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Aarambh (2024)
Consumer Equilibrium DPP-04

1. Indifference curves are convex to the origin because 5. An indifference curve always:
of __________ marginal rate of substitution. (1) Slopes downwards from left to right
(2) Slopes upwards from left to right
2. Which of these is not a property of indifference (3) Is parallel to the Y-axis
curve? (4) Is parallel to the X-axis
(1) Indifference curve slopes downwards
(2) Indifference curve is concave to the origin 6. The slope of indifference curve is different at
(3) Two indifference curves cannot intersect each different points of the curve.
other
(4) Higher indifference curve represents higher 7. Define an indifference curve.
level of satisfaction
8. Why does an indifference curve slope downwards?
3. Indifference curves are convex to the origin because
of:
9. Why are indifference curves always convex to the
(1) Increasing MRS
origin?
(2) Diminishing MRS
(3) Law of Diminishing Marginal Utility
(4) Law of Equi-Marginal Utility

4. An indifference curve is best described as a series of

points which show:
(1) Combinations of two commodities which give
the consumer same satisfaction
(2) Combinations of two goods, such that cost of
each combination is equal to money income
of the consumer
(3) Combinations of the two goods which a
consumer can afford, given his income &
prices in the market
(4) None of these
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Answer Key
1. (With Discussion) 6. (True)
2. (2) 7. (With Discussion)
3. (2) 8. (With Discussion)
4. (1) 9. (With Discussion)
5. (1)
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Hints & Solutions

1. (H & S) 7. (H & S)
Diminishing Indifference curve refers to the graphical
representation of various alternative
2. (2) combinations of bundles of two goods among
which the consumer is indifferent.
3. (2)
8. (H & S)
4. (1) An Indifference curve slopes downwards
because increase in units of one good requires
5. (1) decrease in the number of units of another
good to maintain the same level of
6. (True) satisfaction.
It happens because slope of indifference
curve is measured by marginal rate of 9. (H & S)
substitution, which diminishes along the Indifference curve are always convex to the
curve. origin because of the diminishing marginal
rate of substitution.

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