MCQOPTIONS
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MCQOPTIONS
This section includes 19 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following statements is not true with regard to the standard properties of indifference curves ? |
| A. | Indifference curves are downward sloping |
| B. | indifference curves are bowed outward |
| C. | Indifference curves do not cross each other |
| D. | Higher indifference curve is preferred to lower ones |
| Answer» C. Indifference curves do not cross each other | |
| 2. |
Which of the following is true about the consumer’s optimum consumption bundle? At the optimum ? |
| A. | the slope of the indifference curve equals the slope of the budget constraint |
| B. | the indifference curve is tangent to the budget constraint |
| C. | the relative prices of the two goods equals the marginal rate of substitution |
| D. | none of these answers are true |
| E. | all of these answers are true |
| Answer» F. | |
| 3. |
Which of the following is not true regarding the outcome of a consumer’s optimization process ? |
| A. | The marginal utility per dollar spent on each good is the same |
| B. | The marginal rate of substitution between goods is equal to the ratio of the prices between goods |
| C. | The consumer’s indifference curve is tangent to his budget constraint |
| D. | The consumer has reached his highest indifference curve subject to his budget constraint |
| E. | The consumer is indifferent between any two points on his budget constraint |
| Answer» F. | |
| 4. |
uppose a consumer must choose between the consumption of sandwiches and pizza. If we measure the quantity of pizza on the horizontal axis and the quantity of sandwiches on the vertical axis and if the price of a pizza is Rs10 and the price of a sandwich is Rs5, then the slope of the budget constraint is ? |
| A. | 2 |
| B. | 10 |
| C. | 1/2 |
| D. | 5 |
| Answer» B. 10 | |
| 5. |
The slope at any point on an indifference curve is known as ? |
| A. | the marginal rate of substitution |
| B. | the marginal rate of trade-off. |
| C. | the trade-off rates |
| D. | the marginal rate of indifference |
| Answer» B. the marginal rate of trade-off. | |
| 6. |
The limit on the consumption bundles that a consumer can afford is known as ? |
| A. | an indifference curve |
| B. | the budget constraint |
| C. | the marginal rate of substitution |
| D. | the consumption limits |
| Answer» C. the marginal rate of substitution | |
| 7. |
The consumer’s optimal purchase of any two goods is the point where ? |
| A. | the budget constraint crosses the indifference curve |
| B. | the two highest indifference curves cross |
| C. | the consumer reaches the highest indifference curve subject to remaining on the budget constraint |
| D. | the consumer has reached the highest indifference curve |
| Answer» D. the consumer has reached the highest indifference curve | |
| 8. |
The change in consumption that results when a price change moves the consumer along a given indifference curve is known as the ? |
| A. | inferior effect |
| B. | normal effect |
| C. | substitution effect |
| D. | complementary effect |
| E. | income effect |
| Answer» D. complementary effect | |
| 9. |
Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 A pair of socks is ? |
| A. | an inferior effect |
| B. | a Geffen good |
| C. | a normal good |
| D. | none of these answers |
| Answer» D. none of these answers | |
| 10. |
Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The substitution effect is represented by the movement from point ? |
| A. | Z to point X |
| B. | X to point X |
| C. | X to point Z |
| D. | Y to point X |
| Answer» B. X to point X | |
| 11. |
Refer to Exhibit 4. Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 If the price of a belt is €10 and the price of a pair of socks is €5, the consumer will choose to buy the commodity bundle represented b point ? |
| A. | Z |
| B. | X |
| C. | Y |
| D. | the optimal point cannot be determined from this graph |
| Answer» B. X | |
| 12. |
Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The income effect is represented by the movement from point ? |
| A. | X to point Y |
| B. | X to point Z |
| C. | Y to point X |
| D. | Z to point X |
| Answer» B. X to point Z | |
| 13. |
indifference curves for perfect substitutes are ? |
| A. | right angles |
| B. | bowed outward |
| C. | straight lines |
| D. | nonexistent |
| E. | bowed inward |
| Answer» D. nonexistent | |
| 14. |
If leisure is a normal good, an increase in the wage ? |
| A. | will always increase the quantity of labor supplied |
| B. | will increase the amount of labor supplied if the substitution effect outweighs the income effect |
| C. | will increase the amount of labor supplied if the income effect outweighs the substitution effect |
| D. | will always decrease the amount of labor supplied |
| Answer» C. will increase the amount of labor supplied if the income effect outweighs the substitution effect | |
| 15. |
If income where to double and prices were to to double the budget line would ? |
| A. | stay the same |
| B. | rotate inward |
| C. | shift outward in a parallel fashion |
| D. | rotates outward |
| E. | shift inward in parallel fashion |
| Answer» B. rotate inward | |
| 16. |
If consumption when young and when old are both normal goods, an increase in the interest rate ? |
| A. | will always increase the quantity of saving |
| B. | will always decrease the quantity of saving |
| C. | will increase the quantity of saving if the substitution effect outweighs the income effect |
| D. | will increase the quantity of saving if the income effect outweighs the substitution effect |
| Answer» D. will increase the quantity of saving if the income effect outweighs the substitution effect | |
| 17. |
If an increase in a consumer’s income causes the consumers to decrease her quantity demanded of a good, then the good is ? |
| A. | a substitute good |
| B. | a normal good |
| C. | a complementary good |
| D. | an inferior good |
| Answer» E. | |
| 18. |
If an increase in a consumer’s income causes the consumer to increase his quantity demand of a good, then the good is ? |
| A. | a complementary good |
| B. | an inferior good |
| C. | a normal good |
| D. | a substitute good |
| Answer» D. a substitute good | |
| 19. |
A change in the relative prices of which of the following pair of goods would likely cause the smallest substitution effect ? |
| A. | right shoes and left shoes |
| B. | petrol from BP and petrol from shell |
| C. | kit-Kat chocolate snacks and Twix chocolate snacks |
| D. | coke and Pepsi |
| Answer» B. petrol from BP and petrol from shell | |