Indifference curves are downward sloping and are drawn bowed toward the origin (convex to the origin) implying:
Consumers prefer to have less satisfaction than more of both commodities
As more and more of one commodity is obtained, less and less of the other must be given up to keep satisfaction constant
The total satisfaction obtained along an indifference curve decreases at an increasing rate
None of the above
Correct Answer :
B. As more and more of one commodity is obtained, less and less of the other must be given up to keep satisfaction constant
As the consumer substitute commodity X for commodity Y, the marginal rate of substitution (MRS) diminishes of X for Y along an indifference curve. It means as more and more of X commodity is obtained, less and less of the Y commodity must be given up to keep satisfaction same. That is why the indifference curve is convex to the origin also called bowed to the origin or bowed inward.
Related Questions
The indirect utility function is a homogeneous function of:
degree one
degree zero
degree less than one
degree greater than one
Who first used the term Quasi-Rent?
David Ricardo
Alfred Marshal
J.S.Mill
Karl Marx
Who formulated the Post-Keynsian Theory of Distribution and Growth?
J.M.Keynes
N.Kaldor
C.P.Kindleberger
Irving Fisher
The budget constraint can be written as:
X.PX + Y.PY = 1
X.PX + Y.PY < 1
X.PX + Y.PY > 1
X.PX + Y.PY = 0
Under conditions of perfect competition, price in the long-run is equal to:
Minimum of average variable cost
Minimum of marginal cost
Minimum of average fixed cost
Minimum of average cost
Conditions of perfect competition ensure:
That each firm can influence the price
No single firm can influence the price
Any single firm can influence the supply condition in the market
Any single firm can influence both supply and price in the market
When marginal costs curve cuts average costs curve, average costs are:
Maximum
Zero
Minimum
Equal to one
The right of individuals to control productive resources is known as:
Monopoly
Private property
Workable competition
Oligopoly
Price leadership is associated with:
Collusive oligopoly
Non-collusive oligopoly
Cartel
Perfect competition
Under perfect competition, a firm will be in equilibrium if:
MC = MR
MC cuts the MR from below
MC rises when it cuts the MR
All the above three conditions are fulfilled
Production function relates:
Cost to input
Wages to profits
Cost to output
Inputs to output
The concept of period refers to:
A specific duration of time
A varying duration of time
A duration of time which permits necessary adjustments
A period with calculated intervals
Variable cost includes the cost of:
Hiring the building for the factory
Purchasing heavy machines
Paying the manager of the factory
Paying the laborers
If demand is elastic and supply is inelastic then the burden of a tax on the good will be:
Borne mostly by producers
Borne mostly by consumers
Borne mostly by government
Shared equally by producers and consumers
Any expansion in output by a firm in the short period will always reduce the:
Average variable cost
Average fixed cost
Both average fixed and variable cost
None of the above
According to current thinking, the law of diminishing returns applies to:
All fields of production
Agriculture
Mining
Manufacturing
The goods sold by firms under monopolistic competition are technological as well as:
Economic complements
Economic substitutes
Economic inferiors
None of the above
In joint-profit maximization cartel, the distribution of profit is:
Made by agency
Not made by agency
Made by people
None of the above
According to law of Equi-Marginal Utility when price of commodity falls then we bought:
More units
Less units
Same units
Zero units
The Law of Equi-Marginal Utility states:
per income rupee
The equilibrium of a firm is determined by the equality of MC and MR in only:
Under perfect competition
Under monopoly
Under imperfect competition
Under all the above market forms
Marginal utility is only meant for:
Half utility
Full utility
Additional utility
Multiplied utility
Equilibrium of a discriminating monopolist requires the fulfillment of which one of the following conditions?
It must be profitable to him to sell output in more than one market
Marginal revenue in both markets must be the same
Marginal revenue in both markets must also be equal to the marginal cost of producing the monopolists aggregate output
All the above
While buying two goods X and Y with unequal prices, to maximize total utility from his income, a consumer should get:
Equal MU from both commodities X and Y
More MU from commodity X than from commodity Y
More MU from commodity Y than from commodity X
Equal marginal utility from the last rupee spent on commodity X and commodity Y
In monopolistic competition, the customers are attached with one product because of:
Product similarity
Product differentiations
Product inferiority
None of the above
All the firms with identical costs under perfect competition well, in the long-run, earn only:
Normal profits
Abnormal profits
Differential profits
No profits
At a point where a straight line demand curve meets the price axis (Y-axis), the elasticity of demand is:
Equal to one
Less than one
Equal to zero
Equal to infinite
If the commodity is inferior then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
Marginal cost is the cost:
Of the last unit of production
Of marginal unit
Of marginal efficient units
Of the average units of production
The equilibrium level of output for the pure monopolist is where:
MR = MC
MR > MC
MR < MC
P < AC