Micro

Consumer Behaviour

Medium

Choose the correct statements in the context of the law of diminishing marginal utility

(A) States that each successive unit of a commodity provides lower marginal utility.

(B) States that each successive unit of a commodity provides higher marginal utility.

(C) Explains why demand curves have a negative slope.

(D) States that the marginal utility from consuming each additional unit of a commodity declines as its consumption increases, while keeping consumption of other commodities constant.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(B), (C) and (D) only

(A), (B), (C) and (D)

(A), (C) and (D) only

✅ Correct Option: 4

Option 1 -> Incorrect. Includes statement (B) which contradicts the law by stating marginal utility increases.

Option 2 -> Incorrect. Includes statement (B) which is opposite to the law of diminishing marginal utility.

Option 3 -> Incorrect. Includes statement (B) which wrongly suggests marginal utility increases with successive units.

Option 4 -> Correct. Includes only (A), (C), and (D) which accurately describe the law of diminishing marginal utility.

Hence, Option 4: (A), (C) and (D) only -> The law of diminishing marginal utility states that as consumption of a commodity increases, the marginal utility (additional satisfaction) derived from each successive unit decreases, keeping other factors constant. Statement (A) captures the core principle, statement (D) provides the complete definition with the ceteris paribus condition, and statement (C) correctly links this law to the negative slope of demand curves - as marginal utility falls, consumers are willing to pay less for additional units. Statement (B) is incorrect as it contradicts the fundamental principle by suggesting marginal utility increases. -> correct

2025: 29 May Shift 1

What is the Marginal Rate of Substitution(MRS)?

(A) The rate at which a consumer is willing to substitute one good for another.

(B) Equal to the slope of the indifference curve.

(D) Is constant for perfect substitutes.

Choose the correct answer from the options given below:

2025: 27 May Shift 2

The total sum that the consumer has to spend on wheat in 2022?

2025: 29 May Shift 1

A rational consumer reaches to equilibrium when:

2026: 12 May Shift 1

Arrange the values of the elasticity of demand of the following at different points on a downward straight line demand curve in ascending order.

(A) The point where the demand curve meets the horizontal axis.

(B) The point where the demand curve meets the vertical axis.

(D) At any point to the right of the midpoint of the demand curve.

Choose the correct answer from the options given below:

2025: 27 May Shift 2

Which of the following statements are correct:

(A) Consumer's preferences are monotonic: If and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the other good as compared to the other bundle.

(B) The tendency for the MRS to fall with increase in quantity of goods is known as the Law of Diminishing Marginal Rate of Substitution.

(D) The budget set is the collection of all bundles that the consumer can buy with their income at the prevailing market prices.

Choose the correct answer from the options given below:

2025: 28 May Shift 1

How would the decrease in the price of Good-X impact the budget line, when the price of Good-Y and Income remain unchanged?

The intercept points of both Good-X and Good-Y will shift outward.
The intercept point of Good-X will shift outward and the intercept point of Good-Y will remain unchanged.
The intercept point of Good-X will shift inward and the intercept point of Good-Y will remain unchanged.
The intercept points of both Good-X and Good-Y will shift inward.

Solution

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