QUESTION BANK

(a) Indifference set (b) Budget set

L. Multiple Choice Questions (c) Indifference map (d) Budget line
1. When total utility (TU) is maximum, marginal
utility (MU) is : 7. Convex preferences are indicated by:
(a) Zero (b) Negative (a) Indifference set (b) Budget set
(c) Positive (d) None of these (c) Indifference map (d) Budget line

2. Who gave the cardinal concept of utility ? 8. Marginal utility is: (choose the correct alternative)
(a) Marshall (CBSE Delhi 2016C)
(b) Pigou
(c) Hicks (d) Samuelson (a) utility from first unit of a commodity consumed
(b) the utility from the last unit consumed
3. Which of the following is the assumption of (c) total utility denoted by the number of units
utility analysis ? Consumed
(a) Monotonic Preferences (d) always positive
(b) Assumption of two goods
(c) Utility is ordinal 9. According to utility analysis, the equilibrium
condition in two commodities case is :
(d) Utility is cardinal
4. According to utility analysis, utility : (a) MUA MUB (b) MUA PA
(a) can be measured in terms of money
PA Pg MUB Pg
(b) can not be measured in terms of money (c) Both (a) and (b) (d) Neither (a) nor (b)
(c) can be measured in cardinal numbers
(d) Both (a) and (c) 10. When MU6 MUY:
Py
5. Who gave indifference curve analysis ? (a) Consumption of Y rises while that ofX falls.
(a) Marshall (b) Hicks (b) Consumption of X rises while that of Y falls.
(c) Samuelson (d) Robbins (c) Consumption of bothXand Y rises.
6. Scale of preferences are indicated by : (d) Consumption of both X and Y falls.
Z.1B Progressive Introductory Microeconomics
11.Starting from an initial situation of consumer
equilibrdum, suppose that marginal utilty of a P.
rupee increases. How will it affect the quantity P,
demanded of the product?
(a) It will decrease
(c) (d) +;
P,
(b) It will increase 20. If Marginal Rate of substitution is constant
(c) It will remain unchanged throughout, the indifference curve will be
(d) It will fall to zero (choose the correct alternative). (CBSE Delhi 20151
12. Which of the following is not the property of (a) Parallel to the axis
indifference curve ? (b) Downward sloping concave
(a) It slopes downward from left to the right. (c) Downward sloping convex
(b) It is concave to the origin. (d) Downward sloping straight line
(c) It is convex to the origin. 21. If Marginal Rate of Substitution is increasing
(d) Two indifference curves do not intersect each throughout, the Indifference Curve will be:
other. (Choose the correct alternative)
(a) Downward sloping convex (CBSE AllIndia 2015,
13. Who originally gave the law of diminishing
marginal utility ? (b) Downward sloping concave
(a) Marshall (b) Adam Smith (c) Downward sloping straight line
(c) Hicks (d) Gossen (d) Upward sloping convex
14. A consumer spends his entire income n 22. A consumer consumes only two goods. If price
consumption of two goods (good X and good Y). of one ofthe goods falls, the indifference curve:
If price of good X rises, slope of budget line will: (Choose the correct alternative)
(a) fall (b) rise (a) Shift upwards (CBSE Foreign 2015,
(c) remnain constant (d) None of these (b) Shifts downwards
(c) Can shift both upwards or downwards
15. The slope of indifference curve is given by : (d) Does not shift
(a) Budget line
(b) Marginal rate of substitution 23. The necessary condition under indifference
curve approach to attain consumer's equilibrium
(c) Marginal rate of transformation in case of two commodities is :
(d) None of these
16. A consumer of two goods A and B is in (a) MU
Px
MUy
Py
(b) MRS,x = Px
P
equilibrium. The prices of goods A andB are 10
and 20 respectively. If theMUg= 60 utils. What (c) MUx MU, (d) None of these
is MUA ? Py Px
(a) 30 utils (b) 20 utils 24. Which of the following can be referred to as 'point
(c) 60 utils (d) 6 utils of satiety' ? (CBSE Sanple Paper 2016)
17. After satiety point, consumption of additional (a) Marginal utility is negative
units of the commodity will cause : (b) Marginal utility is zero
(a) TU to fall (c) Marginal utility is rising
(b) TUto increase (d) Total utility is falling
(c) TUto become negative 25. Given the price of goods, a change in consumer's
(d) Increase in both TU & MU income affects the of budget line.
18. Marginal Utility is given by : (a) Slope (b) Position
(c) Both (a) & (b) (d) Neither (a) nor (b)
ATU AMU
(a) (b) 26. The slope of consumer's budget line is :
AQ AQ
(a) Positive and constant
(c) AQ (d) AQ (b) Negative and decreasing
ATU AMU
(c) Negative and constant
19. The slope of budget line is given by : (d) Positive and increasing
 (a) .Shift inwards
(b) Shift outwards
(c) Rotate inwards on the x-axis
(d) Rotate outwards on the x-axis
33. Imagine that PL is a consumner's budget line
in the following iagram. Budget line PLy is
applicable to the consumer when :
Y

Good
Y

-X
L2 L L4
Good X
(a) Pfalls, while income and P, remaining unchanged.
(b) P,rises, while income and P, remaining unchanged.
(c) income of the consumer falls.
(d) income of the consumer rises.

Ans. 1(a), 2(a), 3(d), 4(d), 5(b), 6(c), 7(a), 8(b), 9(c),
10(b), 11(a), 12(b),
 in the following diagram. Budget Whe
applicable to the consumer when :
Y

Good
Y P

X
L2 L Li
Good X

(a) P, falls,while income and P, remaining unchanged.

(b) P,rises, while income and P, remaining unchanged.
(c) income of the consumer falls.
(d) income of the consumer rises.
 (d) inCome of the consumer rises.

Ans. 1(a), 2(a), 3(d), 4{d), 5(b), 6(c), 7(a), 8(b), 9(c),
10(b), 11(a), 12(b), 13(d), 14(b), 15(b), 16(a),
17(a), 18(a), 19(c), 20(d), 21(b), 22(d), 23(b),
24(b), 25(b), 26(c), 27(b), 28(b), 29(a), 30(c),
31(a), 32(d), 33(a).

II. Important Questions:

 QUESTION BANK
L Multiple Choice Questions (a) Aggregate demand of all goods and services
(b) Aggregate supply
Micro' which means small has originated from (c) Consumption dermand
which of the following languages ? (d) All of the above
(a) Arabic (b) German
(c) Greek
5. Éxample of microeconomic variable :
(d) English (a) National income (b) Price level
2.. Who gave the terms microeconomics and (c) Market demand (d) Aggregate demand
macroeconomics for the first time ?
(a) Ragnar Frisch (b) Marshall 6./Following is an example of macroeconomic
variable :
(c) Adam Smith (d) Keynes (a) Household expenses (b) National Output
3. Microeconomics studies : (c) Market demand (d) Supply of a commodity
(a) General price level 7. Choices are necessary because :
(b) National income (a) Wants are unlimited
(c) Consumer equilibrium (b) Resources are Scarce
(d) International trade (c) Resources have alternative uses
4., Macroeconomics studies (d) Allof the above
 8. Which of the following is true ?
(a) Human wants are infinite
(b) Resources are limited as compared to wants
(c) Scarcity of resources gives birth to choice B
(d) All of the above
9. Which of the following statement is correct ?
"K
(a) PPC is always a straight line
(b) Human wants are unlimited but resources to
satisfy them are limited
X
(c) Marginal opportunity cost of producing a good
in terms of another good always decreases (a) R (b) C
(d) None of these (c) K (d) B
16.
10. The curve which indicates economic problen is
known as :
(a) Production curve B R.
(b) Demand curve Good
Y
(c) Indifference curve
(d) Production possibilities curve K.

11.What is the mnarginal opportunity cost of produc

ing more of good X in terms of good Y ?
X (Units) Y (Units)
60 40 Good X

70 10 A production possibility curve AB given above.

(a) 30Y (b) 3Y
State which of the following statements is correct?
(c) 10Y (d) 20Y (a) The economy cannot produce combination R.
(b) Combinations K and T are attainable.
12. PP Curve : (c) Combinations B and Crepresent under
(a) Slopes downwards and is concave utilization of resources.
(b) Sloppes downward and is convex (d) Both (a) and (b)
(c) Slopes upward and is concave
(d) None of these 17.Concavity of PPC implies :
(a) Increasing MRT (b) Decreasing MRT
13. A1 points inside the PPC are :
(c) Constant MRT (d) None of these
(a) Unattainable (b) Attainable
(c) Both (a) and (b) 18.The PPC will not shift when there is
(d) None of these
(a) Destruction of resources
14. The slope of PP Curve indicates : (b) Massive unemployment
(a) More of one good can be produced only by
(c) Upgradation of technology
sacrificing some amount of another good. (d) Discovery of new resources
(b) Resources are not fully utilized.
19. Which of the following is not an assumption of
(c) Increasing MOC. PPC ?
(d) Both (a) and (c)
(a) Resources are fully and eficiently utilized.
15. Which of the points in the given diagram (b) There isno change in level of technology.
indicates wastage or inefficient utilization of
resources :
(c) Resources in the economy are fixed.
(d) Resources are equally efficient in production ol
all goods.
20. In which situation, can PPC be a straight line ?
 When MRT decreasing
is
la)
When MRT increasing
is
is constant
iol When MRT
(d) Nonegthese
of the following is an assumption of
21. Whjeh frontier ?
production possiblity
(CBSE Sample Question Paper 20i6)
not fully employed.
la) Resources are
Resourcesare not equally efficient for production
(b)
of thetwo goods.
efficiently employed.
ic) Resources are not
available are not fxed.
Id) Resources
a positive science ?
92Who regarded economics
(a) Marshall (b) Hawtrey
(c) Robbins (d) None of the above
economics normative science ?
23 Who regarded (b) Marshall
(a) Robbins
(d) Neither (a) nor (b)
(c) Both (a) and (b)
also called as :
24.Opportunity cost is (b) explicit cost
la) implicit cost
(c) economic cost (d) None of the above

25.Whih of the following isa statement of

?
gormative nature in economics
(CBSE Sample Question Paper 2017-18)
choices/alternatives.
(a) Economics is study of
concerned with how to
(b) Government should be
reduce unemployment.
estimate, in spite of severe
(c) According to an houses in Indian
shortage, more than 10% of
cities are lying vacant.
Refugees is posing a big
(d) Accommodation of
-problem for the Europe.
indicates:
26. Any point inside the PPC
(b) inefficiency
(a) scarcity and (c)
() unemployment (d) may be both (b)
would be
Curve
27. A Production Possibility available resources
curve if all the produce
egually eficient to
a an economy are the correct alternative)
both the goods. (Choose Paper 2018-19)
(CBSE Sample Question
(a) a straight line (b) convex to origin
(c) concave to origin (d) upward sloping
5(c), 6(b), 7(d), 8(d), 9(b),
ns. L(c), 2(a), 3(c), 4(d), 14(d), 15(c), 16(d),
10(d), 11(b), 12(a), 13(b), 21(b), 22(c), 23(b),
17|a), 18(b), 19(d), 20(c),
24(c), 25(b), 26(d), 27\a).