Tag: public finance

Questions Related to public finance

Consumer's equilibrium occurs when __________.

  1. $MRS > \dfrac{P _x}{P _y}$

  2. $MRS = \dfrac{P _x}{P _y}$

  3. $MRS < \dfrac{P _x}{P _y}$

  4. $MRS = \dfrac{P _y}{P _x}$


Correct Option: B

Constraints on which budget line is made are __________.

  1. given income and prices

  2. given prices and tastes

  3. given income and tastes

  4. given prices and government policy


Correct Option: A

For consumers' equilibrium to be stable, the requirement is __________.

  1. constant MRS

  2. increasing MRS

  3. diminishing MRS

  4. none of the above


Correct Option: C

The slope of the indifference curve is called __________.

  1. opportunity cost ratio

  2. MRTS

  3. MRS

  4. $\dfrac{P _x}{P _y}$


Correct Option: C

L-shaped indifference curve exists in case two goods are ____________.

  1. perfect complements

  2. perfect substitutes

  3. substitutes

  4. not related


Correct Option: A

When indifference curve is straight downward sloping line, the two goods are _________.

  1. not related

  2. complements

  3. perfect substitutes

  4. perfect complements


Correct Option: C

If MRS was increasing, what shape will indifference curve take?

  1. Horizontal

  2. Vertical

  3. Concave

  4. Rising


Correct Option: C

When price of substitute good Z rises, then supply of X will _______.

  1. not change

  2. fall to zero

  3. decrease

  4. rise


Correct Option: C

What is that one effect which Marshall ignored but Hicks took into account?

  1. Income effect

  2. Substitution effect

  3. Price effect

  4. Output effect


Correct Option: A

A straight downward sloping indifference curve implies ________.

  1. constant MRS

  2. unchanged MRS

  3. rising

  4. none of the above


Correct Option: A