CBSE Class 12 Microeconomics Consumers Equilibrium Notes

Question. The want satisfying power of a good is known as .................... .
a) Utility
b) Usefulness
c) Both (a) and (b)
d) None of (a) and (b)

Answer : A

Question. If a consumer is in equilibrium consuming one commodity, how will he respond to a fall in price of the commodity?
a) Decrease the consumption of the commodity
b) Increase the consumption of the commodity
c) Consumption will remain constant
d) None of the above

Answer : B

Question. Law of Equi-Marginal utility is a law of
a) Production of Wealth
b) Consumption of Wealth
c) Distribution of Wealth
d) Exchange of Wealth

Answer : B

Question. When MU is zero, TU will be ................. .
a) maximum
b) maximum and constant
c) constant
d) minimum

Answer : B

Question. The unit of utility is known as ................. .
a) marginal utility
b) MU_M
c) utils
d) None of these

Answer : C

Question. The law of equi-marginal utility considers price of money as
a) zero
b) less than one
c) more than one
d) one

Answer : D

Question. According to cardinal measurement of utility                                                         
a) Utility is quantitative
b) Utility is qualitative
c) Utility is both quantitative and qualitative
d) Utility is constant

Answer : A

Question. Which of the following is/are the feature(s) of utility?
a) Subjective in nature
b) Depending upon of urgency of wants
c) Both (a) and (b)
d) None of (a) and (b)

Answer : C

Question. Which of the following is an assumption of consumer equilibrium (through utility analysis)?
a) Rationality
b) The cardinal measurability of utility
c) Constancy of the MU of money
d) All of the above

Answer : D

Question. In case of single commodity, the consumer will be in equilibrium when ....... .
a) MU_X/MU_Y = MU_M
b) MU_X/P_X = MU_M
c) P_X/P_Y = MUx
d) MU_X = MU_M

Answer : B

Question. Law of equi-marginal utility is called
a) Law of increasing utility
b) Law of diminishing utility
c) Law of substitution
d) None of the above

Answer : C

Question. Consumer’s equilibrium takes at a point where
a) MU = Price
b) MU < Price
c) MU > Price
d) None of these

Answer : A

Question. When total utility increases at a diminishing rate, marginal utility will be
a) increasing
b) diminishing
c) constant
d) diminishing but positive

Answer : D

Question. Total Utility derived from consumption of commodity will begin to fall ...... .
a) with every additional unit consumed
b) when Total Utility curve becomes flat
c) when Marginal Utility starts falling
d) when Marginal Utility becomes negative

Answer : D

Question. ………… curve is a downward sloping curve cutting the X-axis.
a)Marginal Utility
b) Total Utility
c) Average Utility
d) Both (a) and (c)

Answer : A

Question. Utility can be measured by
a) Money
b) Exchange of goods
c) Weight of the good
d) None of the above

Answer : A

Question. Cardinal utility approach was given by ..................... .
a) Prof. Alfred Marshall
b) Prof. Hicks
c) Prof. Samuelson
d) Prof. Gossen

Answer : A

Question. Utility approach is ...... .
a) cardinal
b) ordinal
c) both cardinal and ordinal
d) None of the above

Answer : C

Question. Exceptions to law of diminishing marginal utility include
a) reading
b) money
c) acquiring knowledge
d) All of these

Answer : D

Question. In accordance with the relationship between Total Utility and Marginal Utility, when MU is negative, then
a) TU increases
b) TU decreases
c) TU remains constant
d) TU becomes zero

Answer : B

Question. A consumer is in equilibrium, how will a consume behave if MU_x/P_x<MU_x/P_x?
a) Consumer will consume more of Good X and less of Good Y
b) Consumer will consume more of Good Y and less of Good X
c) Consumer more of both Good
d) Consumer less of both Good

Answer : B

Question. A consumer buys two commodities X and Y, he would be in equilibrium when ...... .
a) MU_X/P_X = MU_Y/P_Y
b) MU_X/MU_Y = MU_M
c) MU_X/P_X = MU_Y/P_X
d) P_X/P_Y = MU_M

Answer : A

Question. “Utility is same as Usefulness”. Which of the below options fits the given statement?
a) Always true
b) Partially true
c) False
d) Incomplete

Answer : C

Question. Which of the following is not correct about consumer equilibrium through utility analysis?
a) Law of Marginal Utility does not operate
b) MU_M remains constant
c) MU_X = MU_M
d) Consumer is rational

Answer : A 

Question. In case of single commodity, a consumer is at equilibrium point, marginal utility derived from consumption of commodities is 12, find the price of that commodity? (when MU_M = 1)
a) Rs 1
b) Rs 2
c) Rs 12
d) Rs 10

Answer : C

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