Chapter 2 – Theory of Consumer Behaviour.
Consumer Utility Theory: MCQ
1. What is the measurement of consumer utility called?
(a) In dollars
(b) Cardinal approach
(c) Measurable utility
(d) In meters
2. Who proposed the cardinal utility theory?
(a) Paul A. Samuelson
(b) J.R. Hicks
(c) Alfred Marshall
(d) Adam Smith
3. How is utility measured in the ordinal utility theory?
(a) Cardinally
(b) Numerically
(c) By ranks
(d) Mathematically
4. Which utility theory is also known as Indifference Curve Analysis?
(a) Cardinal Utility
(b) Ordinal Utility
(c) Revealed Preference
(d) Marginal Utility
5. What does the consumer’s budget define?
(a) Consumer’s income
(b) Consumption bundles
(c) Prices of goods
(d) Consumer’s expenses
6. Which of the following is a consumption bundle?
(a) (X1, X2)
(b) (P1, P2)
(c) (M, P)
(d) (U, B)
7. How is a consumption bundle defined?
(a) The quantity of two or more goods
(b) Consumer’s income
(c) The quantity of one good
(d) Combination of two goods
8. How is the consumer’s budget set defined?
(a) Consumption bundles
(b) Budget constraint
(c) Collection of consumption bundles
(d) Prices of goods
9. When defining a consumption bundle, how are the consumer’s expenses determined?
(a) Total income
(b) Total price of goods
(c) Budget constraint
(d) Sum of prices
10. What does the budget constraint define?
(a) Consumer’s income
(b) Prices of goods
(c) Inequality between income and expenses
(d) Total expenses
Answers
1. (c) Measurable utility
2. (c) Alfred Marshall
3. (c) By ranks
4. (b) Ordinal Utility
5. (a) Consumer’s income
6. (a) (X1, X2)
7. (d) Combination of two goods
8. (c) Collection of consumption bundles
9. (b) Total price of goods
10. (c) Inequality between income and expenses
