Consumer's Equilibrium- Income, Substitution and Price Effect Online Test

For Giffen goods:
Negative Income effect is stronger than the positive Substitution effect
Negative Income effect is weaker than the positive Substitution effect
Positive Income effect is stronger than the negative Substitution effect
Positive Income effect is weaker than the negative Substitution effect
Negative Income effect balances the negative Substitution effect
The Income Consumption Curve shows the Income effect when: I consumer’s Income changes II Price of both the commodities remain constant III Price of one commodity changes and that of the other remains constant
I only
II only
III only
I and II
I and III
The Engel Curve shows the:
The amount of a commodity that the consumer would purchase per unit of time at a given level of Income
The amount of a commodity that the consumer would purchase at all times at a given level of Income
The amount of a commodity that the consumer would purchase per unit of time at various levels of Income
The amount of two commodities that the consumer would purchase per unit of time at a various levels of Income
The amount of two commodities that the consumer would purchase per unit of time at a given level of Income
In case of Inferior goods, when the Income rises,:
The amount of a commodity purchased increases
The amount of a commodity purchased decreases
The amount of a commodity purchased remains the same
The price increases
The price decreases
The Substitution effect: I is a result of change in the Income of the consumer II is a result of change in the relative prices of the commodities III results in the movement along the Indifference Curve
I only
II only
III only
I and III
II and III
Under the Income effect, the consumer:
Moves to a higher Indifference Curve
Moves to a lower Indifference Curve
Moves to either a higher or lower Indifference Curve
Purchases lower quantities of both commodities
Purchases higher quantities of both commodities
Which of the following Curve shows the relationship between the change in Income and the corresponding change in quantities of commodities purchased?
Demand Curve
Supply Curve
Price Consumption Curve
Income Consumption Curve
None of the above
With an increase in the Income, if the consumer consumes less of commodity X, then X is:
An Inferior good
A superior good
A substitute commodity
A complementary commodity
A normal good
The Income Consumption Curve is the locus of points of consumer’s Equilibrium with a change in: I Price of commodity X II Price of commodity Y III Consumer’s Income
I only
II only
III only
I and III
II and III
In the case of Normal goods:
Income effect is negative and the Substitution effect is positive
Income effect is positive and the Substitution effect is negative
Income effect and the Substitution effect are both positive
Income effect and the Substitution effect are both negative
None of these
Description:

In Microeconomics, the Indifference Curve Analysis is an important approach to understanding Consumer Behaviour. The Consumer’s Equilibrium is affected by changes in the Income of the consumer, the price of the substitute goods and the price of goods consumed. These changes are known as the Income Effect, Substitution Effect and the Price Effect. Here is a 7 minute short Revision test on Multiple Choice questions relating to Indifference Curves, Price Line, Consumer’s Equilibrium, the Income Effect, Substitution Effect and the Price Effect under the Consumption Function. This test is a must for any student of AP Microeconomics.

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