Consumer Behavior and Utility Analysis MCQs

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Topic Notes: Consumer Behavior and Utility Analysis

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Which of the following is a fundamental assumption of cardinal utility analysis?

The consumer is said to be in equilibrium when he plans his expenditure on x, y and z commodities in such a way that he ultimately attains

A $$\frac{{M{U_X}}}{{{P_X}}} = \frac{{M{U_Y}}}{{{P_Y}}} = \frac{{{M_Z}}}{{{P_Z}}}$$ B $$M{U_X} = M{U_y} = {M_Z}$$ C $$\frac{{M{U_X}}}{{{P_X}}} = \frac{{M{U_Y}}}{{{P_Y}}} = \frac{{M{U_Z}}}{{{P_Z}}} = M{U_M}$$ D $$\frac{{M{U_X}}}{{{P_X}}} < \frac{{M{U_Y}}}{{{P_Y}}} < \frac{{M{U_Z}}}{{{P_Z}}} < M{U_M}$$

Which economist is credited with the formal development and propagation of the Law of Diminishing Marginal Utility?

Total utility of a commodity is primarily associated with which concept of value?

Under what circumstances does an indifference curve take on an 'L' shape?

How is total consumer surplus defined within the P-Q (Price-Quantity) graphical framework?

A the area of the triangle formed by the demand curve, the price axis and the equilibrium price line B the area between the average revenue and marginal revenue curves C Both A and C D the difference between the maximum price the consumer is willing to pay for a good (vertical intercept of demand curve) and the minimum price the producer is willing to sell at (vertical intercept of supply curve)

Given a consumer with a budget of Rs. 110, prices Px=4 and Py=5, and current consumption of 15 units of X (MU=40) and 10 units of Y (MU=45), which statement is correct?

A His total utility will increase if he spends more on good Y and less on good X B His total utility is being maximized subject to the budget constraint he is facing C His total utility will increase if he spends less on both the goods D His total utility will increase if he reallocates his spending towards more of good X and less of good Y

What is the term for the difference between the maximum price a consumer is willing to pay and the actual price paid?

Which of the following is not a characteristic property of indifference curves?

A Indifference curves cannot intersect each other B Every point of an indifference curve shows equal satisfaction C Indifference curves are, always concave to the origin D Indifference curves do not touch the axis

100

How does a decrease in the price of a commodity affect the consumer's economic position?

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