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ECONOMICS DPP: 1

Consumer's Equilibrium

Q1 Utility in Economics means : (C) both at optimal level

(A) Pleasure (D) same quantity of both
(B) Happiness
Q7 According to law of diminishing marginal
(C) Optimum
utility,while eating cake the satisfaction derived
(D) Want satisfying power of a commodity
from the second slice of it consumed is :
Q2 Cardinal utility theory is associated with - (A) greater than the consumption of first slice
(A) Prof. Marshall (B) less than the consumption of first slice
(B) Prof.Hicks (C) not comparable to that from the first
(C) Both (a) and (b) (D) equal to that from the first
(D) None
Q8 Additional utility derived from the consumption
Q3 The statement X=Y=25 utilities implies - of an additional unit of a commodity is called :
(A) An ordinal measure of utility (A) Average utility
(B) A cardinal measure of utility (B) Marginal utility
(C) Both (a) and (b) (C) Total utility
(D) None (D) None of the above

Q4 Which of the following can be referred to as Q9 Which of the following utility approach
‘point of satiety’ ? suggests that utility is a measurable and
(A) Marginal Utility is negative quantifiable entity ?
(B) Marginal Utility is zero (A) None of these
(C) Total utility is rising (B) Ordinal approach
(D) Total utility is falling (C) Cardinal approach
(D) Both cardinal and ordinal
Q5 What happens to MU when TU is maximum and
constant ? Q10 Which situation is consistent with the law of
(A) MU becomes zero diminishing marginal utility ?
(B) MU becomes negative (A) The more pizza A eats,the more he enjoys
(C) MU declines another slice.
(D) MU remains same (B) The more pizza A eats,the less he enjoys
another slice.
Q6 Hitesh buys pizza and coke.The marginal utility
(C) A’s marginal utility from eating pizza reaches
of last piece of pizza is 80 utils and of last sip of
a maximum when total utility is zero.
coke is 40 utils.The price of pizza is $ 40 and
(D) A’s marginal utility from eating pizza
that of coke is $ 20.This means that Hitesh is
becomes positive after eating three slices.
buying :
(A) more pizza and less coke Q11 In the case of mux/px>muy/py :
(B) more coke and less pizza (A)

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consumer will shift some expenditure from x (B) Prof.Gossen

to y (C) Prof.Ricardo
(B) consumer will shift some expenditure from y (D) Prof. J.S. Mill
to x
Q17 Which of these is not a property of indifference
(C) consumer will spend less on both x and y
curve?
(D) consumer will spend x and y
(A) Indifference curve slopes downwards
Q12 The approach to study what are the conditions (B) Indifference curve is concave to the origin
for consumer’s equilibrium is ? (C) Two indifference curves cannot intersect
(A) Cardinal approach each other
(B) Ordinal approach (D) Higher indifference curve represents higher
(C) Both A and B level of satisfaction
(D) A or B
Q18 Indifference curves are convex to the origin
Q13 Consumer’s preferences are __________ when because of:
consumer always choose a bundle having more (A) Increasing MRS
of one good and less of other. (B) Diminishing MRS
(A) Consumer budget (C) Law of Diminishing Marginal Utility
(B) Budget preference (D) Law of Equi-Marginal Utility
(C) Monotonic preference
Q19 An indifference curve is best described as a
(D) Margin method
series of points which show:
Q14 What does the term ‘marginal’ in economics (A) Combinations of two commodities which
mean ? give the consumer same satisfaction
(A) Additional (B) Combinations of two goods, such that cost
(B) Unimportant of each combination is equal to money
(C) Minimum unit income of the consumer
(D) None of the above (C) Combinations of the two goods which a
consumer can afford, given his income &
Q15 Why is a consumer’s spending restricted ?
prices in the market
(A) Due to the utility maximisation
(D) None of these
(B) Due to the budget constraint
(C) Due to the demand curve Q20 An indifference curve always:
(D) Due to the marginal utility (A) Slopes downwards from left to right
(B) Slopes upwards from left to right
Q16 Who basically propounded the concept of Law
(C) Is parallel to the Y-axis
of Equimarginal Utility ?
(D) Is parallel to the X-axis
(A) Prof.Marshall

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Answer Key
Q1 (D) Q11 (B)

Q2 (A) Q12 (C)

Q3 (B) Q13 (C)

Q4 (B) Q14 (A)

Q5 (A) Q15 (B)

Q6 (C) Q16 (B)

Q7 (B) Q17 (B)

Q8 (B) Q18 (B)

Q9 (C) Q19 (A)

Q10 (B) Q20 (A)

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Hints & Solutions

Q1 Text Solution: Q11 Text Solution:
Utility in Economics means want satisfying consumer will shift some expenditure from y to x
power of a commodity.
Q12 Text Solution:
Q2 Text Solution: Cardinal and ordinal are the approaches to
Prof. Marshall study the conditions for consumer’s equilibrium.
Q3 Text Solution: Q13 Text Solution:
A cardinal measure of utility Consumer’s preferences are monotonic when
Q4 Text Solution: consumer always choose a bundle having more
Marginal Utility is zero of one good and less of other.

Q5 Text Solution: Q14 Text Solution:

When total utility becomes maximum and Additional
constant and MU becomes zero this is also Q15 Text Solution:
known as the point of Satiety after this point Due to the budget constraint
MU becomes negative and TU starts
Q16 Text Solution:
diminishing
Prof.Gossen
Q6 Text Solution:
Q17 Text Solution:
both at optimal level
Indifference curve is concave to the origin
Q7 Text Solution:
Q18 Text Solution:
less than the consumption of first slice
Diminishing MRS
Q8 Text Solution:
Q19 Text Solution:
Marginal utility
Combinations of two commodities which give
Q9 Text Solution: the consumer same satisfaction
Cardinal approach
Q20 Text Solution:
Q10 Text Solution: Slopes downwards from left to right
The more pizza A eats,the less he enjoys
another slice.

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