Tag: consumer's budget

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Questions Related to consumer's budget

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

What happens to the budget line when consumer income increases but the price of goods remains unchanged?

  1. Parallel upwards shift

  2. Parallel downwards shift

  3. Shift only on the x axis

  4. Shift only on the y-axis
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Greater the income with same prices would mean that the consumer can purchase more of both the goods on the budget line.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The other name of price line is ________.

  1. price opportunity line

  2. price-income line or budget line

  3. budget constraint line

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All points on the budget lines are points of optimal efficiency. Wherein the consumer is maximizing his utility by utilizing his entire income.  Points above the budget line are not attainable as it requires greater income. 

Therefore the answer is all of the above.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

Price line indicates __________.

  1. all possible combination for the consumer to buy with given income and prices of the two commodities

  2. all possible combination for the consumer to buy with given income and prices of the single commodity

  3. income of the consumer

  4. prices of related commodities
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

All points on the budget lines are points of optimal efficiency. Wherein the consumer is maximizing his utility by utilizing his entire income.  Points above the budget line are not attainable as it requires greater income. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

Price line depends on the __________.

  1. prices of two commodities

  2. income of the consumer

  3. related commodities

  4. both (A) and (B)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The price line (or budget line) represents the combinations of two goods a consumer can afford given their income and the prices of those goods. Therefore, it is determined by both the income and the prices.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

If the consumer is below his budget line, the consumer ______________.

  1. is in equilibrium

  2. is spending all personal income

  3. is not spending all personal income

  4. may or may not be spending all personal income
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When the consumer is not spending all his income, he/she is inefficient with the current group of goods purchased. The optimal point for the consumer is the point at which the indifference curve is tangent to the budget line. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

In a wage system where an employee is paid a fixed amount irrespective of output is called ______.

  1. time rate system

  2. piece rate system

  3. time cum bonus system

  4. piece cum bonus rate system
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This can be explained with an example, if you get a monthly salary of Rs. $20,000$, the salary will not change depending on the output you produce it depends on time the person involves.
It will remain even if you produce 10 units or even 20 units. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

In which of the wage payment system an employee will be least interested in enhancing output?

  1. Time rate system

  2. Piece rate system

  3. Bonus payment system

  4. Time cum piece rate system
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A piece rate system is wherein the worker is paid a amount equal to the number of units he/she produces. For example if a worker is paid Rs.20 per unit and the worker produces 10 units. The worker will get paid a total of Rs.200 for producing the 10 units. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

In a wage system where an employee is paid according to output is called ________.

  1. time rate system

  2. piece rate system

  3. time cum bonus system

  4. piece cum bonus rate system
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A piece rate system is wherein the worker is paid a amount equal to the number of units he/she produces. For example if a worker is paid Rs.20 per unit and the worker produces 10 units. The worker will get paid a total of Rs.200 for producing the 10 units. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

Slope of budget line is equal to ________.

  1. marginal rate of substitution between the factor inputs

  2. ratio of price of factor input

  3. demand of each factor input

  4. supply of each factor input
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The budget line shows the combination of two goods a individual can consume with his current income. Hence, it is equal to the ratio of prices between the two goods.