zero

C. Undefined

D. Positive

Answer: A) Negative

The amount of a good that a consumer is willing to give up in order to obtain one additional unit of
another good is called

A. an indifference curve.
B. the marginal rate of substitution.
C. a market basket.
D. an indifference map