ASSIGNMENT

CLASS 11 ECONOMICS

Q.1 If Marginal Rate of Substitution is increasing throughout, the Indifference curve will be:
a) downward sloping convex b) downward sloping concave
c) downward sloping straight line d) upward sloping convex

Q.2 If due to fall in the price of good X, demand for good Y rises, the two goods are:
a) substitutes b) complements c) not related d) competitive

Q.3 _______________ measures the slope of indifference curve.

a) Budget line b) Marginal Rate of substitution
c) Price ratio d) Budget set

Q.4 A consumer is consuming two goods X and Y and is in equilibrium. The prices of X and Y
are ₹10 and ₹20 respectively and the marginal utility of good Y is 50 utils. What will be
marginal utility of good X?
a) 100 utils b) 25 utils c) 250 utils d) 4 utils

Q.5 A consumer consumes only two goods X and Y whose prices are ₹ 3 and ₹ 4 respectively. If
the consumer chooses a combination of two goods with marginal utility of X equal to 4 and that
of Y equal to 3, then the consumer will__________.
a) buy more units of both X and Y b) buy more units of Y and less of X
c) buy more units of X and less of Y d) buy less units of both X and Y

Q.6 A consumer consumes two goods. A consumer is in equilibrium, when:

a) marginal utility of two goods is equal b) total utility of two goods is equal
c) price of two goods is equal d) per rupee marginal utility of two goods is
equal

Q.7 Which of the following is not a characteristic of an indifference curve?

a) Indifference curve is convex to origin
b) Higher indifference curve indicates higher level of satisfaction
c) Indifference curve do not intersect each other
d) Indifference curve is concave to origin

Q.8 A consumer demands more quantity of a commodity when price decreases

because__________.
a) total utility increases and become more than price
b) marginal utility becomes more than price

Q.9 Demand curve shifts rightward in case of ______________.

a) decrease in price of the commodity b) decrease in price of substitute good
c) increase in price of complementary good d) increase in number of buyers
Q.10 A consumer has monotonic preferences. The most preferred bundle by him is ________.
a) 4 units of good X and 6 units of good Y b) 6 units of good X and 5 units of good Y
c) 6 units of good X and 6 units of good Y d) 4 units of good X and 5 units of good Y
Q.11 After reaching the point of satiety, consumption of additional units of the commodity
cause:
a) TU falls and MU increases b) Both TU and MU increase
c) TU falls and MU falls and becomes negative d) TU becomes negative and MU falls

Q.12 A consumer consumes two goods. Consumer is said to be in equilibrium, when:

a) Marginal Utility of two goods is equal b) Total Utility of two goods is equal
c) Price of two goods is equal d) Per rupee marginal utility is equal

Q.13 Marginal Utility of a commodity

a) always decreases with increase in quantity
b) decreases only when total utility decreases
c) decreases but always remain positive
d) first increase and start decreasing after reaching maximum point

Q.14 A consumer gets maximum satisfaction, when

a) price of a commodity is minimum
b) Total Utility is minimum
c) Total Utility he gets is equal to total utility he gives up in terms of money
d) Utility he gets from last unit is equal to utility he gives up in terms of money

Q.15 Total Utility of a commodity is maximum when:

a) consumption of goods is maximum b) marginal utility is maximum
c) average utility is maximum d) marginal utility is zero

Q.16 If the consumption of an additional unit of a commodity causes no change in total utility,
then the resultant marginal utility is:
a) zero b) constant c) positive d) negative

Q.17 According to law of diminishing marginal utility, satisfaction obtained from consumption
of each successive unit ______________.
a) increases b) decreases
c) remains same d) either increases or decreases

Q.18 If Marginal Rate of Substitution is constant throughout, the indifference curve will be
_______________.
a) downward sloping concave b) downward sloping convex
c) downward sloping straight line d) parallel to x-axis

Q.19 If price of good y falls, what happens to budget line?

a) swings out on y-axis b) swings out on x-axis
c) swings in on x-axis d) swings in on y-axis
Q.20 In which of the following situations, demand curve shifts towards left?
a) fall in price of the commodity b) decrease in price of substitute good
c) decrease in price of complementary good d) increase in income in case of normal good

Q.21 Contraction of demand is the result of:

a) decrease in the number of consumers b) increase in the price of commodity
itself
c) increase in the price of related goods d) decrease in income of the consumers

Q.22 Which of the following pairs of goods is an example of substitutes?

a) tea and sugar b) tea and coffee c) pen and ink d) shirt and
trouser

Q.23 Suppose the price of pepsi increases, we will expect the demand curve of coca cola to:
a) shift toward left since these are substitutes
b) shift toward right since these are substitutes
c) remain at the same level
d) none of the above

Q.24 The price of tomatoes increases and people buy more tomato puree. You infer that tomato
puree and tomatoes are:
a) normal goods b) complements c) substitutes d) inferior goods

Q.25 In Economics, when demand for a commodity increases with a fall in its price it is known
as:
a) contraction of demand b) expansion of demand
c) increase in demand d) decrease in demand
REASONING-ASSERTION QUESTIONS:
Q.1 Assertion: Consumer would not be willing to buy an additional unit at the same price
Reason: Consumer’s utility increases with the purchase of more units.
a) Assertion and reason both are true and reason is the correct explanation for assertion
b) Assertion and reason both are true but reason is not the correct explanation for assertion
c) Assertion is true but reason is false
d) Assertion is false but reason is true

Q.2 Assertion: Budget line can shift to the right when the consumer is able to increase the
consumption of both the goods.
Reason: When the level of income increases, the consumer will be able to buy more bundles of
goods, which were previously not possible.
a) Assertion and reason both are true and reason is the correct explanation for assertion
b) Assertion and reason both are true but reason is not the correct explanation for assertion
c) Assertion is true but reason is false
d) Assertion is false but reason is true
Q.3 Assertion: Consumer is willing to sacrifice less and less units of a good to gain an additional
unit of the other good.
Reason: The utility that he gets from consuming an additional unit of a good goes on
diminishing.
a) Assertion and reason both are true and reason is the correct explanation for assertion
b) Assertion and reason both are true but reason is not the correct explanation for assertion
c)Assertion is true but reason is false
d)Assertion is false but reason is true

Q.4 Assertion: Budget line can shift to the right when the consumer is able to increase the
consumption of both the goods.
Reason: When the price of both goods fall, the consumer cannot purchase more goods with the
same income level.
a) Assertion and reason both are true and reason is the correct explanation for assertion
b) Assertion and reason both are true but reason is not the correct explanation for assertion
c) Assertion is true but reason is false
d) Assertion is false but reason is true

Q.5 Assertion(A): The problem of how to produce involves choice of technique of production.
Reason(R): Goods are produced for those people who have the paying capacity.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.6 Assertion(A): Microeconomics deals with study of a cotton textile industry.

Reason(R): Microeconomics is that part of economic theory which studies the behaviour of
individual units.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.7 Assertion(A): Central problems are found only in developing economies like India and
Bangladesh and not in developed countries like India.
Reason(R): An economic problem is basically a problem of choice.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.
Q.8 Assertion(A): The problem of price determination of a product comes under the purview of
microeconomics.
Reason(R): Microeconomics is also known as price theory.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.9 Assertion(A): ‘Unemployment in India is increasing’ is a normative statement.

Reason(R): Normative economics deals with what ought to be.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.10 Assertion(A): Any consumption bundle beyond the point of satiety leads to disutility.
Reason(R): Utility refers to want satisfying power of a commodity.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.11 Assertion(A): Indifference curve is a curve which shows different combination of two
goods which provide same level of satisfaction.
Reason(R): Different points in an indifference curve represents different level of satisfaction.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.12 Assertion(A): Indifference curve is downward sloping from left to right.

Reason(R): Slope of indifference curve is Marginal Rate of Substitution.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.
Q.13 Assertion(A): MRS remains same along an indifference curve.
Reason(R): MRS is the amount of good Y that a consumer is willing to sacrifice to increase the
consumption of good X.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.

Q.14 Assertion(A): The slope of indifference curve is different at different points of the curve.
Reason(R): Slope of indifference curve is MRS.
a) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of
Assertion(A).
b) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of
Assertion(A).
c) Assertion(A) is false but Reason(R) is true.
d) Assertion(A) is false but Reason(R) is true.
CASE BASED QUESTIONS:
Case study 1
Buyers preferences between diesel and petrol cars are significantly influenced by the relative
prices of these fuels. In India, people have a higher preference for diesel cars, despite their higher
price compared with petrol cars. Because diesel has been much cheaper than petrol. However, in
the recent past, the gap between diesel and petrol price has tended to shrink. Accordingly, the
buyer’s preferences are likely to change. The low price differential between petrol and diesel is
expected to induce the buyers to shift from diesel cars to petrol cars.

Q.1 When the price of petrol goes up, the demand for a car will____________(rise/fall).
Q.2 Petrol and diesel are ___________(substitute/complementary) goods.
Q.3 If two goods are complementary, then rise in the price of one results in:
i.rise in demand for the other
ii.fall in demand for the other
iii.rise in demand for both
iv.constant demand of the other
Q.4 How are the two goods related when, as a result of rise in the price of one, demand for other
increases?
i.substitute goods ii.complementary goods iii.normal goods iv.inferior goods

Case study 2
If our income rises, we generally tend to buy more of the goods. More income would mean more
pens, more shirts, more shoes, more cars and so on. But there are exceptions. If initially, you are
buying coarse grains, how would you take your increase in income now? Perhaps, as a first step,
you would discard the consumption of inferiors. Surely, this happens in the deserts of Rajasthan
where the rich minority eats wheat while the poor majority eats bajra as their staple food.
Q.1 Inferior goods are those whose demand __________ (increases/decreases)when income of
the consumer increases.
Q.2 A fall in income of the consumer(in case of normal goods) will cause:
i. upward movement along the demand curve
ii.downward movement along the demand curve
iii.rightward shift of demand curve
iv.leftward shift of demand curve
Q.3 Shirts and shoes are example of ________________(substitute/complementary) goods.
Q.4 As income of the consumer increases, he buys more of car. This will lead to :
i. upward movement along the demand curve
ii.downward movement along the demand curve
iii.rightward shift of demand curve
iv.leftward shift of demand curve