chapter 5

Scarcity raises both price and marginal utility but generally reduces total utility.

• true

• false

the word 'marginal' means

• three more units

• two more units

• one more unit

• none of all above

the cardinal measure of utility is required in :

• utility theory

• inferior good

• 
  indifference curve analysis

• none of the above

On which of the following assumptions, the theory of consumer behaviour on cardinal utility approach is NOT base ?

1. 1.Consumer is rational

2. 2.Limited money income on the consumer

3. 3.Maximization of the total satisfaction

4. 4.Diminishing marginal utility of money

• consumer is rational

• limited money income on the consumer

• maximization of the total satisfaction

• diminishing marginal utility of money

which of the following statements is true?

• when the total utility is maximum, marginal utility is zero.

• when total utility decreases, marginal utility remains constant

• total utility and marginal utility are not inter related

• all of the above

the ratio of exchange between two groups in the indifference curve analysis is shown by ____

• price line

• price consumption curve

• income consumption curve

• production probability curve

which one of the following is not the basic property of indifference curves ?

• indifference curves have a negative slope

• indifference curves do not intersect nor are they tangent to one another

• indifference curve of imperfect substitutes are concave to the origin

• upper indifference curves indicate higher level of satisfication

utility derived from consumption of an additional unit of a good is called

• total utility

• additional utility

• derived utility

• marginal utility

suppose a consumer who perchases only two goods is making a utility-maximizing choice and then the price of one of the goods decreases. What will happen ?

• the consumer's purchasing power will increase

• the consumer's total utility will increase

• the consumer's money income will increase

cardinal utility analysis of consumer's behaviour is based on which combination of the following assumptions :

• utility is measurable in terms of cardinal number

• constancy of the marginal utility of money

• utilities of different goods are interdependent

• marginal utility of a good for a person diminishes with every increase in the stock that he already has