What is the definition of "law of diminishing marginal utility" in respect of a consumer?

Which of the following are not the assumptions related to the theory of consumer behaviour as per the cardinal utility approach?
1. Rational consumer
2. Unlimited money income
3. Utility cardinally measurable
4. Diminishing marginal utility of money
5. Constant marginal utility of commodities
6. Maximisation of satisfaction
7. Utility is additive

A

1, 3, 5 and 7

B

2, 4 and 5

C

1, 3, 4 and 5

D

Both 6 and 7

On which of the following assumptions, the theory of consumer behaviour on cardinal utility approach is NOT based? 1. Consumer is rational 2. Limited money income of the consumer 3. Maximization of total satisfaction 4. Diminishing marginal utility of money

A

1

B

2

C

3

D

4

According to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to

A

improve

B

diminish

C

remain constant

D

first diminish and then improve

Cardinal utility analysis of consumer's behaviour is based on which combination of the following assumptions: (i) Utility is measurable in terms of cardinal number. (ii) Constancy of the marginal utility of money (iii) Utilities of different goods are interdependent (iv) Gossen's first law of consumption Choose the correct answer from the code given below:

A

Only (i) and (ii)

B

Only (i), (ii) and (iv)

C

Only (ii), (iii) and (iv)

D

Only (iii) and (iv)

Cardinal utility analysis of consumer's behaviour is based on which combination of the following assumptions:
I. Utility is measurable is terms of cardinal numbers
II. Constancy of the marginal utility of money
III. Utilities of different goods are interdependent
IV. Gossen's first law of consumption
Choose the correct answer

A

Only I and II

B

Only I, II and IV

C

Only II, III and IV

D

Only III and IV

When labour is plotted on X-axis and capital is plotted on Y-axis and an iso-quant is prepared, then which of the following statements is/are false ? (a) Marginal rate of technical substitution of labour for capital is equal to the slope of the iso-quant. (b) Marginal rate of technical substitution of labour for capital is equal to change in the units of capital divided by the change in the units of labour. (c) Marginal rate of technical substitution of labour for capital is the ratio of marginal productivity of capital to marginal productivity of labour.

A

(a) and (b) statements

B

Only (c) statement

C

Only (a) statement

D

Only (b) statement

When labour is plotted on X-axis and capital is plotted on Y-axis and an isoquant is prepared, then which of the following statement(s) is/arefalse?
1. Marginal rate of technical substitution of labour for capital is equal to the slope of the iso-quant.
2. Marginal rate of technical substitution of labour for capital is equal to change in the units of capital divided by the change in the units of labour.
3. Marginal rate of technical substitution of labour for capital is the ratio of marginal productivity of capital to marginal productivity of labour.

A

Both 1 and 2

B

Only 3

C

Only 1

D

Only 2

Assertion (A): Utility will be maximized when the marginal units of expenditure in each direction bring the same increment of utility.
Reason (R): A consumer will try to maximize his utility.

A

Both (A) and (R) are true

B

Both (A) and (R) are false

C

(A) is true but (R) is false

D

(A) is false but (R) is true

Suppose that there are two goods, X and Y, facing a consumer. The prices are P_x = Rs. 4 and P_y = Rs. 5. He has Rs. 110 to spend on these goods. Suppose, he is currently buying 15 units of good X (with marginal utility equal to 40) and 10 units of good Y (with marginal utility equal to 45).
In the above context, which one of the following statements is correct?

A

His total utility will increase if he reallocates his spending towards more of good X and less of good Y

B

His total utility will increase if he spends more on good Y and less on good X

C

His total utility will increase if he spends less on both the goods

D

His total utility is being maximized subject to the budget constraint he is facing

Put into chronological order on the basis of development:
1. Law of demand
2. Law of indifference
3. Law of diminishing marginal utility
4. Revealed preference curve
5. Indifference curve

A

1, 3, 4, 2, 5

B

1, 5, 3, 4, 2

C

1, 3, 2, 5, 4

D

1, 2, 3, 4, 5

What is the definition of "law of diminishing marginal utility" in respect of a consumer?

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