Good 'Y' is the substitute for good 'X' if<br>1. A fall in the price of good X leads to the fall in the marginal utility of good Y.<br>2. A fall in the price of good X leads to the fall in the quantity purchased of good Y. Select the correct answer

Which of the following are not the assumptions related to the theory of consumer behaviour as per the cardinal utility approach?
1. Rational consumer
2. Unlimited money income
3. Utility cardinally measurable
4. Diminishing marginal utility of money
5. Constant marginal utility of commodities
6. Maximisation of satisfaction
7. Utility is additive

A

1, 3, 5 and 7

B

2, 4 and 5

C

1, 3, 4 and 5

D

Both 6 and 7

From the following two statements of Assertion (A) and Reason (R), indicate the correct answer.
Assertion (A) From the marginal costing approach point of view, the marginal cost is compared with the purchase price.
Reason (R) If the marginal cost is less than the purchase price it should be purchased rather than manufactured.

A

Both (A) and (R) are correct

B

(A) is correct, but (R) is not correct

C

(A) is not correct, but (R) is correct

D

Both (A) and (R) are incorrect

Assertion (A) Total utility will be maximum, when marginal utility to price of respective products are equal.
Reason (R) Deviation from this situation leads to reduction in maximum utility.

A

Both (A) and (R) are true

B

Both (A) and (R) are false

C

(A) is true, but (R) is false

D

(A) is false, but (R) is true

When labour is plotted on X-axis and capital is plotted on Y-axis and an isoquant is prepared, then which of the following statement(s) is/arefalse?
1. Marginal rate of technical substitution of labour for capital is equal to the slope of the iso-quant.
2. Marginal rate of technical substitution of labour for capital is equal to change in the units of capital divided by the change in the units of labour.
3. Marginal rate of technical substitution of labour for capital is the ratio of marginal productivity of capital to marginal productivity of labour.

A

Both 1 and 2

B

Only 3

C

Only 1

D

Only 2

From the following two statements of Assertion (A) and Reason (R). Indicate the correct option.
Assertion (A) From the marginal costing approach point of view, the marginal cost is compared with the purchase price.
Reason (R) If the marginal cost is less than the purchase price, it should be purchased rather than manufactured.

A

Both (A) and (R) are correct

B

(A) is correct, but (R) is not correct

C

(A) is not correct, but (R) is correct

D

Both (A) and (R) are incorrect

Marginal cost is equal to marginal revenue, average cost is equal to average revenue, average revenue is equal to marginal revenue and average cost is equal to marginal cost. This is the condition of
1. long period equilibrium for a firm under monopoly
2. short period equilibrium for a firm under oligopoly
3. long period equilibrium
4. long period equilibrium for a firm under perfect competitions
Select the correct answer

A

Both 1 and 4

B

Both 3 and 4

C

Both 3 and 1

D

Only 1

Suppose that there are two goods, X and Y, facing a consumer. The prices are P_x = Rs. 4 and P_y = Rs. 5. He has Rs. 110 to spend on these goods. Suppose, he is currently buying 15 units of good X (with marginal utility equal to 40) and 10 units of good Y (with marginal utility equal to 45).
In the above context, which one of the following statements is correct?

A

His total utility will increase if he reallocates his spending towards more of good X and less of good Y

B

His total utility will increase if he spends more on good Y and less on good X

C

His total utility will increase if he spends less on both the goods

D

His total utility is being maximized subject to the budget constraint he is facing

Cardinal utility analysis of consumer's behaviour is based on which combination of the following assumptions:
I. Utility is measurable is terms of cardinal numbers
II. Constancy of the marginal utility of money
III. Utilities of different goods are interdependent
IV. Gossen's first law of consumption
Choose the correct answer

A

Only I and II

B

Only I, II and IV

C

Only II, III and IV

D

Only III and IV

Assertion (A): From the marginal costing approach point of view, the marginal cost is compared with the purchase price.
Reason (R): If the marginal cost is less than the purchase price, it should be purchased rather than manufactured.

A

Both (A) and (R) are correct

B

(A) is correct, but (R) is incorrect

C

(A) is incorrect, but (R) is correct

D

Both (A) and (R) are incorrect

According to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to

A

improve

B

diminish

C

remain constant

D

first diminish and then improve