CA FOUNDATION PAPER - 4 (BUSINESS ECONOMICS) 500+ MCQs
CHAPTER - 2 THEORY OF CONSUMER BEHAVIOUR MOST IMPORTANT OBJECTIVE QUESTIONS
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Nature of Human Wants
1. All___________ of human beings are called wants in Economics
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(a) Desires
(b) Tastes
(c) Motives
(d) All of these
2. Wants may arise due to __________ causes.
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(a) Elementary
(b) Psychological
(c) Internal
(d) Both (a) & (b)
3. Which of the following is not the characteristic of wants of human beings?
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(a) Wants are unlimited
(b) Wants are subjective & relative
(c) Wants are affected by income, taste, fashion, advertisement and social customs
(d) Wants do not vary with time, place & person.
4. Wants arise from multiple causes including ____________
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(a) Natural instincts
(b) Social obligations
(c) Individual's economic & social status
(d) All of the above
Marginal utility Analysis
5._________ is the__________ by the Consumer and, the actual satisfaction derived:
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(a) Utility, anticipated satisfaction,satisfaction
(b) Utility, actual satisfactory,desire
(c) Desire, utility,satisfaction
(d) None of these.
6. _________ is the want satisfying power of a Commodity.
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(a) Utility
(b) Marginal Utility
(c) Desire
(d) Desired Utility
7. Which of the following theories explains consumer behaviours?
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(a) Marginal Utility Analysis
(b) Indifference Curve
(c) Returns to scale
(d) Both (a) & (b)
8. Marginal Utility Analysis has been propounded by:
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(a) Marshall
(b) Hicks
(c) Allen
(d) Hicks & Allen
9. Alfred Marshall was a____________ economist.
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(a) British
(b) American
(c) European
(d) Asian
10.___________ is the sum of marginal utilities derived from the consumption of different units.
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(a) Marginal Utility
(b) Average Utility
(c) Total Utility
(d) Incremental Marginal Utility
11. ___________ is the additional made to total utility by the consumption of an additional unit of a com- modity.
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(a) Marginal Utility
(b) Average Utility
(c) Total Utility
(d) Incremental Marginal Utility
12. When economists speak of the utility of a certain good, they are referring to:
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(a) The demand for the good.
(b) The usefulness of the good in consumption.
(c) The expected satisfaction derived from consuming the good.
(d) The rate at which consumers are willing to exchange one good for another.
13. The aim of the consumer in allocating his income is to
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(a) Maximize his total utility.
(b) Maximize his marginal utility.
(c) To buy the goods he wants most whatever the price.
(d) To buy the goods which he ex- pects to be short in supply.
14. Additional made to total utility refers to?
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(a) Total utility
(b) Average utility
(c) Marginal utility
(d) All of the above
15. Cardinal approach is related to:
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(a) Indifference curve
(b) Equi marginal utility
(c) Law of diminishing returns
(d) None of these
16. Which economist said that money is the measuring rod of utility?
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(a) A.C. Pigou
(b) Marshall
(c) Adam Smith
(d) Robbins
17. Which of the following relation is true with MU?
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(a) When MU is positive, Total utility rises at a diminishing rate
(b) When marginal utility is zero, total utility is maximum
(c) When marginal utility is negative, do total utility is diminishing
(d) All of the above
18. Total utility is maximum when:
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(a) Marginal utility is zero.
(b) Marginal utility is at its highest point.
(c) Marginal utility is negative.
(d) None of the above.
19. The second glass of lemonade gives lesser satisfaction to a thirsty boy. This is a clear case of:
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(a) Law of demand.
(b) Law of diminishing returns.
(c) Law of diminishing utility
(d) Law of supply
20. Marginal Utility Analysis is__________ Concept
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(a) Cardinal
(b) Ordinal
(c) Sequential
(d) None of these
21. Which of the following is not an assumption of Marginal Utility Analysis?
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(a) Rationality
(b) Cardinal Measurability of Utility
(c) Hypothesis of independent utility
(d) Increasing Marginal Utility of Money.
22. As per the hypothesis of__________ Utility, the total utility which a person gets from the whole collection of goods purchased by him is simply the sum total of the separate utilities of the goods.
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(a) Dependent
(b) Independent
(c) Related
(d) Affected
23. According to neo-classical econo mists, utility is a cardinal concept. It means:
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(a) Utility is a measurable and quantifiable entity
(b) A psychological unit of measurement of utility is available called as 'UTILS'
(c) Utilities from different units of the commodity can be added.
(d) All of the above.
24. The Marginal Utility can be__________
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(a) Positive
(b) Zero
(c) Negative
(d) Any of above
Consumer's Supply
25. The concept of Consumer's Surplus was propounded by__________
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(a) Alfred Marshall
(b) Hicks & Allen
(c) J.B. Say
(d) None of these
26. If a Consumer gets more utility from a commodity, he would be willing to pay a higher price and vice versa. This extra satisfaction which consumer gets from the purchase of goods is called as___________
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(a) Producer's Supply
(b) Consumer's Surplus
(c) Extra Utility
(d) Excess Marginal Utility
27. Which of the following statement is incorrect as regards Consumer's Surplus
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(a) It can be measured in money
(b) It cannot be measured precisely
(c) It is affected by a variability of substitutes
(d) It is always infinite for necessaries.
28. By consumer surplus, economists mean
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(a) The area inside the budget line.
(b) The area between the average revenue and marginal revenue curves.
(c) The difference between the maximum amount a person is willing to pay for a good and its market price
(d) None of the above
29. Which of the following is/are the condition's of theory of consumer surplus if price is same for all the units he purchased?
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(a) Consumer gains extra utility or surplus
(b) Consumer surplus for the last commodity is zero
(c) Both
(d) None
30. The concept of consumer's surplus is derived from:
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(a) The law of diminishing marginal utility
(b) The law of equal-marginal utility
(c) The law of diminishing returns
(d) Engel's law
31. In case of necessaries, consumes surplus is?
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(a) Infinite
(b) Zero
(c) Equals to one
(d) More than one
Indifference Curve Analysis
32. The indifference curve analysis is based on _________utility
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(a) Ordinal
(b) Cardinal
(c) Quantitative
(d) Numeric
33. Which one is not an assumption of the theory of demand based on analysis of indifference curves?
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(a) Given scale of preferences as between different combinations of two goods.
(b) Diminishing marginal rate of substitution
(c) Constant marginal utility of money.
(d) Consumers would always prefer more of a particular good to less of it, other things remaining the same
34. Which of the following is not the property of indifference curve?
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(a) Slopes downwards to the right
(b)Always convex to the origin
(c) Intersects each other
(d) Will not touch either of the axes
35. Which of the following is not the property of indifference curve?
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(a) IC is convex to the origin
(b) IC scopes downwards from left to right
(c) Two IC can touch each other
(d) IC cannot touch either of the axis
36. An indifference curve slopes down towards right since more of one commodity and less of another result in:
-
(a) Same level of satisfaction.
(b) Greater satisfaction.
(c) Maximum satisfaction.
(d) Any of the above.
37. Which of the following is a property of an indifference curve?
-
(a) It is convex to the origin.
(b) The marginal rate of substitution is constant as you move along an indifference curve.
(c) Marginal utility is constant as you move along an indifference curve.
(d) Total utility is greatest where the 45 degree line cuts the indifference curve.
38. An IC shows_________MRS between the commodity?
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(a) Increasing
(b) Decreasing
(c) Constant
(d) Zero
39. Indifference curve is L shaped then two goods will be:
-
(a) Perfect substitute goods
(b) Substitute goods
(c) Perfect complementary goods
(d) Complementary goods.
40. Which of the following statements is incorrect?
-
(a) An indifference curve must be downward-sloping to the right.
(b) Convexity of a curve implies that the slope of the curve diminishes as one moves from left to right.
(c) The income elasticity for inferior goods to a consumer is positive.
(d) The total effect of a change in the price of a good on its quantity demanded is called the price effect.
41. A point below the budget line of a consumer
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(a) Represents a combination of goods which costs the whole of consumer's income.
(b) Represents a combination of goods which costs less than the consumer's income.
(c) Represents a combination of goods which is unattainable to the consumer given his/her money income.
(d) Represents a combination of goods which costs more than the consumers' income.
42.__________ is a curve which represents all those combinations of two goods which give same satisfaction to the consumer.
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(a) Indifference Curve
(b) Iso-Utility Curve
(c) Equal-Utility Curve
(d) All of the above
43._________ represents a collection of many indifference curves where each curve represents a certain level of satisfaction.
-
(a) Indifference Group
(b) Indifference Map
(c) Indifference Aggregate
(d) Market Map
44.____________ is the rate at which a consumer is prepared to exchange group X and Y.
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(a) Marginal Rate of Substitution
(b) Average Rate of Substitution
(c) Mathematical Rate of Substitution
(d) None of the above
45. When MU, is divided by MU then it is the marginal rate of substitution of_________
-
(a) A for B
(b) B for A
(c) A & B for other Product
(d) None of these
46. When the consumer has more and more unit of food, he is prepared to give up less and less units of clothing It is due to __________
-
(a) Falling MRS
(b) Rising MRS
(c) Constant MRS
(d) None of the above.
47. Which one of the following Statement is incorrect about Indifference Curve?
-
(a) Always Convex to the origin
(b) Never intersects each other
(c) Higher Curve represents higher level of satisfaction.
(d) It may touch X axis but never Y axis.
48. A higher indifference curve shows a higher level of satisfaction than a lower one. Therefore, a consumer, in his attempt to maximize satisfaction will try to reach the_____________possible indifference curve.
-
(a) Highest
(b) Lowest
(c) Any of (a) or (b)
(d) None of these
49. The consumer is in equilibrium at a point where the budget line:
-
(a) Is above an indifference curve.
(b) Is below an indifference curve.
(c) Is tangent to an indifference curve.
(d) Cuts an indifference curve
50. The slope of the 'Price line’ indicates the ratio between_________of the two goods
-
(a) Prices
(b) Quantities demanded
(c) Quantities Sold
(d) Marginal Utility
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