A rational consumer is one who
Spends his income to maximize satisfaction
Is not influenced by advertisemment
Behaves in a particular way all the time
Knows the price of all goods and buys the cheapest
Correct answer is A
A rational consumer is considered to be that person who makes rational consumption decisions. In other words, the consumer who makes consumption decision by portioning his limited resources (income) to buying commodities that will give maximum satisfaction.
When total utility is constant, it means marginal utility is
Increasing
Zero
Decreasing
One
Correct answer is B
When total utility is constant, it means marginal utility is zero.
Total utility is constant when it is at its maximum, then marginal utility will be Zero. It is based on the law of diminishing marginal utility which says 'as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall. Once the total utility is constant, marginal utility will be zero.
A consumer purchasing a commodity X will maximize his satisfaction if
Px = MUx
Px ≥ MUx
Px > MUx
Px < MUx
Correct answer is A
Utility is maximized when price is equal to marginal utility.
Price fixed above the equilibrium is to
Protect agricultural producers
Discourage agricultural producers
Lower the price of agricultural producers
Favour consumers
Correct answer is A
When prices are set above equilibrium, it means more suppliers or producers will be willing to sell their goods because of the high prices. This will invariably lead to a surplus of goods in the market resulting in excess supply.
This is usually done to protect and encourage production, as producers will be willing to produce and supply to the markets in large quantities when the price is high.
If the current price of an apple is twice that of last year, it implies that the value of money is
Stable
Falling
Rising
Getting stronger
Correct answer is B
If the price of the apple was 100 in year 1, and by year 2 it increased to 200. It means the value of the money is falling. The value of money is determined by how much goods it can buy.