# Indifference Curve Analysis Part 2 Online Test

Which of the following influences the “Budget Constraint Line”? I Income of the consumer II Market Price of commodity X III Market Price of commodity Y
I only
II only
III only
I and II
I, II and III
Which of the following is not a property of the Indifference Curves?
Two Indifference Curves are parallel to each other
Two Indifference Curves can’t intersect each other
The Indifference Curves are convex to the origin
The Indifference Curves always slope downwards to the right
None of these
The Indifference Curve approach is superior than the other theories of Consumption as the Indifference Curve Analysis:
Does not consider the indivisibility of commodities
Assumes the consumer to be more rational
Analysis the consumer behaviour in depth
Assumes the Income effect to be positive
Draws the distinction between the Income effect and the Substitution effect due to a Price change
To obtain the Price Line, which of the following must be given? I Consumer’s Income II Indifference Map III Prices of the commodities
I only
II only
III only
I and III
II and III
An Indifference Curve cannot assume a horizontal shape as it would imply that the consumer is indifferent between:
Less of one commodity and more of another
Less of one commodity and same amount of another
Greater amount of both the commodities
Lesser amount of both the commodities
More of one commodity and same amount of another
What will be the effect of a movement along the Indifference Curve from left to right, on the Marginal Rate of Substitution?
The Marginal Rate of Substitution falls
The Marginal Rate of Substitution rises
The Marginal Rate of Substitution remains the same
The Marginal Rate of Substitution falls at an increasing rate
The Marginal Rate of Substitution rises at an increasing rate
When the consumer’s Indifference Map and the Money Income are known, the consumer will be in Equilibrium position on the Indifference Curve which: I cuts the Price Line II is highest in the Indifference Map III is tangent to the Price Line
I only
II only
III only
I and II
II and III
In any case, the consumer would not be able to cross the Price Line because:
There is no information about other combinations available
The consumer has no taste for other combinations of commodities
He spends an increasing amount of money on both commodities
He is not rich enough
He has no information about other commodities
When a consumer’s Income increases while other things remain the same, the Equilibrium point moves to:
The right hand side on the same Indifference Curve
The left side on the same Indifference Curve
A higher Indifference Curve
A lower Indifference Curve
Remains at the same position on the same Indifference Curve
The point at which the Indifference Curve is tangent to the Price Line, the slope of the Indifference Curve is: I smaller than the slope of the Price Line II the same as the slope of the Price Line III greater than the slope
I only
II only
III only
Any of these
None of these
Description:

In Microeconomics, the Indifference Curve Analysis is an important approach to understanding Consumer Behaviour. Here is a 7 minute short Revision test on Multiple Choice questions relating to Indifference Curves, Indifference Map, Marginal Rate of Substitution, Properties of Indifference Curves, Price Line and Consumer’s Equilibrium under the Consumption Function. This test is a must for any student of AP Microeconomics.

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