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Test: Theory Of Consumer Behaviour - 1


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10 Questions MCQ Test Indian Economy for UPSC CSE | Test: Theory Of Consumer Behaviour - 1

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Test: Theory Of Consumer Behaviour - 1 - Question 1

Which of the following statements regarding utility is not true?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 1

Utility can be measured cardinally according to Marshall, but according to Hicks (ordinal approach) we can rank our preferences so utility is not always measurable cardinally.

Test: Theory Of Consumer Behaviour - 1 - Question 2

Which of the following utility approach is based on the theory of Alfred Marshall?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 2

The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1,2,3, and so on.  Here, one Util is equivalent to one rupee and the utility of money remains constant.

Test: Theory Of Consumer Behaviour - 1 - Question 3

_____________ is the addition to total utility by the consumption of one additional unit of the commodity?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 3

Marginal Utility or Marginal Satiety – is the additional utility derived from the consumption of an additional unit of a commodity. Therefore, Marginal Utility = the addition made to the Total Utility by consuming one more unit of a commodity.

Test: Theory Of Consumer Behaviour - 1 - Question 4

Which of the following utility approach suggests that utility is a measurable and quantifiable entity?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 4

The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1,2,3, and so on.The neo-classical economist developed the theory of consumption based on the assumption that utility is measurable and can be expressed cardinally. And to do so, they have introduced a hypothetical unit called as “Utils” meaning the units of utility. Here, one Util is equivalent to one rupee and the utility of money remains constant.

Test: Theory Of Consumer Behaviour - 1 - Question 5

____________ shows various combinations of two goods that give same amount of satisfaction to the consumer?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 5

An indifference curve is a graph that shows a combination of two goods that give a consumer equal satisfaction and utility, thereby making the consumer indifferent. Indifference curves are heuristic devices used in contemporary microeconomics to demonstrate consumer preference and the limitations of a budget. Recent economists have adopted the principles of indifference curves in the study of welfare economics.

Test: Theory Of Consumer Behaviour - 1 - Question 6

In case of relatively more elastic curve, demand curve is:

Test: Theory Of Consumer Behaviour - 1 - Question 7

 _____________ is defined as the difference between what the consumer is willing to pay for a product and what he actually pays?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 7

The consumer surplus is the difference between the highest price a consumer is willing to pay and the actual market price of the good. The producer surplus is the difference between the market price and the lowest price a producer would be willing to accept. For producers, a surplus can be thought of as profit, because producers usually don't want to produce at a loss. The two together create an economic surplus.

Test: Theory Of Consumer Behaviour - 1 - Question 8

According to the law of diminishing marginal utility, _________?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 8

D is the correct answer because every additional unit lowers the consumer satisfaction and it tends to lower the total utility....the marginal utility will also becomes low

Test: Theory Of Consumer Behaviour - 1 - Question 9

The want satisfying power of a commodity is known as:

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 9

The want satisfying power of a commodity is called utility. It is a quality possessed by a commodity or service to satisfy human wants. Utility can also be defined as value-in-use of a commodity because the satisfaction which we get from the consumption of a commodity is its value-in-use.

Test: Theory Of Consumer Behaviour - 1 - Question 10

What is called point of satiety?

Detailed Solution for Test: Theory Of Consumer Behaviour - 1 - Question 10

Point of Satiety is defined as '' the point where marginal utility of any commodity is zero''. Thus it is a point where satisfaction of any commodity is zero.

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