F.Y B.COM
SEMESTER - 2
MICRO ECONOMICS
(ME)
MCQS - FEBRUARY 2020
1. An expansion path shows
A. Combinations of tangency points between successive isoqants and isocost lines
B. Combinations of tangency points between the two goods
C. combinations of tangency points between the two factors of production
D. combinations of highest levels of output
2. A horizontal indifference curve means
A. that the quantity of both goods increases
B. that the quantity of one good increases while that of the other good remains constant
C. that the quantity of both goods remains canstant
D. that the quantity of one good increases while that of the other good decreases
3. The convex isoquant represents
A. diminishing rate of substitution between the two factors of production.
B constant rate of substitution between the two factors of production.
C. diminishing rate of substitution between the two goods.
D. increasing rate of substitution between the two factors of production.
4. Which of these is NOT a term related to different stages under the law of variable proportions?
A. Stage in diminishing returns
B. Stage in negative returns
C. diminishing rate of substitution between the two goods.
D. increasing rate of substitution between the two factors of production.
4. Which of these is NOT a term related to different stages under the law of variable proportions?
A. Stage in diminishing returns
B. Stage in negative returns
C. Stage in increasing returns
D. Stage in positive returns
5. One factor of production remaining fixed in quantity while the other being variable, has reference to
A. Constant returns to scale
B. long run
C. laws of returns to scale
D. law of variable proportions
6. Which of these implies transitivity assumption?
A. If a consumer prefers A to B and B to C, then she prefers A to C.
B The consumer prefers more units of goods to less.
C. A consumer aims at maximization of satisfaction.
D. Satisfaction derived from two goods is measurable.
7. The budget line is ___________
A. convex to the origin
B. negatively sloped.
D. Stage in positive returns
5. One factor of production remaining fixed in quantity while the other being variable, has reference to
A. Constant returns to scale
B. long run
C. laws of returns to scale
D. law of variable proportions
6. Which of these implies transitivity assumption?
A. If a consumer prefers A to B and B to C, then she prefers A to C.
B The consumer prefers more units of goods to less.
C. A consumer aims at maximization of satisfaction.
D. Satisfaction derived from two goods is measurable.
7. The budget line is ___________
A. convex to the origin
B. negatively sloped.
C. positively sloped.
D. a rectangular hyperbola.
8. Under Marginal Utility Analysis, equilibrium of a consumer the case of a free good is achieved at the point where
A. MU = Price
B. TU=1
D. a rectangular hyperbola.
8. Under Marginal Utility Analysis, equilibrium of a consumer the case of a free good is achieved at the point where
A. MU = Price
B. TU=1
C. MU is maximum
D. MU-0
9. Which of these statements is true?
A. Zero substitutability between two goods produces an L-shaped indifference curve.
B. Zero substitutability between two goods produces a rectangular hyperbola indifference Curve.
C. Greater the substitutability between two goods, greater the convexity of the indifference curve.
D. Lower the substitutability between two goods, lower the convexity of the indifference curve.
10. Producer's equilibrium is a point where
A. Output is maximized at least cost
B. revenue is maximized
C. profit is maximized
D. Output is minimized at least cost
11. Which of these is NOT a basic assumption of economics?
A. Consumer is rational in decision making.
B. Economics does not give theories that involve unlawful activities.
C. Consumers income remains constant.
D. Economics does not give theories for maximizing output with the condition that a Worker can work for 24 hours.
12. Which of these statements fits into the assumptions of indifference curve analysis?
A. The consumer can say that she get 50 utils more from mangoes than from apples.
B. The consumer can say that she likes mangoes more than apples.
C. The consumer, when given a choice between a smaller basket of goods and a bigger basket, will choose the smaller basket, other things remaining constant.
D. The consumer has incomplete information about prices of goods and the utilities that the goods possess.
13. Which of these is true for the second stage of production under the law of variable proportions?
A. The marginal product of labor is rising through out
B. The marginal product of labor is negative
C The total product of labor is declining
D. The marginal product of labour is positive but declining
14. What is the correct equation for an isocost line?
A. c = w/L + r/K
D. MU-0
9. Which of these statements is true?
A. Zero substitutability between two goods produces an L-shaped indifference curve.
B. Zero substitutability between two goods produces a rectangular hyperbola indifference Curve.
C. Greater the substitutability between two goods, greater the convexity of the indifference curve.
D. Lower the substitutability between two goods, lower the convexity of the indifference curve.
10. Producer's equilibrium is a point where
A. Output is maximized at least cost
B. revenue is maximized
C. profit is maximized
D. Output is minimized at least cost
11. Which of these is NOT a basic assumption of economics?
A. Consumer is rational in decision making.
B. Economics does not give theories that involve unlawful activities.
C. Consumers income remains constant.
D. Economics does not give theories for maximizing output with the condition that a Worker can work for 24 hours.
12. Which of these statements fits into the assumptions of indifference curve analysis?
A. The consumer can say that she get 50 utils more from mangoes than from apples.
B. The consumer can say that she likes mangoes more than apples.
C. The consumer, when given a choice between a smaller basket of goods and a bigger basket, will choose the smaller basket, other things remaining constant.
D. The consumer has incomplete information about prices of goods and the utilities that the goods possess.
13. Which of these is true for the second stage of production under the law of variable proportions?
A. The marginal product of labor is rising through out
B. The marginal product of labor is negative
C The total product of labor is declining
D. The marginal product of labour is positive but declining
14. What is the correct equation for an isocost line?
A. c = w/L + r/K
B. c = w/r + K+L
C. c = wL + rK
D. c = wL - rK
15. Which of these is NOT related to the laws of returns to scale?
A. Increasing returns to scale
15. Which of these is NOT related to the laws of returns to scale?
A. Increasing returns to scale
B. Decreasing returns to scale
C. Negative returns to scale
D. Constant returns to scale
16. Which of these is NOT one of the reasons for diminishing marginal returns to a variable factor?
A. Imperfect substitutability between the factors of production
C. Negative returns to scale
D. Constant returns to scale
16. Which of these is NOT one of the reasons for diminishing marginal returns to a variable factor?
A. Imperfect substitutability between the factors of production
B. Indivisibility of the fixed factor of production
C. Scarcity of fixed factor of production
D. Perfect substitutability between the factors of production
17. Which of these implies rational behaviour?
A. Consumer aims at maximization of his satisfaction.
B. Consumer aims at maximization of his consumption units.
C. Consumer aims at maximization of his expenditure.
D. Consumer keeps on changing his preference.
18. Which type of productive activity does the conversion of raw materials into finished goods imply?
C. Scarcity of fixed factor of production
D. Perfect substitutability between the factors of production
17. Which of these implies rational behaviour?
A. Consumer aims at maximization of his satisfaction.
B. Consumer aims at maximization of his consumption units.
C. Consumer aims at maximization of his expenditure.
D. Consumer keeps on changing his preference.
18. Which type of productive activity does the conversion of raw materials into finished goods imply?
A. Professional
B. Service
C. Manufacturing
D. Trading
19. Increasing returns to scale refers to
A. equal increase in output and inputs
B. lower increase in output compared to that in inputs
C. greater increase in inputs compared to that in Output
D. greater increase in output compared to that in inputs
20. In the law of variable proportions, the word variable refers to which of the following?
A. scale of production
B. Total output
C. factors of production
D. none of the above
21. Which of these statements is incorrect?
A. Indifference curve analysis does away with the assumption of measurability of utility.
B. Indifference curve analysis does away with the assumption of ordinal utility.
C. Indifference curve analysis does away with the assumption of cardinal utility.
D. Indifference curve analysis is superior to marginal utility analysis.
22. Which of these is one of the reasons why the rational stage of production is called so?
A. Because it relates to better use of the fixed factor of production
B. Because it uses the least of the fixed factor of production
C. Because it minimizes the cost of production
D. Because it gives the highest average productivity for the variable fixed factor of production
23. Which of these statements is incorrect?
A. Lower the substitutability between two goods, lower the convexity of the indifference curve.
B. Perfect substitutability between two goods produces a downward sloping straight line indifference curve.
C. Greater the substitutability between two goods, lower the convexity of the indifference curve.
D. Lower the substitutability between two goods, greater the convexity of the indifference curve.
24. Which of these is a reason why an isoquant cannot be upward rising?
A. It would show increase in one factor and decrease in the other factor
B. It would represent higher levels of output as we move upward from left to right.
C. It would represent higher levels of output as we move downward from right to left
D. It would show increase in one factor while the other factor remains constant
25. Which of these is an indirect consumption?
A. Consumption of readymade garments by a consumer.
B. Consumption of vegetables by a household.
C. Greater the substitutability between two goods, lower the convexity of the indifference curve.
D. Lower the substitutability between two goods, greater the convexity of the indifference curve.
24. Which of these is a reason why an isoquant cannot be upward rising?
A. It would show increase in one factor and decrease in the other factor
B. It would represent higher levels of output as we move upward from left to right.
C. It would represent higher levels of output as we move downward from right to left
D. It would show increase in one factor while the other factor remains constant
25. Which of these is an indirect consumption?
A. Consumption of readymade garments by a consumer.
B. Consumption of vegetables by a household.
C. Consumption of tea by a household.
D. Consumption of petrol by a household.
26. Which of these is NOT an assumption of Marginal Utility analysis?
A. Consumer behaves rationally.
B. Marginal Utility of money remains constant.
D. Consumption of petrol by a household.
26. Which of these is NOT an assumption of Marginal Utility analysis?
A. Consumer behaves rationally.
B. Marginal Utility of money remains constant.
C. Utility is immeasurable.
D. Utilities are independent.
27. Which of these statements is correct for producer's equilibrium?
A. MRTSLK is equal to the ratio of MPP of the two factors
D. Utilities are independent.
27. Which of these statements is correct for producer's equilibrium?
A. MRTSLK is equal to the ratio of MPP of the two factors
B. There is no relation between MRTSLK and MPP of the factors for achieving the equilibrium point.
C. MRTSLK is greater than the ratio of MPP of the two factors
D. MRTSLK is less than the ratio of MPP of the two factors
28. Which of these implies non-satiety assumption?
A. The consumer prefers less units of goods to more.
B. The consumer prefers more unit of goods to less.
C. A consumer aims at maximization of satisfaction
D. If a consumer prefers A to B and B to C, then she prefers A to C.
29. Which of these statements is consistent with the assumption of constancy of marginal utility of money?
A. When the consumer has more money, she values it less.
B. When the consumer has less money, she values it more.
C. The consumer values more and less money, equally
D. As expenditure of the consumer increases, she becomes extra-cautious about spending.
30. Which of these is a correct condition for consumer's equilibrium under the Marginal Utility Analysis?
A The ratio or MU of two goods is greater than the ratio of prices of the two goods.
B The ratio of MU to respective prices of two goods is equal.
C The product of MU and respective prices of two goods is equal
D The MU of goods is equal to their respective prices.
B. The consumer prefers more unit of goods to less.
C. A consumer aims at maximization of satisfaction
D. If a consumer prefers A to B and B to C, then she prefers A to C.
29. Which of these statements is consistent with the assumption of constancy of marginal utility of money?
A. When the consumer has more money, she values it less.
B. When the consumer has less money, she values it more.
C. The consumer values more and less money, equally
D. As expenditure of the consumer increases, she becomes extra-cautious about spending.
30. Which of these is a correct condition for consumer's equilibrium under the Marginal Utility Analysis?
A The ratio or MU of two goods is greater than the ratio of prices of the two goods.
B The ratio of MU to respective prices of two goods is equal.
C The product of MU and respective prices of two goods is equal
D The MU of goods is equal to their respective prices.
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