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Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Commerce MCQ


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5 Questions MCQ Test - Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions

Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions for Commerce 2024 is part of Commerce preparation. The Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions questions and answers have been prepared according to the Commerce exam syllabus.The Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions below.
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Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 1
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Marginal Utility diminishes as the person consumes more unit of a commodity.

Reason (R): Utility derived from each unit of a commodity is less than that of the previous one.

Detailed Solution for Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 1
The Law Of Diminishing Marginal Utility states that, all else equal, as consumption increases, the marginal utility derived from each additional unit declines. Marginal utility is derived as the change in utility as an additional unit is consumed. Utility is an economic term used to represent satisfaction or happiness. Marginal utility is the incremental increase in utility that results from consumption of one additional unit.
Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 2
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Law of diminishing marginal utility states that as more and more units of a commodity are consumed, marginal utility derived from every additional unit must decline.

Reason (R): When MU is negative, TU will be decreasing.

Detailed Solution for Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 2
The Law Of Diminishing Marginal Utility states that, all else equal, as consumption increases, the marginal utility derived from each additional unit declines. Marginal utility is derived as the change in utility as an additional unit is consumed. Utility is an economic term used to represent satisfaction or happiness.

Total utility is the sum of all marginal utilities derived from consumption of each additional unit of a commodity. When marginal utility becomes negative the addition to total utility will be negative, thus, leading to diminishing total utility.

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Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 3
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Rare commodities like antiques do not follow the law of diminishing marginal utility.

Reason (R): Law of marginal utility states that as more and more units of a commodity

are consumed, marginal utility derived from additional unit must decline.

Detailed Solution for Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 3
In economics, the law of diminishing marginal utility states that the marginal utility of a good or service declines as more of it is consumed by an individual. Economic actors receive less and less satisfaction from consuming incremental amounts of a good.
Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 4
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Indifference Curves are always convex to the origin.

Reason (R): Diminishing Marginal Rate of Substitution.
Detailed Solution for Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 4

The indifference curves are convex to the origin because of the diminishing marginal rate of substitution. The MRS diminishes because of the decline in the marginal utility, which means with more and more consumption of one commodity, the customer utility starts declining and he is not willing to consume it more at the cost of the other commodity. For example, let’s say there are two chocolates, dairy milk, and Nestle, with more and more consumption of dairy milk chocolates the utility continues to decline, and the customer will no more give up the Nestle chocolates to buy the dairy milk. Here, MRS shows the slope of the indifference curve.

Test: Consumer's Equilibrium and Demand- Assertions & Reason Type Questions - Question 5
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Mohit gets a raise in his salary by 10% as he was a hard working person and was an employee of the week for three months straight.

Reason (R): The raise in the salary is a part of the consumption for Mohit.
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