Micro Economics MCQ (GK Set-1) with Answers

A budget line

A demand curve

A price consumption curve

An indifference curve

The line is called an income consumption curve

The line will always slope upwards to the right if both products are normal goods

The line will slope backwards or downwards at income levels where one product is an inferior good

The line may not pass through the origin

There is no income effect because the consumer’s income is unchanged

Between them the income and substitution effects cover the entire change in the quantity that the consumer demands

If the product is normal, the income effect works in the same direction as the substitution effect

If the product is inferior, the income effect works in the opposite direction to the substitution effect

The indifference curves slope downwards to the right because both income and leisure are desirable

The curves get flatter to the right because both income and leisure have diminishing marginal utility

The indifference curves furthest from the original represent the highest total utility

An increase in the wage rate shifts the earnings leisure line, with the new line being parallel to the initial line

The supply curves of individuals may slope backwards, and also the market supply curve for any given type of labour may well slope backwards

The supply curves of individuals may slope backwards, but the market supply curve for any given type of labour is most unlikely to slope backwards

The supply curves of individuals are most unlikely to slope backwards, but the market supply curve for any given type of labour may well slope backwards

The supply curves of individuals are most unlikely to slope backwards, and the market supply curve for any given type of labour is also most unlikely to slope backwards.