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Indifference curve

Total questions: 109

Worksheet time: 57mins

Name
Class
Date
1.
When MU is negative TU:- 
a)
Increases
b)
decreases
c)
Constant
d)
none of the above
2.
The slope of indifference curve is:- 
a)
Concave
b)
convex
c)
Straight line
d)
MRS
3.
The slope of budget line is:-
a)
concave
b)
convex
c)
MRS
d)
price ratio of the commodity
4.
Indifference mean:-
a)
x is preferred to y
b)
y is preferred to x
c)
x & y are equally preferred
d)
none of the above
5.
If the price of good x shown on x-axis falls then budget line will:-
a)
Shift to the right
b)
shift to the left
c)
Rotate to the right on the x axis
d)
rotate to the left on the x
6.
The slope of budget line is measured by:-
a)
MRSxy
b)
MRTSxy
c)
ratio of the prices of the 2 goods
d)
all the above
7.
If the marginal rate of substitution (MRS) declines, then the indifference curve is:-
a)
concave to the origin
b)
straight line cutting both the axis
c)
convex to the origin
d)
none of the above
8.
Ordinal utility analysis was developed by:-
a)
J.R.Hicks & R.J.D. Allen
b)
Samualson
c)
Marshall and Jevons
d)
Slutsky
9.
A consumer reaches equilibrium when:- 
a)
Marginal utility is equal to price
b)
Marginal utility greater than price
c)
Marginal utility less than price
d)
Total utility is equal
10.

In one commodity case the marginal utility curve slopes downward from

a)

Right to left

b)

left to right

c)

Straight line

d)

None of the above

11.
 Indifference curve is a 
a)
Tabular Presentation
b)
Diagrammatic Presentation 
c)
Both A & B b
d)
None of the above
12.
 Indifference curve is a various combination of 
a)
  One commodity 
b)
Four commodities
c)
Three commodities 
d)
Two commodities
13.
  Indifference curve slopes downward from
a)
Left to right
b)
Right to left
c)
both of these
d)
none of these
14.
 Indifference curve 
a)
Concave to the origin 
b)
Both A & B 
c)
Convex to the origin
d)
None of the above
15.
1.  Higher indifference curve represents 
a)
Lower level of satisfaction
b)
Medium level of satisfaction
c)
No satisfaction 
d)
Higher level of satisfaction
16.
Indifference map is the set of
a)
Indifference Set
b)
Both of these
c)
Indifference curve
d)
None of the Above
17.

The slope of the indifference curve is equal to which of the following?

a)

One

b)

Marginal utility

c)

Marginal rate of substitution

d)

None of these

18.

Why is the indifference curve convex to origin?

a)

Due to the continuous decline of the marginal rate of substitution

b)

Due to the law of diminishing marginal utility

c)

Due to monotonic preferences

d)

Both a and b

19.

Which of the following is not the property of indifference curves?

a)

The higher the indifference curves, the higher is the level of satisfaction.

b)

The indifference curve is downward sloping.

c)

The indifference curve is concave to the origin.

d)

Two indifference curves cannot intersect each other.

20.

Hicks and Allen believed that utility:

a)

Can be measured in cardinal numbers

b)

Can be measured in ordinal numbers

c)

Cannot be measured

d)

Cannot be expressed

21.

As we move down the indifference curve from left to right, the slope of the indifference curve tends to which of the following?

a)

Unity

b)

Zero

c)

Decline

d)

Rise

22.

In the indifference map, a higher IC indicates which of the following?

a)

The lower level of satisfaction

b)

The Higher level of satisfaction

c)

The same level of satisfaction

d)

Either higher or same level of satisfaction

23.

Which of the following statements is NOT TRUE of indifference curves?

a)

They could intersect.

b)

They are downward sloping.

c)

They are convex to the origin.

d)

They exhibit higher levels of utility as you move from the origin.

24.

An indifference curve represent

a)

(a) Four commodities

b)

(b) Less than two commodities

c)

(c) Only two commodities

d)

(d) Only one commodity

25.

Indifference curve is always

a)

(a) Concave to the origin

b)

b) Convex to the origin

c)

c) L shaped

d)

(d) A straight line

26.

In case of a convex indifference curve

a)

(a) MRS xy is constant

b)

(b) MRS xy is increasing

c)

(c) MRS xy is negligible

d)

(d) MRS xy is diminishing

27.

Moving along an indifference curve :

a)

Consumers prefer some of the consumption points to others.

b)

The marginal rate of substitution for a good increases as more of the good is consumed.

c)

The marginal rate of substitution is constant.

d)

Consumers do not prefer one consumption point to another.

28.

The slope of the indifference curve is equal to which of the following?

a)

One

b)

Marginal utility

c)

Marginal rate of substitution

d)

None of these

29.

Why is the indifference curve convex to origin?

a)

Due to the continuous decline of the marginal rate of substitution

b)

Due to the law of diminishing marginal utility

c)

Due to monotonic preferences

d)

Both a and b

30.

Which of the following is not the property of indifference curves?

a)

The higher the indifference curves, the higher is the level of satisfaction.

b)

The indifference curve is downward sloping.

c)

The indifference curve is concave to the origin.

d)

Two indifference curves cannot intersect each other.

31.

Hicks and Allen believed that utility:

a)

Can be measured in cardinal numbers

b)

Can be measured in ordinal numbers

c)

Cannot be measured

d)

Cannot be expressed

32.

As we move down the indifference curve from left to right, the slope of the indifference curve tends to which of the following?

a)

Unity

b)

Zero

c)

Decline

d)

Rise

33.

In the indifference map, a higher IC indicates which of the following?

a)

The lower level of satisfaction

b)

The Higher level of satisfaction

c)

The same level of satisfaction

d)

Either higher or same level of satisfaction

34.

Two indifference curves cannot cut each other because of which of the following?

a)

They represent those combinations of two goods that give the same satisfaction.

b)

The slope is downwards.

c)

Each indifference curve represents a different level of satisfaction

d)

They are convex to origin.

35.

An indifference curve is related to which of the following?

a)

Choices and preferences of the consumer

b)

Prices of goods X and Y

c)

Consumer’s income

d)

Total utility from goods X and Y

36.

An Indifference curve slope down towards the right since more of one commodity and less of another result in which of the following?

a)

Decreasing expenditure

b)

Maximum satisfaction

c)

Greater satisfaction

d)

Same satisfaction

37.

An Indifference curve slope down towards the right since more of one commodity and less of another result in which of the following?

a)

Decreasing expenditure

b)

Maximum satisfaction

c)

Greater satisfaction

d)

Same satisfaction

38.

An indifference curve is related to which of the following?

a)

Choices and preferences of the consumer

b)

Prices of goods X and Y

c)

Consumer’s income

d)

Total utility from goods X and Y

39.

An indifference curve shows combinations of two goods that:

a)

a consumer could buy with their given income.

b)

would provide the consumer with the same level of satisfaction.

c)

could be available to the consumer in a given time period.

40.

Which of the following statements is NOT TRUE of indifference curves?

a)

They could intersect.

b)

They are downward sloping.

c)

They are convex to the origin.

d)

They exhibit higher levels of utility as you move from the origin.

41.

In case of a convex indifference curve

a)

(a) MRS xy is constant

b)

(b) MRS xy is increasing

c)

(c) MRS xy is negligible

d)

(d) MRS xy is diminishing

42.
When Marginal Utility is zero what happens to Total Utility?
a)
Became Zero
b)
Became Maximum
c)
Became Minimum
d)
None of these
43.
When a consumer consumes two goods X and Y , she will attain equilibrium when
a)
MUx = MUy
b)
MUx/Px = MUy/Py
c)
Px/MUx = Py/MUy
d)
None of these
44.
In which analysis Utility can be measured in numbers?
a)
Ordinal Analysis
b)
Cardinal Analysis
c)
Utility Analysis
d)
None of these
45.
When income of the Consumer decreases , the budget line
a)
Shifts rightward
b)
shifts leftward
c)
No change
d)
Rotates inward
46.
Slope of the Indifference Curve is 
a)
Price Ratio
b)
MRSxy
c)
MRTxy
d)
None of these
47.
What will be the shape of the Indifference curve when its slope increases?
a)
convex to origin
b)
concave to origin
c)
straight line
d)
none of these
48.
Indifference Curve analysis of Consumer's equilibrium is also called
a)
Marshallian Anaysis
b)
Gossen's Analysis
c)
Hicks and Allen Analysis
d)
None of these
49.
The necessary condition in Indifference curve analysis for equilibrium is
a)
MUx = Px
b)
MUx/Px = MUy/Py
c)
MRSxy = - P1/P2
d)
MRSxy increases
50.
Equation of Budget Line is
a)
P1X1+P2X2 <M
b)
P1X1+P2X2 = M
c)
P1X1+P2X2 >M
d)
P1X1+P2X2 <= M
51.
An indifference curve is downward sloping due to 
a)
Monotonic preferences
b)
convex preference
c)
transitivity
d)
none of these
52.
If the consumer prefer the bundle (5,7) to (3,7) his preference will be called
a)
Monotonic
b)
Indifferent
c)
Convex
d)
None of these
53.
Consumer consumes two goods X and Y and in equilibrium. if Px increases , the consumer will consume
a)
More of X
b)
Less of X
c)
Less of Y
d)
None of these
54.
The curve derived by joining all bundles which give equal level of satisfaction is called
a)
Budget Line
b)
Indifference Curve
c)
Budget Set
d)
Price Line
55.
The collection of all the consumption bundles which costs the consumer exactly equal or strictly less than her money income is called 
a)
Budget Line
b)
Budget Set
c)
Indifference Map
d)
Indifference Curve
56.

A utility function that describes how much of one market basket is preferred to another is called

a)

an ordinal utility function.

b)

a cardinal utility function.

c)

.a utility-maximizing function.

d)

a definitive utility function.

57.

Indifference curves cannot intersect because of the assumption that

a)

indifference curves are negatively sloped.

b)

marginal utility diminishes as more of that good is consumed.

c)

preferences are transitive (multiple options)

d)

preferences are complete.

58.

If Karim's marginal rate of substitution of Ice Cream for Custard Dessert is 2, then we know that

a)

he is willing to give up 2 units of Custard Dessert to get the next unit of Ice Cream.

b)

he is willing to give up 2 units of Ice Cream to get the next unit of Custard Dessert.

c)

2 units of Custard Dessert are identical to 2 units of Ice Cream.

d)

he prefers to eat 2 units of Custard Dessert together with every unit of Ice Cream he eats.

59.

Ordinal utility analysis Was developed by

a)

J.R.Hicks & R.J.D. Allen

b)

Samualson

c)

Marshall and Jevons

d)

Slutsky

60.

Ordinal utility analysis Was developed by

a)

J.R.Hicks & R.J.D. Allen

b)

Samualson

c)

Marshall and Jevons

d)

Slutsky

61.

A consumer is in equilibrium when marginal utilities are:

a)

Minimum

b)

Highest

c)

Equal

d)

Increasing

62.

Law of Equi-marginal Utlity is a law of:

a)

Production

b)

Consumption

c)

Distribution

d)

Exchange

63.

MRS is the rate at which the consumer is willing to substitute one good for another without changing the level of

a)

Income

b)

Price

c)

Satisfaction

d)

None

64.

Marginal Utility curve of a consumer is also his

a)

Indifference Curve

b)

Total Utility Curve

c)

Supply Curve

d)

Demand Curve

65.

Indifference curve between income and leisure for an individual is generally

a)

Concave to the Origin

b)

Convex to the Origin

c)

Negatively sloped straight lines

d)

Positively sloped straight lines

66.

Cardinal measurement is related to ____________________

a)

Indifference curve

b)

Equi-Marginal utility

c)

Law of diminishing marginal utility

d)

None of the Above

67.

The change in total utility after each additional unit of consumption is called:

a)

Satisfaction

b)

Value

c)

Marginal Utility

d)

Benefit

68.

Which of the following activities is least likely to exhibit the law of diminishing marginal utility?

a)

a student answering multiple choice questions for an economics course

b)

a wealthy individual shopping for a third luxury car

c)

a child at a new school making ten new friends at once

d)

a track athlete at practice running the 400 meter dash ten times in a row

69.

Indifference curve between income and leisure for an individual is generally

a)

Concave to the Origin

b)

Convex to the Origin

c)

Negatively sloped straight lines

d)

Positively sloped straight lines

70.

Indifference curves is

a)

are non-intersecting.

b)

are contour lines of a utility function.

c)

are negatively sloped.

d)

all of the above.

71.

Which of the following statements is NOT TRUE of indifference curves?

a)

They are downward sloping.

b)

They could intersect.

c)

They are convex to the origin.

72.

A production possibilities curve shows the various combinations of output:

a)

Consumers would like to consume.

b)

Producers would like to produce.

c)

An economy can produce.

73.

When IC is higher then

a)

Satisfaction is lower

b)

Satisfaction is higher

c)

No change in satisfaction

d)

Nothing can be said about satisfaction

74.

The slope of IC is measured by

a)

MOC

b)

MRS

c)

Any of the above

d)

None of the above

75.

Slope of budget line is given by

a)

MRS

b)

MOC

c)

Price Ratio

d)

None of these

76.
What will be the shape of the Indifference curve when its slope increases?
a)
convex to origin
b)
concave to origin
c)
straight line
d)
none of these
77.
Slope of the Indifference Curve is 
a)
Price Ratio
b)
MRSxy
c)
MRTxy
d)
None of these
78.
Slope of the Indifference Curve is 
a)
Price Ratio
b)
MRSxy
c)
MRTxy
d)
None of these
79.
The necessary condition in Indifference curve analysis for equilibrium is
a)
MUx = Px
b)
MUx/Px = MUy/Py
c)
MRSxy = - P1/P2
d)
MRSxy increases
80.

Definition of Marginal Utility

a)

the satisfaction from consumption

b)

to total satisfaction from consuming a product

c)

the extra satisfaction from the last unit consumed

d)

the extra consumption from last unit consumed

81.

The definition of the law of diminishing marginal utility

a)

As more units are consumed the marginal utility falls.

b)

As more units are consumed the marginal utility increases.

c)

As price decreases quantity demanded increases.

d)

As price increases consumers are willing to pay more.

82.

The total utility definition states:

a)

The usefulness, benefit or satisfaction a consumer gains from consuming a product.

b)

The satisfaction gained from consuming a quantity of an economic good, measured in utils.

c)

The added consumer satisfaction from consuming a quantity of a good.

d)

The consumer's satisfaction from consuming a quantity of a good.

83.

The relationship between demand and marginal utility is best explained as ...

a)

the marginal utility a person gets from consuming a good determines their demand for the good.

b)

the total utility a person gets from consuming a good determines their demand for the good.

c)

the marginal utility a person gets from consuming a good determines their market demand for the good.

d)

the total utility a person gets from consuming a good determines their market demand for the good.

84.

If Ann gets 100 units of utility from reading a book and 500 units of utility from playing with her cat, What can we determine about Ann?

a)

She does not enjoy reading books.

b)

She does not enjoy playing with her cat.

c)

She prefers reading a book to playing with her cat.

d)

She prefers playing with her cat to reading a book.

85.

Which of the following best refers to the additional cost a person or firm incur to produce one more unit?

a)

Consumer Benefit

b)

Intersection

c)

Marginal Benefit

d)

Marginal Cost

86.

The first four dinner rolls Joan consumes have total utility of 15, 27, 37, and 45 respectively. What is the marginal utility of the 4th dinner roll?

a)

124 units of utility

b)

45 units of utility

c)

11.25 units of utility

d)

8 units of utility

87.

What best reflects the goal of a consumer?

a)

To acquire the largest possible quantity of goods.

b)

To acquire the largest possible variety of goods.

c)

To maximize utility.

d)

To save money.

88.

You made a good decision if:

a)

Marginal cost is greater then marginal benefit

b)

Marginal cost is less than marginal benefit

c)

Marginal benefit is greater then marginal cost

d)

Marginal benefit is less then marginal cost

89.

If the marginal cost of something exceeds marginal benefit the marginal benefit becomes a:

a)

mis-utilty

b)

dis-utility

c)

former utilty

d)

ex-utility

90.

Total Utility will be greatest when marginal utility equals

a)

0

b)

1

c)

2

d)

3

91.

Consumer equilibrium occurs when ...

a)

they have spent all of their income.

b)

a person consumes quantities of three goods.

c)

a person consumes quantities of two goods.

d)

satisfaction is maximised for a given level of income.

92.

Harry Munkee loves eating bananas. His total utility for for 3 bananas is ?

a)

70

b)

71

c)

72

d)

73

93.

Harry's marginal utility for 2 bananas is ?

a)

23

b)

32

c)

25

d)

26

94.

Total utility is the benefit received from consuming an extra unit of a good.

a)

TRUE

b)

FALSE

95.
The first four dinner rolls Joan consumes have total utility of 15, 27, 37, and 45 respectively. What is the marginal utility of the 4th dinner roll?
a)
124 units of utility
b)
45 units of utility
c)
11.25 units of utility
d)
8 units of utility
96.
In a given time period, a person consumes more and more of a good and enjoys each additional unit less and is willing to pay less for it, because of:
a)
diminishing returns
b)
diminishing marginal product
c)
diminishing marginal utility
d)
increasing costs
97.
Which of the following is true if consuming one unit of a good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils?
a)
the MU of the 1st unit is 20
b)
the MU of the 2nd unit is 80
c)
the MU of the 2nd unit is 120
d)
the total utility of consuming 2 units is 120
98.
When a consumer consumes two goods X and Y , she will attain equilibrium when
a)
MUx = MUy
b)
MUx/Px = MUy/Py
c)
Px/MUx = Py/MUy
d)
None of these
99.
Marginal Utility
a)
is always positive
b)
is always negative
c)
can be positive or negative but not zero
d)
can be positive or negative or zero
100.

Which of the following is correct?

a)

MU(₹) > price when consumer is said to be in equilibrium

b)

MU(₹) < price when consumer is said to be in equilibrium

c)

MU(₹) = price when consumer is said to be in equilibrium

d)

All of the above

101.

What will the consumer do when MU(₹) < price

a)

Increase commodity consumption

b)

Decrease commodity consumption

c)

Any of the above

d)

None of the above

102.
The slope of budget line is:-
a)
concave
b)
convex
c)
MRS
d)
price ratio of the commodity
103.
If the price of good x shown on x-axis falls then budget line will:-
a)
Shift to the right
b)
shift to the left
c)
Rotate to the right on the x axis
d)
rotate to the left on the x
104.
The slope of budget line is measured by:-
a)
MRSxy
b)
MRTSxy
c)
ratio of the prices of the 2 goods
d)
all the above
105.

Budget line will shift to left if prices of both goods

a)

Change in opposite direction

b)

Decrease

c)

Increase

d)

All of the above

106.

A consumer will attain equilibrium if slope of budget line is equal to the slope of IC

a)

Yes

b)

No

c)

May or may not be

107.

Slope of a budget line is

a)

Increasing

b)

Decreasing

c)

Constant

d)

Can be all of the above

108.

Any point on budget line will be a point in budget set

a)

True

b)

False

109.

Any point in the budget set will be a point on budget line

a)

True

b)

False

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