Test: Consumer's Equilibrium and Demand- Case Based Type Questions - Commerce MCQ
8 Questions MCQ Test Economics Class 11 - Test: Consumer's Equilibrium and Demand- Case Based Type Questions
Read the following passage and answer the question that follows:
The ordinalist revolution originates in the criticism of the psychological foundations of the theory of demand, namely, the principle of decreasing marginal utility as Alfred Marshall ([1890] 1898) used it. The rejection of hedonist hypotheses led Irving Fisher (1892) and Pareto (1896–97, 1900, 1909) to favour an objective or “positive” approach to economic concepts.
The “ordinalist revolution” (Ormazabal 1995, 116) is grounded in a methodological transformation of economics that put the facts of objective experience as a foundation of economics and provided a research program for the ensuing years (Green and Moss 1993; Lewin 1996). Mathematically, ordinalism is entirely based upon the idea that one can dispense with the use of a specific utility function and that no meaning shall be attached to utility measurement, except as an ordinal principle.
Clearly, the development of ordinalist must be separated from the introduction of the concept of the indifference curve. Ordinalism was first advocated in Fisher’s “Mathematical Investigations” (1892) and Pareto’s Suunto (1900) and Manual ([1909] 1971), while the indifference curve had appeared in F. Y. Edge worth’s Mathematical Psychics (1881). It was thus only through Fisher’s and Pareto’s recasting that the concept of the indifference curve became irreversibly associated with the promotion of ordinalism.
Along the way, the recasting of the theory of choice along ordinalist lines raised a number of issues (about integrability, measurability, and complementarity) that would be progressively settled. A reasonable closing date for the ordinalist revolution is 1950, after Houthakker (1950) and Samuelson’s (1950) contributions.
From the late 1920s, the Paretian school was progressively gaining a larger audience while the use of the concept of marginal utility and other derivative concepts was challenged. Consequently, demand theory was recast along the principles
of individual preferences and ordinal utility functions. Nevertheless, English authors proved very silent about the meaning of indifference curves. Most if not all of the reflections after 1920 about the nature of indifference curves took place in America, mainly under the impulse of Henry Schultz at Chicago. This is an American story.
Q. ______ is a curve showing a different combination of two goods, each combination offering the same level of satisfaction to the consumer.
Read the following passage and answer the question that follows:
The ordinalist revolution originates in the criticism of the psychological foundations of the theory of demand, namely, the principle of decreasing marginal utility as Alfred Marshall ([1890] 1898) used it. The rejection of hedonist hypotheses led Irving Fisher (1892) and Pareto (1896–97, 1900, 1909) to favour an objective or “positive” approach to economic concepts.
The “ordinalist revolution” (Ormazabal 1995, 116) is grounded in a methodological transformation of economics that put the facts of objective experience as a foundation of economics and provided a research program for the ensuing years (Green and Moss 1993; Lewin 1996). Mathematically, ordinalism is entirely based upon the idea that one can dispense with the use of a specific utility function and that no meaning shall be attached to utility measurement, except as an ordinal principle.
Clearly, the development of ordinalist must be separated from the introduction of the concept of the indifference curve. Ordinalism was first advocated in Fisher’s “Mathematical Investigations” (1892) and Pareto’s Suunto (1900) and Manual ([1909] 1971), while the indifference curve had appeared in F. Y. Edge worth’s Mathematical Psychics (1881). It was thus only through Fisher’s and Pareto’s recasting that the concept of the indifference curve became irreversibly associated with the promotion of ordinalism.
Along the way, the recasting of the theory of choice along ordinalist lines raised a number of issues (about integrability, measurability, and complementarity) that would be progressively settled. A reasonable closing date for the ordinalist revolution is 1950, after Houthakker (1950) and Samuelson’s (1950) contributions.
From the late 1920s, the Paretian school was progressively gaining a larger audience while the use of the concept of marginal utility and other derivative concepts was challenged. Consequently, demand theory was recast along the principles
of individual preferences and ordinal utility functions. Nevertheless, English authors proved very silent about the meaning of indifference curves. Most if not all of the reflections after 1920 about the nature of indifference curves took place in America, mainly under the impulse of Henry Schultz at Chicago. This is an American story.
Q. Which of the following is not the way of studying Utility?
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Read the following passage and answer the question that follows:
The ordinalist revolution originates in the criticism of the psychological foundations of the theory of demand, namely, the principle of decreasing marginal utility as Alfred Marshall ([1890] 1898) used it. The rejection of hedonist hypotheses led Irving Fisher (1892) and Pareto (1896–97, 1900, 1909) to favour an objective or “positive” approach to economic concepts.
The “ordinalist revolution” (Ormazabal 1995, 116) is grounded in a methodological transformation of economics that put the facts of objective experience as a foundation of economics and provided a research program for the ensuing years (Green and Moss 1993; Lewin 1996). Mathematically, ordinalism is entirely based upon the idea that one can dispense with the use of a specific utility function and that no meaning shall be attached to utility measurement, except as an ordinal principle.
Clearly, the development of ordinalist must be separated from the introduction of the concept of the indifference curve. Ordinalism was first advocated in Fisher’s “Mathematical Investigations' ' (1892) and Pareto’s Suunto (1900) and Manual ([1909] 1971), while the indifference curve had appeared in F. Y. Edge worth’s Mathematical Psychics (1881). It was thus only through Fisher’s and Pareto’s recasting that the concept of the indifference curve became irreversibly associated with the promotion of ordinalism.
Along the way, the recasting of the theory of choice along ordinalist lines raised a number of issues (about integrability, measurability, and complementarity) that would be progressively settled. A reasonable closing date for the ordinalist revolution is 1950, after Houthakker (1950) and Samuelson’s (1950) contributions.
From the late 1920s, the Paretian school was progressively gaining a larger audience while the use of the concept of marginal utility and other derivative concepts was challenged. Consequently, demand theory was recast along the principles
of individual preferences and ordinal utility functions. Nevertheless, English authors proved very silent about the meaning of indifference curves. Most if not all of the reflections after 1920 about the nature of indifference curves took place in America, mainly under the impulse of Henry Schultz at Chicago. This is an American story.
Q. Under Cardinal Utility approach, utility is measured in utils.
Read the following passage and answer the question that follows:
The ordinalist revolution originates in the criticism of the psychological foundations of the theory of demand, namely, the principle of decreasing marginal utility as Alfred Marshall ([1890] 1898) used it. The rejection of hedonist hypotheses led Irving Fisher (1892) and Pareto (1896–97, 1900, 1909) to favour an objective or “positive” approach to economic concepts.
The “ordinalist revolution” (Ormazabal 1995, 116) is grounded in a methodological transformation of economics that put the facts of objective experience as a foundation of economics and provided a research program for the ensuing years (Green and Moss 1993; Lewin 1996). Mathematically, ordinalism is entirely based upon the idea that one can dispense with the use of a specific utility function and that no meaning shall be attached to utility measurement, except as an ordinal principle.
Clearly, the development of ordinalist must be separated from the introduction of the concept of the indifference curve. Ordinalism was first advocated in Fisher’s “Mathematical Investigations' ' (1892) and Pareto’s Suunto (1900) and Manual ([1909] 1971), while the indifference curve had appeared in F. Y. Edge worth’s Mathematical Psychics (1881). It was thus only through Fisher’s and Pareto’s recasting that the concept of the indifference curve became irreversibly associated with the promotion of ordinalism.
Along the way, the recasting of the theory of choice along ordinalist lines raised a number of issues (about integrability, measurability, and complementarity) that would be progressively settled. A reasonable closing date for the ordinalist revolution is 1950, after Houthakker (1950) and Samuelson’s (1950) contributions.
From the late 1920s, the Paretian school was progressively gaining a larger audience while the use of the concept of marginal utility and other derivative concepts was challenged. Consequently, demand theory was recast along the principles
of individual preferences and ordinal utility functions. Nevertheless, English authors proved very silent about the meaning of indifference curves. Most if not all of the reflections after 1920 about the nature of indifference curves took place in America, mainly under the impulse of Henry Schultz at Chicago. This is an American story.
Q. How is utility measured in Ordinal utility theory?
Read the following passage and answer the questions that follows:
In economics, rationing is an artificial restriction of demand and is done to keep price below the equilibrium (market-clearing) price determined by the process of supply and demand in an unfettered market. Thus, rationing can be complementary to price controls which can be explained through indifference curve approach.
There are two kinds of rationing done by the government to reduce consumption—price rationing and non-price rationing. By rationing, we mean exercise tax and by non-price rationing, we mean all types of control on the quantity consumed. Non-price rationing could be done by giving away coupons that would enable low income families to obtain some goods at affordable prices, which could not be possible if the prices were to increase alone. With coupon schemes, it would develop a black market for coupons, which would paradoxically increase the utility for those who are in need of that commodity by collection of more of these coupons from those who are not in need. This ensures greater marginal utility for those people who are in need of the commodity and will provide exchange of money to those who sell these coupons. For this, it is necessary for the government to encourage trading of the coupons.
The major importance of introducing rationing is to keep the price of important commodities under control, as for a necessary commodity, there will be an excessive demand in the market which will drive their price up in the market and high prices leads to reduction of consumption and utility for those who could not afford it. This ensures that the resources are planned in favour of the poor people of the country and restricts the rich people to ensure excessive purchase of limited resources of the country. This ensures development and equality of welfare and utility
between the rich and the poor people. Rationing of the good is done by the government and not the private sector. There is the same limit put on every person on the budget spending to which people could buy the commodities and within the limit, one could buy any amount of the commodity.
Q. Rationing of goods by the government ......................
Read the following passage and answer the questions that follows:
In economics, rationing is an artificial restriction of demand and is done to keep price below the equilibrium (market-clearing) price determined by the process of supply and demand in an unfettered market. Thus, rationing can be complementary to price controls which can be explained through indifference curve approach.
There are two kinds of rationing done by the government to reduce consumption—price rationing and non-price rationing. By rationing, we mean exercise tax and by non-price rationing, we mean all types of control on the quantity consumed. Non-price rationing could be done by giving away coupons that would enable low income families to obtain some goods at affordable prices, which could not be possible if the prices were to increase alone. With coupon schemes, it would develop a black market for coupons, which would paradoxically increase the utility for those who are in need of that commodity by collection of more of these coupons from those who are not in need. This ensures greater marginal utility for those people who are in need of the commodity and will provide exchange of money to those who sell these coupons. For this, it is necessary for the government to encourage trading of the coupons.
The major importance of introducing rationing is to keep the price of important commodities under control, as for a necessary commodity, there will be an excessive demand in the market which will drive their price up in the market and high prices leads to reduction of consumption and utility for those who could not afford it. This ensures that the resources are planned in favour of the poor people of the country and restricts the rich people to ensure excessive purchase of limited resources of the country. This ensures development and equality of welfare and utility
between the rich and the poor people. Rationing of the good is done by the government and not the private sector. There is the same limit put on every person on the budget spending to which people could buy the commodities and within the limit, one could buy any amount of the commodity.
Q. The marginal utility of a person diminishes.
Read the following passage and answer the questions that follows:
In economics, rationing is an artificial restriction of demand and is done to keep price below the equilibrium (market-clearing) price determined by the process of supply and demand in an unfettered market. Thus, rationing can be complementary to price controls which can be explained through indifference curve approach.
There are two kinds of rationing done by the government to reduce consumption—price rationing and non-price rationing. By rationing, we mean exercise tax and by non-price rationing, we mean all types of control on the quantity consumed. Non-price rationing could be done by giving away coupons that would enable low income families to obtain some goods at affordable prices, which could not be possible if the prices were to increase alone. With coupon schemes, it would develop a black market for coupons, which would paradoxically increase the utility for those who are in need of that commodity by collection of more of these coupons from those who are not in need. This ensures greater marginal utility for those people who are in need of the commodity and will provide exchange of money to those who sell these coupons. For this, it is necessary for the government to encourage trading of the coupons.
The major importance of introducing rationing is to keep the price of important commodities under control, as for a necessary commodity, there will be an excessive demand in the market which will drive their price up in the market and high prices leads to reduction of consumption and utility for those who could not afford it. This ensures that the resources are planned in favour of the poor people of the country and restricts the rich people to ensure excessive purchase of limited resources of the country. This ensures development and equality of welfare and utility
between the rich and the poor people. Rationing of the good is done by the government and not the private sector. There is the same limit put on every person on the budget spending to which people could buy the commodities and within the limit, one could buy any amount of the commodity.
Q. The marginal utility derived from a commodity keeps on ..................... .
Read the following passage and answer the questions that follows:
In economics, rationing is an artificial restriction of demand and is done to keep price below the equilibrium (market-clearing) price determined by the process of supply and demand in an unfettered market. Thus, rationing can be complementary to price controls which can be explained through indifference curve approach.
There are two kinds of rationing done by the government to reduce consumption—price rationing and non-price rationing. By rationing, we mean exercise tax and by non-price rationing, we mean all types of control on the quantity consumed. Non-price rationing could be done by giving away coupons that would enable low income families to obtain some goods at affordable prices, which could not be possible if the prices were to increase alone. With coupon schemes, it would develop a black market for coupons, which would paradoxically increase the utility for those who are in need of that commodity by collection of more of these coupons from those who are not in need. This ensures greater marginal utility for those people who are in need of the commodity and will provide exchange of money to those who sell these coupons. For this, it is necessary for the government to encourage trading of the coupons.
The major importance of introducing rationing is to keep the price of important commodities under control, as for a necessary commodity, there will be an excessive demand in the market which will drive their price up in the market and high prices leads to reduction of consumption and utility for those who could not afford it. This ensures that the resources are planned in favour of the poor people of the country and restricts the rich people to ensure excessive purchase of limited resources of the country. This ensures development and equality of welfare and utility
between the rich and the poor people. Rationing of the good is done by the government and not the private sector. There is the same limit put on every person on the budget spending to which people could buy the commodities and within the limit, one could buy any amount of the commodity.
Q. ______ means the utility derived from the total number of products consumed (choose the correct alternative).
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