Free Consumer Behaviour 02 Practice Test - 11th Grade - Commerce
Question 1
Reeta buys only compact discs and tapes and spends all her income. The marginal utility from a compact disc is 30 and the marginal utility from a tape is 20. The price of a compact disc is INR 15 and the price of a tape is INR 10. To maximize her utility, Reeta should
SOLUTION
Solution : C
MCCDs/PCDs=MUtape/Ptape. Reeta is already maximizing her utility.
Question 2
The fact that rubies are more expensive than milk reflects the fact that for most consumers
SOLUTION
Solution : C
Because more milk is consumed, the MU from milk is lower than the MU from rubies.
Question 3
In a situation when MRS>PX/PY, the consumer would react by
SOLUTION
Solution : C
MRS is the amount of Good-Y which a consumer is willing to give up for one unit more of Good-X. In a situation when MRS>PX/PY, the consumer would react by increasing the consumption of commodity-X.
Question 4
MRS is determined by
SOLUTION
Solution : D
MRS is always related to the choice and preferences of the consumer.
Question 5
A shift in the budget line, when prices are constant, is due to
SOLUTION
Solution : B
A budget line shows different combination of two goods, which a consumer can attain, given his income and market price of the goods. Therefore, any shift in the budget line, when prices are constant will be due to change in income of the consumer.
Question 6
All attainable combinations of Good-X and Good-Y are below the budget line of a consumer. State True or False.
SOLUTION
Solution : B
All attainable combinations of Good-X and Good-Y are below as well as along the budget line.
Question 7
A consumption point inside the budget line
SOLUTION
Solution : D
Any point inside the budget line indicates that it is possible to afford but has spent unspent income.
Question 8
Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line
becomes steeper.
shifts farther away from the origin of the graph.
does not change.
shifts closer to the origin of the graph.
SOLUTION
Solution : B
The budget line shifts farther away from the origin.
Question 9
Moving along an indifference curve
SOLUTION
Solution : D
It indicates that the consumer does not prefer one consumption point to another.
Question 10
Suppose a consumer has INR 100 to spend on two goods, shoes and shirts. If the price of a pair of shoes is INR 20 per pair and the price of a shirt is INR 15 each, which of the following combinations is unaffordable to the consumer?
SOLUTION
Solution : D
The total price comes to INR 105 (7 shirts ∗ INR 15), which is greater than INR 100.