ORDINAL AND CARDINAL APPROACH SARASWATI

3. As the consumer has more units of a commodity, his total utility from the commodity: (a) Increases less than in proportion, reaches a maximum and then falls
   (b) Increases less than in proportion and then falls
   (c) Increases more than in proportion and then reaches a maximum

   (d) Falls, becomes zero and then negative

• a

• b

• c

• d

3. MU of the commodity when no commodity is consumed is: (a) Maximum (b) Falling
   (c) Constant (d) Rising

• a

• b

• c

• d

5. MU of the commodity becomes negative when TU of the commodity is: (a) Rising (b) Constant
   (c) Falling (d) Zero

• a

• b

• c

• d

Falling MU curve shows which law?
(a) Law of diminishing returns
(b) Law of diminishing marginal rate of substitution (c) Law of diminishing marginal utility
(d) None of the above

• a

• b

• c

• d

When MU is falling, TU is: (a) Rising

(c) Not changing

(b) Falling
(d) Maximum

• a

• b

• c

• d

MRS is defined as:
(a) Amount of good Y given up in exchange for good X such that total utility is constant

(b) Amount of good X given up in exchange for good Y such that total utility is constant

(c) Amount of good Y given up in exchange for good X such that total utility rises
(d) Amount of good Y given up in exchange for good X

• a

• b

• c

• d

Diminishing MRS means:
(a) Consumer wants to give up lesser units of Y in exchange for good X

(b) Consumer wants to give up more units of Y in exchange for good X

(c) Consumer wants to give up same units of Y in exchange for good X

(d) None of the above

• a

• b

• c

• d

16. Budget set is:
    (a) Right angled triangle formed by the budget line with the axes
    (b) All points on the budget line
    (c) Points inside the budget line
    (d) Points on Y-axis from where budget line starts and the point on X-axis where budget line

ends.

• a

• b

• c

• d

If Marginal Rate of Substitution is constant throughout, the Indifference curve will be:

(a) Parallel to the x-axis.
(b) Downward sloping concave.
(c) Downward sloping convex.
(d) Downward sloping straight line.

• a

• b

• c

• d

When marginal utility is zero, total utility is:

(a) Zero
(c) Maximum

(b) Minimum

(d) Negative

• a

• b

• c

• d