AGRITECH 323 MIDTERM EXAM

1. It is the locus points each of which represents a bundle of goods that can be purchased if the entire money income is spent.

                        

• A. Budget Line     

• B. Marginal Rate of Substitution

• C. Indifference Map

2. It is the formula used to compute the Marginal Rate of Substitution. What is it?

             

• A. Change in a/Change in b

•     B. Change in y/Change in x  

• C. Change in x/Change in u

3. It is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. 

                           

• A. Budget Line

• B. Marginal Rate of Substitution  

• C. Indifference Map

4. It is a point of tangency between indifference curve and budget line. What is it?

                                    

• A. Theory of Production

• B. Consumer Equilibrium

•    C. Stages of Production

5. ___________________ is a set of indifference curve. What is it?

                            

• A. Budget Line 

• B. Marginal Rate of Substitution

• C. Indifference Map

6. It shows the rate at which the consumer will substitute one good for the other to remain equality satisfied. It is also the slope of indifference curve. What is it?

                            

• A. Budget Line 

• B. Marginal Rate of Substitution

• C. Indifference Map

7. These are the characteristics of indifference curve except:

       

• A. They are down sloping/negatively slope

•   B. They are convex to the origin

• C. They always intersect

8. Utility Maximizing Rule states that to maximize satisfaction, the consumer should allocate his money so that the last money spent on each product yields the same amount of extra. This rule is otherwise known as?

                            

• A. Budget Allocation Rule

•   B. Indifference Rule 

• C. Marginal Rule

9.  It states that as a person consumes more of a given commodity, the marginal utility will eventually tend to decline. It pertains to?

                                    

• A. The Cardinal Approach

• B. The Utility Approach 

• C. Both A & B

10. It shows all combinations of two products A and B which will yield at the same total satisfaction or total utility to a consumer.

                    

                                                                                                                           

• A. Consumer Demand Theory

• B. Indifference Curve Analysis

•   C. Relationship Between Total Utility and Marginal Utility