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B Com Exam  >  B Com Tests  >  Business Economics & Finance  >  Test: Supply Analysis - 2 - B Com MCQ

Test: Supply Analysis - 2 - B Com MCQ


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10 Questions MCQ Test Business Economics & Finance - Test: Supply Analysis - 2

Test: Supply Analysis - 2 for B Com 2024 is part of Business Economics & Finance preparation. The Test: Supply Analysis - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Supply Analysis - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Supply Analysis - 2 below.
Solutions of Test: Supply Analysis - 2 questions in English are available as part of our Business Economics & Finance for B Com & Test: Supply Analysis - 2 solutions in Hindi for Business Economics & Finance course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Supply Analysis - 2 | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Business Economics & Finance for B Com Exam | Download free PDF with solutions
Test: Supply Analysis - 2 - Question 1
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Which assumption is necessary for the concept of consumer surplus to be applicable?

Detailed Solution for Test: Supply Analysis - 2 - Question 1
The assumption that the marginal utility of money remains constant is necessary for the concept of consumer surplus to be applicable. This assumption implies that the consumer's willingness to pay for a product remains consistent regardless of their income. It forms the basis for measuring consumer surplus in economic analysis.
Test: Supply Analysis - 2 - Question 2
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When does consumer surplus occur in a market?

Detailed Solution for Test: Supply Analysis - 2 - Question 2
Consumer surplus occurs in a market when consumers are willing to pay more for a product than the market price. It represents the additional value or benefit that consumers receive when they can purchase a product at a price lower than what they are willing to pay.
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Test: Supply Analysis - 2 - Question 3
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What does the concept of consumer surplus help in determining in the field of public finance?

Detailed Solution for Test: Supply Analysis - 2 - Question 3
The concept of consumer surplus helps in determining the desirability of imposing taxes on certain commodities in the field of public finance. It allows policymakers to assess the trade-off between the loss of consumer surplus due to taxes and the increase in tax revenue. This information is crucial for making informed decisions about taxation policies.
Test: Supply Analysis - 2 - Question 4
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Which of the following best describes the equilibrium of a market?
Detailed Solution for Test: Supply Analysis - 2 - Question 4
The equilibrium of a market is a state where supply and demand are in balance, resulting in a stable price. In this state, the quantity demanded equals the quantity supplied, and there is no inherent pressure for prices to rise or fall. It represents a point of balance in the market.
Test: Supply Analysis - 2 - Question 5
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What happens to the equilibrium price when market demand increases?
Detailed Solution for Test: Supply Analysis - 2 - Question 5
When market demand increases, the equilibrium price typically increases. This occurs because higher demand puts upward pressure on prices as consumers are willing to pay more for the product. Suppliers respond to this increased demand by raising prices until a new equilibrium is reached at a higher price level.
Test: Supply Analysis - 2 - Question 6
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What happens to the equilibrium price when market supply increases?
Detailed Solution for Test: Supply Analysis - 2 - Question 6
When market supply increases, the equilibrium price typically decreases. This happens because an increase in supply means there are more goods available in the market. With greater supply and the same level of demand, suppliers may lower prices to encourage consumers to buy more, resulting in a new equilibrium at a lower price.
Test: Supply Analysis - 2 - Question 7
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What is the role of the marginal rate of substitution (MRS) in indifference curve analysis?
Detailed Solution for Test: Supply Analysis - 2 - Question 7
The marginal rate of substitution (MRS) in indifference curve analysis indicates the slope of an indifference curve and measures the rate at which a consumer is willing to substitute one good for another while keeping utility constant. It reflects the consumer's preference for different combinations of goods and their willingness to trade one for another.
Test: Supply Analysis - 2 - Question 8
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What is the primary function of an indifference curve in consumer theory?
Detailed Solution for Test: Supply Analysis - 2 - Question 8
The primary function of an indifference curve in consumer theory is to illustrate the consumer's preference for different combinations of goods. Indifference curves show combinations of goods that yield the same level of satisfaction or utility to the consumer, allowing economists to analyze consumer preferences.
Test: Supply Analysis - 2 - Question 9
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What does a convex indifference curve imply in indifference curve analysis?
Detailed Solution for Test: Supply Analysis - 2 - Question 9
A convex indifference curve in indifference curve analysis implies that the consumer's marginal rate of substitution (MRS) is diminishing. This means that as the consumer moves along the indifference curve from left to right, they are willing to trade less of one good for another while keeping their level of satisfaction constant. It reflects the typical behavior of consumers as they allocate their resources.
Test: Supply Analysis - 2 - Question 10
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In the context of consumer surplus, which of the following statements is correct?
Detailed Solution for Test: Supply Analysis - 2 - Question 10
Consumer surplus is the difference between the price a consumer is willing to pay for a product and the actual price they pay. It represents the additional value or satisfaction that consumers receive when they can purchase a product at a price lower than their maximum willingness to pay. This concept is important in economics for understanding the benefits consumers derive from the market.
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