Question

4.____One of the following is not true about the characteristics of well-behaved
indifference curves:
A. They are convex to the origin
B. All points on an indifference curve yield the same level of satisfaction
C. They are straight line
D. As we move closer to the origin, the level of satisfaction will diminish
E. None
5.____When the short run average product of labor is declining but positive, the
marginal product of labor is,
A. Negative B. Declining C. Zero D. Any of the above is possible
6.____When marginal utility is positive and declining.
A. Total utility decreases at a diminishing rate
B. Total utility increases at a diminishing rate
C. Totai utility increases at an increasing rate
D. Total utility is negative
If the price elasticity of 7._____demand is less than 1 and price increases by 8%,
then, quantity demand will
A. Decrease by less than 8%
C. Increase by more than 8%
B. Decrease by more than 8%
D. Remains the same
8.___refers to attitude of an individual who prefers risk income than income with
certain outcome.
A. Risk Averse B. Risk lover C. Risk neutral D. Diversification
9._____The law of scarcity refers to the following facts:
A. Scarcity exist only during bad economic times
B. Scarcity exists only when there is poverty
C. Even in the richest countries, hang-y people can be found
D. No country can produce enough to satisfy fully every body's wants for
everything.​

Answer 1

The following are the answers to the given questions-

4. (c) They are straight line

• Indifference curves are curves that graphically represent a locus of all the quantities of goods that give the consumer equal satisfaction, i.e. the consumer is 'indifferent' among them.
• An indifference curve can be a straight line if and only if both the goods in the basket provide equal satisfaction to the consumer per unit.
• Since this is not a characteristic of normal consumer behaviour, indifference curves cannot be straight lines.

5. (b) Declining

• According to the law of variable proportions, when the AP is declining but is positive, the MP is declining but at a greater rate than the AP.
• This stage is known as the stage of diminishing returns, according to the law of variable proportions.

6. (b) Total utility increases at a diminishing rate

• Total utility is the aggregate satisfaction a consumer derives from the consumption of a specific good or service.
• Marginal utility is the change in total utility when an additional unit of the commodity is consumed.
• When marginal utility is positive and declining, the total utility increases at a diminishing rate.

7. (a) decrease by less than 8%

• Since the price elasticity of demand is less than 1, the demand will change but to a lesser extent than the price change.
• Also, according to the law of demand, price and demand share an inverse relationship. Hence, an increase in price would definitely lead to a decrease in demand.
• So, if the price rises by 8%, the demand would fall but by less than 8%

8. (b) risk lover

• The risk-loving attitude of an individual in economics refers to the prioritisation of investment in high-risk ventures like stocks etc., instead of avoiding risk by investing in places with surety of return, like fixed deposits.
• Hence, an individual who prefers risk income would be called a risk lover.

9. (d) No country can produce enough to satisfy fully everybody's wants for everything.

• The law of scarcity presumes that human beings have unlimited wants, whereas the resources of the world are limited in nature.
• Hence, the plausible explanation that follows is that no economy, with its defined set of resources, will ever be able to produce enough to completely satisfy each of the unlimited wants.

SPJ5