Micro

Consumer Behaviour

Medium

Which of the following will NOT cause a change in the budget set of a consumer?

Change in quantities of goods purchased by the consumer.

Change in the prices of both the goods purchased by the consumer.

Change in the income of the consumer.

change in the price of any one of the two goods purchased by the consumer, price of the other good remaining same.

✅ Correct Option: 1

Option 1 -> The quantities purchased are choices made within the budget set, not determinants of it.

Option 2 -> Changes in both prices alter the budget constraint equation, shifting the budget set.

Option 3 -> Income changes shift the budget line parallel, expanding or contracting the budget set.

Option 4 -> Changing one price rotates the budget line, modifying the budget set.

Hence, Option 1: Change in quantities of goods purchased by the consumer -> The budget set represents all possible combinations of goods a consumer CAN afford given their income and market prices. It is determined by the budget constraint: p₁x₁ + p₂x₂ ≤ M, where prices (p₁, p₂) and income (M) are the parameters. The quantities (x₁, x₂) that the consumer actually chooses to purchase are points within the budget set, not factors that define it. Changing consumption choices simply means moving from one point to another within the same budget set, without altering the set itself. -> correct

2025: 28 May Shift 1

Why indifference curves are convex to origin?

Due to the constant market rate of exchange.
Due to the increasing marginal rate of substitution.
Due to the constant marginal rate of substitution.
Due to a diminishing marginal rate of substitution.

2026: 23 May Shift 1

Which one of the following statements is most suitable to the law of diminishing marginal utility?

2025: 14 May Shift 1

With regard to price elasticity, in general, demand for a luxury good is likely to be ........

Inelastic
Unitary elastic
Perfectly Inelastic
Elastic

2025: 27 May Shift 2

An increase in the price of socks is likely to decrease the demand for shoes and a decrease in the price of socks is likely to increase the demand for shoes. Socks and shoes are:

2026: 21 May Shift 1

Which of the following conditions of the indifference curve is violated when two indifference curves are intersecting each other?

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:

Which of the following will NOT cause a change in the budget set of a consumer?

Solution

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