Top 80+ Solved MicroEconomics, Theory and Applications 1 MCQ Questions Answer
Q. Which best expresses the law of diminishing marginal utility?
a. the more consumption of a product, the smaller is the total and marginal utilityfrom the consumption.
b. the less consumption of a product, the greater is the total and marginal utilityof the consumption.
c. the more consumption of a product, the smaller is the marginal utility fromconsuming an additional unit.
d. the more consumption of a product, the smaller is the total and marginal utilityfrom the consumption.
Q. Which situation is consistent with the law of diminishing marginal utility?
a. the more cake henry eats, the more he enjoys another slice.
b. the more cake henry eats, the less he enjoys another slice.
c. henry’s marginal utility from eating cake becomes positive after eating threeslices.
d. henry’s marginal utility from eating cake reaches a maximum when total utilityis zero.
Q. A consumer with a fixed income will maximize utility when each good is purchased inamounts such that the:
a. total utility is the same for each good.
b. marginal utility of each good is maximized.
c. marginal utility per dollar spent is the same for all goods.
d. marginal utility per dollar spent is maximized for each goo
Q. If a rational consumer is in equilibrium, then:
a. the marginal utility obtained from one product is equal to the marginal utility obtained from any other product.
b. a reallocation of income would increase the consumer’s total utility.
c. the marginal utility per last dollar spent is the same for all goods consumed.
d. total utility becomes zero.
Q. If you know that the marginal utility per rupees spent on product Alpha is less than the marginal utility per rupees spent on product Beta, consumers who spend all their income on these two products can:
a. maximize total utility but not marginal utility.
b. maximize marginal utility but not total utility.
c. increase total utility by buying more of beta and less of alpha.
d. increase total utility by buying more of alpha and less of beta.
Q. A consumer is in equilibrium and is spending income in such a way that the marginal utility ofproduct X is 40 units and Y is 16 units. The unit price of X is Rs.5. The price of Y is:
a. rs.1 per unit.
b. rs.2 per unit.
c. rs.3 per unit.
d. rs.4 per unit.
Q. Which is an explanation for why the demand curve is down sloping?
a. normal goods
b. the law of supply
c. the law of diminishing marginal utility
d. the law of increasing opportunity cost
Q. As If a few large firms dominate an industry the market is known as:
a. monopolistic competition
b. competitively monopolistic
c. duopoly
d. oligopoly
Q. In a cartel, member firms may be given a fixed amount to produce. This amount is called
a. limitless
b. factor
c. quota
d. quotient
Q. The Kinked Demand Curve theory assumes:
a. firms co-operate
b. firms act as part of a cartel
c. firms are competitive with each other
d. firms are not profit maximisers
Q. In Game Theory:
a. firms are always assumed to act independently
b. firms are always assumed to cooperate with each other
c. firms always collude as part of a cartel
d. firms consider the actions of others before deciding what to do
Q. In the Kinked Demand Curve theory:
a. the marginal revenue curve is perfectly horizontal
b. demand is always price inelastic
c. demand is always price elastic
d. non price competition is likely
Q. In oligopoly:
a. the largest four firms are likely to have a small market share
b. the price is likely to equal marginal revenue
c. firms will continue to produce in the long run if price is less than average cost
d. firms may collude or compete depending on their assumptions about their competitors
Q. A model of Game Theory of oligopoly is known as the:
a. prisoner\s dilemma
b. monopoly cell
c. jailhouse sentence
d. jury box
Q. In a cartel:
a. firms compete against each other
b. price wars are common
c. firms use price to win market share from competitors
d. firms collude