If the marginal utility of apples to a consumer exceeds that of bananas then the consumer:
Is not in equilibrium
Will not buy any banana
Will buy some banana but less than he buys of apples
Is willing to pay more for apples than bananas
Correct Answer :
D. Is willing to pay more for apples than bananas
For equilibrium marginal utility should be equal to price (MU = P). Thus, if the marginal utility of apples exceeds that of bananas then consumer will pay more for apples than bananas
Related Questions
In the case of an inferior good, the income effect:
Partially offsets the substitution effect
Reinforces the substitution effect
Is equal to the substitution effect
More than offsets the substitution effect
When marginal costs curve cuts average costs curve, average costs are:
Maximum
Zero
Minimum
Equal to one
Of the following commodities, which has the lowest price-elasticity of demand?
Car
Salt
Tea
House
If a straight line supply curve passes through the point of origin O, the elasticity of supply is:
Zero
Infinity
Unity
More than unity
A country is advised to devalue (reduce external value of) its currency only when its exports face:
Inelastic demand in foreign markets
Elastic demand in foreign markets
Unit elastic demand in foreign markets
None of the above
Indifference curve represents:
Only two commodities
Only three commodities
More than three commodities
Any number of commodities
The marshallian demand curve includes:
Substitution Effect
Income Effect
Both substitution and income effect
None of them
A monopolist is:
Price winner
Price searcher
Price taker
Price leaver
In the case of complements, the cross demand curve slopes:
Downwards to the right
Upwards to the right
Backwards to the top
Inwards at the bottom
The marginal revenue of a perfectly competitive firm is:
Equal to the prices of its products
Positively related to output
Negatively related to output
Always higher than marginal cost
In Revealed Preference Theory, a consumer reveals preference for bundle of:
Two goods
A few goods
One good
Many goods
In monopolistic competition (also in kinked demand curve model), a firm sells the amount where:
Individual demand curve (IDC) is equal to proportional demand curve (PDC)
Individual demand curve (IDC) is greater than proportional demand curve (PDC)
Individual demand curve (IDC) is less than proportional demand curve (PDC)
None of the above
Equilibrium of a firm represents maximization of profits as well as:
Maximization of losses
Minimization of losses
Minimization of profits
None of the above
The production process is:
Consuming goods and services
Transforming inputs into outputs
Wasting goods and services
Buying goods and services
Under which of the following forms of the market structure does a firm have no control over the price of its product?
Monopoly
Monopolistic competition
Oligopoly
Perfect competition
When with a change in price the total outlay (expenditures) on a commodity remains constant, it is a case of:
Perfect elasticity (infinitely elastic)
Perfect inelasticity (zero elasticity)
Unit elasticity
Zero elasticity (infinitely inelastic)
Total profits are maximized at the point where:
TR equals TC
The TR curve and the TC curve intersect such that TR and TC lie at the same point
The TR curve and the TC curve are parallel and TC exceeds TR
The TR curve and the TC curve are parallel and TR exceeds TC
If, at the prevailing price, more of a good is desired than is available for sale:
The price is below equilibrium
The price is at equilibrium
The price must fall
We cannot tell anything about the price
The long run average cost curve is:
Cup-shaped
Oval-shaped
Saucer-shaped
Glass-shaped
If the price of a product falls then quantity demanded tends to increase ceteris paribus because:
The MU/P ratio has decreased
Of the income and substitution effects
Consumers tend to feel poorer when prices fall
When price falls the demand curve shifts right
If by doubling all inputs in the long run output is less than double, it is a case of:
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
Variable returns to scale
Total variable costs in equation form are:
In Revealed Preference Theory, Samuelson proves P.E = S.E + I.E :
With using indifference curves
With using MRS
Without using indifference curve
None of the above
Cross-demand curve shows:
The effect of a change in price of X on its demand
The effect of a change in price of X on the demand for Y
The effect of a change in price of Y on its demand
None of the above
The demand of the luxuries is:
More elastic
Less elastic
Unit elastic
Zero elastic
According to Chamberline, in monopolistic competition, differentiation is determined by:
Choices
Preferences
Both a and b
None of the above
Of the following, which one is a characteristic of monopolistic competition?
Standardized product
Differentiate product
Two firms
No entry
In 1890, Principles of Economics was written by:
Prof. Robbins
Alfred Marshal
Prof. Senior
Adam Smith
Elasticity (E) expressed by the term, 1>E>0, is:
Perfectly elastic
Relatively elastic
Unitary elastic
Relatively inelastic
Neutral Technological Progress can be defined as:
Technological progress that causes to raise the marginal product of capital and labor in the same proportion
Technological progress that causes the marginal product of capital to increase relative to the marginal product of labor
Technological progress that causes the marginal product of labor to increase relative to the marginal product of capital
None of the above