MCQs - Utility Analysis Commerce Notes | EduRev

Crash Course of Micro Economics -Class 12

Commerce : MCQs - Utility Analysis Commerce Notes | EduRev

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Q.1 Negative utility from a given unit of a commodity means that

(a) Consumer does not expect to get any satisfaction from the consumption of this unit.
(b) The consumer expects to get some lower level of satisfaction from the consumption of this unit.
(c) The consumer would consume this unit of the commodity even if he has not to pay any price for this commodity.
(d) The consumer would not like to consume this unit of the commodity even if he has not to pay any price for this commodity.
Ans: D

Q.2 
If a consumer is in equilibrium and is consuming commodity-X only.  The marginal utility fro last unit consumed of commodity-X = 50 utils and MUM = 10 utils.  Find the price of the commodity-X:
(a) Rs. 5.
(b) Rs. 4.
(c) Rs. 10.
(d)  Rs. 40.
Ans: A

Q.3 
The principal limitation of utility analysis relates to the basic assumption that utility can be expressed in terms of
(a) Ordinal numbers
(b) Cardinal numbers
(c) Both (a) and (b)
(d) None of the above.
Ans: B

Q.4 
The assumption of constant marginal utility of money means that importance of money o the consumer is
(a) Decreasing
(b) Increasing
(c) Same
(d) None of the above
Ans: C

Q.5 
Utility, being subjective means it
(a) Differs from product to product
(b) Differs from time to time

(c) Differs from person to person
(d) All of the above.
Ans: D

Q.6 
Suppose a consumer consuming two commodities X and Y is at equilibrium.  The prices of Gopal-X and Good-Y are Rs. 100 and Rs. 200 respectively and the marginal utility of Good-Y is 500 utils.  What will be the marginal utility of X?
(a) 1,000 utils
(b) 250 utils
(c) 2,500 utils

(d) 40 utils
Ans: B

Q.7 
Once the point of satiety is attained, consumption of additional units of the commodity causes.
(a) Both TU and MU increase
(b) TU falls and MU increases.

(c) TU falls and MU falls and becomes negative
(d) TU becomes negative and MU falls.
Ans: D

Q.8 
According to one of the assumptions of the law of diminishing marginal utility, there should be ____ between the consumption of the unit and another unit.
(a) Long time lag
(b) No time lag
(c) Equal time lag
(d) None of the above.
Ans: B

Q.9 
When the utility is expressed in _____ it is called ordinal utility.
(a) Utils
(b) Rupees
(c) Ranks
(d) Total utility
Ans: C

Q.10 
If consumption of an additional unit of a commodity causes no change in TU, then MU is:
(a) Positive
(b) Negative
(c) Constant
(d) zero
Ans: D

Q.11 
With the decrease in the price of petrol, the demand curve of cars will make
(a) leftward shift
(b) rightward shift
(c) Upward movement
(d) downward movement
Ans: B

Q.12 
Starting from an initial situation of consumer equilibrium, suppose that the marginal utility of money increases.  How will it affect the quantity demanded of the product?
(a) It will decrease
(b) It will increase.
(c) It will remain unchanged
(d) It will fall to zero
Ans: A

Q.13 Worth of a rupee to a consumer is called:
(a) The marginal utility of money
(b) Total utility of money
(c) The diminishing marginal utility of money
(d) Consumer’s equilibrium
Ans: A


Q.14 According to the law of diminishing marginal utility, while eating cake the satisfaction derived from     the second slice of it consumed is:
(a) Greater than the consumption of the first slice
(b) Less than the consumption of the first slice
(c) Not comparable to that from the first
(d) Equal to that from the first
Ans: B

Q.15 
Hitesh buys pizza and coke.  The marginal utility of the last piece of pizza is 80 utils and of the last sip of coke is 40 utils.  The price of pizza is Rs. 40 and that of coke is Rs. 20.  This means that Hitesh is buying:
(a) More pizza and less coke
(b) More coke and less pizza

(c) Both at the optimal level
(d) The same quantity of both
Ans: C

Q.16 
What happens to MU when TU is maximum and constant?
(a) MU becomes zero
(b) MU becomes negative
(c) MU declines
(d) it remains the same
Ans: A

Q.17 
“Cardinality” means utility can be:

(a) Measured
(b) Ranked
(c) Not measured
(d) None of these
Ans: A

Q.18 
Consumer consumes only two goods X and Y whose prices are Rs. 3 and Rs. 4 per unit respectively.  It the consumer chooses a combination of the two goods with marginal utility of X equal to 4 and that of Y equal to 3, is the consumer in equilibrium, then the consumer will.
(a) Buy more units of both, X and Y

(b) Buy more units of Y and less of X

(c) Buy more units of X and less of Y

(d) Buy fewer units of both, X and Y

Ans: C

Q.19 
By cardinal numbers, we mean
(a) 1, 2, 3, 4, ........., etc.
(b) First, Second, Third etc.
(c) Arabic numbers.
(d) Latin numbers.
Ans: A

Q.20 
A rational consumer, while making a purchase of any product should consider

(a) it's price
(b) it's utility
(c) its price and utility
(d) None of these
Ans: C

Q.21 
A rational consumer should always aim at 
(a) Maximal utility
(b) optimal purchases
(c) Minimal wastage
(d) maximal utility and minimal wastage
Ans: B

Q.22 
MUx is 40 and MUy is 30. If the price of Y is Rs. 9. What will be the price of X at equilibrium:
(a) Rs. 9
(b) Rs. 30
(c) Rs. 12
(d) Rs. 15
Ans: C

Q.23 Marginal Utility (MU) in terms of money is equal to:
(a) Marginal Utility in utils/Marginal Utility of one rupee
(b) Marginal Utility of one rupee/Marginal Utility in utils (c) Marginal Utility in utils/Price of the Commodity (d) None of these

Ans: A

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