Imagine a budget constraint between good y on the vertical axis and good x on the horizontal. How would that budget line be effected if both income and the price of both goods fell?
The new budget line will have the same slope as the original so long as the price of both goods change in the same proportion
The new budget line must be parallel to the old budget line
The budget line must become shallower
The budget line would not shift
Imagine a budget constraint between good y on the vertical axis and good x on the horizontal. If that budget line were to become more shallow it could be due to:
An increase in the price of good x
A change in consumer preference towards good x
An increase in the price of both goods, yet with the price of ' good y ' increasing more than that of good x
An increase in income
Consumer's equilibrium is a situation in which a consumer can get _______ satisfaction from his current level of income.
Maximum
Minimum
No
Less
If a consumer is willing to pay Rs.20 for an apple and is able to buy it for Rs.15, then the consumer surplus is:
Rs.35
Rs.15
Rs.5
Rs.20
Upward sloping demand curve can be explained by:
Marginal utility theory
Diminishing marginal utility
Indifference curve theory
Consumer theory
The formula of marginal utility is
MUn - 1 - MU1
TUn - TUn - 1
TU/MU
TU × MU
Total utility and marginal utility are same when a consumer takes ________ of a commodity.
5th Unit
10th Unit
6th Unit
1st Unit
Smoothness of indifference curve means
X and Y are substitutes of each other
X and Y can be consumed in fixed proportion
Perfect divisibility of two goods
Perfect non divisibility of two goods
Which of the following statements is NOT true of indifference curves?
They exhibit higher levels of utility as you move from the origin
They are convex to the origin
They are downward sloping
They could intersect
A consumer with a given income will maximize their utility when :
The total utility derived from each commodity consumed is equal
The marginal utilities derived from each commodity consumed are proportional to their prices
The marginal utility derived from each commodity is equal
The marginal utility derived from each product consumed is zero
