Practice Exam Question 1) The income available to the consumer for spending is called Hint Budget Answers Option 1 Consumption bundle Option 2 Budget set Option 3 Consumer's budget Option 4 None of these Feedback Its a wrong click ! Invalid selection Great ! Correct option. Incorrect selection Solution Wrong (Feedback) Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Question 2) In the given budget line, movement from AA to BB is due to Hint Shifts in Budget line Answers Option 1 Increase in the price of good 1 Option 2 Increase in the income of the consumer Option 3 Decrease in the income of consumer Option 4 Increase in the price of good 2 Feedback Invalid selection Its a correct choice ! Incorrect option Wrong click Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 3) Collection of all the bundles that the consumer can buy with his income at the prevailing market is called Hint Related with Budget Answers Option 1 Consumption bundle Option 2 Budget equation Option 3 Budget line Option 4 Budget set Feedback Invalid selection Wrong choice Invalid selection Correct option selected Solution Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Correct Option (Feedback) Question 4) P1X1 + P2X2 ≤ M is a Hint Budget line equation Answers Option 1 Budget set or budget constrain Option 2 Budget Line Option 3 Shift of budget line Option 4 Consumption bundles Feedback Correct. Smart selection ! Invalid selection You made a mistake ! Its a wrong click Solution Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Question 5) If price of good 1 is ₹10 and price of good 2 is ₹5. What will be the slope of the budget line? Hint Method of finding slope of budget line. Answers Option 1 10 Option 2 -2 Option 3 10 Option 4 5 Feedback Incorrect option selected You selection is correct Invalid selection Wrong click Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 6) 10X1 + 5X2 = 50 , In the given equation , what is the vertical interception ? Hint Method of finding vertical and horizontal intercept Answers Option 1 10 Option 2 5 Option 3 15 Option 4 65 Feedback Correct choice ! You selected a wrong option ! Invalid selection Wrong answer Solution Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Question 7) Consider a budget line equation 6X1 + 6X2 = 60. If the consumer want to spent his entire income on good 1, how much quantity consumer can buy? Hint Finding vertical and horizontal intercepts Answers Option 1 12 Option 2 6 Option 3 60 Option 4 10 Feedback Invalid selection Wrong click Invalid option Correct. consumer can buy 10 units of good 1 Solution Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Correct Option (Feedback) Question 8) If the income of the consumer increases. Then what happen to the budget line? Hint Changes in budget line Answers Option 1 Shifts parallel to left Option 2 Shifts parallel to right Option 3 Budget line moves along the x axis Option 4 Budget line moves along the y axis Feedback Its a wrong choice Correct option selected Invalid selection Wrong click Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 9) Price of good 1 and good 2 are 2 and 5 respectively. Consumer's income is 20. If the price of good 2 changes to 6, then the budget line equation is Hint Budget line equation Answers Option 1 2X1 + 6X2 = 20 Option 2 6X1 + 6X2 = 20 Option 3 2X1 + 5X2 = 26 Option 4 2X1 + 6X2 = 28. Feedback Correct option. Congrats ! Invalid selection You made a mistake ! Invalid click Solution Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Question 10) In the budget equation 5X1 + 5X2 = 50, the consumer can have equal quantity of good 1 and good 2 if he chooses bundle Hint Consumption bundles Answers Option 1 (5,5) Option 2 (2,2) Option 3 (2,8) Option 4 (8,2) Feedback Correct. You look smart! Invalid selection Wrong click Incorrect choice Solution Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Question 11) A movement of budget line from AA to AC indicates that Hint Shift of budget line Answers Option 1 Price of good 2 decreased Option 2 Price of good 2 increased Option 3 Income of the consumer decreased Option 4 Price of good 1 increased Feedback Invalid selection Wow ! Its correct Wrong choice Invalid click Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 12) Assume that a consumer can buy 6 units of good 1 and 8 units of good 2. Price of good 1 and good 2 are 6 and 8 respectively. What will be the income of consumer? Hint Find income from price of goods and quantity he purchased Answers Option 1 200 Option 2 100 Option 3 12 Option 4 48 Feedback Wrong selection Correct ! That is, M = 6 x 6 + 8 x 8 = 36 + 64 = 100 Invalid selection Wrong option Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 13) Cardinal utility analysis was put forwarded by Hint Theories of utility Answers Option 1 JR Hicks Option 2 Alfred Marshall Option 3 PA Samuelson Option 4 Robins Feedback Invalid selection Correct option selected Wrong click Invalid option Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 14) In the given graph , movement from budget line AA to AB is due to Hint Changes in budget line Answers Option 1 Increase in the price of good 1 Option 2 Decrease in the price of good 1 Option 3 Decrease in the price of good 2 Option 4 Increase in the price of good 2 Feedback Its a correct selection ! Invalid selection Wrong option Invalid selection Solution Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Question 15) Price of good 1 (P2x1) and good 2 (P2x2) are 3 and 5 respectively. Income of the consumer is 30. If the prices of both goods doubles, what will be the Budget Line equation? Hint Changes in budget line equation Answers Option 1 3X1 + 5X2 = 30 Option 2 PX1 + PX2 = M Option 3 6X1 + 10X2 = 30 Option 4 3X1 + 5X2 = 56 Feedback Invalid selection Your choice is wrong Correct option Incorrect click Solution Wrong (Feedback) Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Question 16) The reason for the downward slope of budget line is Hint Budget line and its features Answers Option 1 While income keeping constant, if consumer want to have additional units of good 1, he has to sacrifice quantity of good 2. Option 2 The slope of budget line will be always negative that is Option 3 Convex Preference Option 4 All of the above Feedback Wrong option Invalid selection Incorrect option Correct click ! Solution Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Correct Option (Feedback) Question 17) Look at the given graph. What is the reason behind the movement of budget line AA to AB ? Hint Movement of budget lines Answers Option 1 Increase in the price of good 2 Option 2 Increase in the price of good 1 Option 3 Decrease in the price of good 1 Option 4 Increase in the price of good 1 Feedback Invalid selection Wrong option Correct option selected Invalid click Solution Wrong (Feedback) Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Question 18) Select an equation which stands for consumer's budget constrain Hint Equation for budget constrain Answers Option 1 P1 X1 + P2X2 ≤ M Option 2 P1 X1 + P2X2 = M Option 3 P1 X1 + P2X2 ≥ M Option 4 P1 X1 + P2X2 ≠ M Feedback Correct option. You are smart ! Invalid selection Wrong option Incorrect choice Solution Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Wrong (Feedback) Question 19) Any point in a budget line indicates bundles which are Hint Budget line Answers Option 1 Exactly equal to prices of goods Option 2 Exactly equal to the income of the consumer Option 3 Exactly equal to the price of good 1 Option 4 Exactly equal to the price of good 2 Feedback Invalid selection Wow ! Correct option selected Incorrect option Invalid click Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback) Question 20) In the below given budget line, point G represents Hint Points above and below the budget line Answers Option 1 Superior bundles Option 2 Inferior Bundles Option 3 Preferred bundles Option 4 Reduction in resources Feedback Invalid selection Correct option selected Wrong click Wrong choice Solution Wrong (Feedback) Correct Option (Feedback) Wrong (Feedback) Wrong (Feedback)