Indifference Curves and Budget Lines Quiz by Shubhrata Shrestha | Jun 24, 2025 | 0 comments Indifference Curves and Budget Lines Quiz 1. What does an indifference curve represent? A) Different levels of income B) Combinations of goods giving the same satisfaction C) The budget constraint of a consumer D) The price ratio between two goods None 2. The slope of a budget line is equal to: A) Px + Py B) -Px / Py C) Py / Px D) I / (Px + Py) None 3. An outward parallel shift of the budget line is caused by: A) Increase in price of one good B) Decrease in income C) Increase in income D) Increase in price of both goods None 4. The convex shape of an indifference curve reflects: A) Increasing marginal utility B) Constant marginal utility C) Diminishing marginal rate of substitution D) Increasing price of goods None 5. When the price of a good falls, the substitution effect: A) Always decreases quantity demanded B) Moves quantity demanded opposite to the price change C) Moves quantity demanded in the same direction as the price change D) Has no effect on quantity demanded None 6. For a Giffen good, when the price increases, the quantity demanded: A) Decreases B) Increases C) Remains constant D) Decreases then increases None 7. Which of the following is NOT a limitation of the indifference curve model? A) Assumes rational behavior B) Assumes goods are divisible C) Assumes multiple goods are considered D) Assumes perfect knowledge of prices and income None 8. The budget line shows: A) The preferences of a consumer B) Combinations of goods affordable with given income and prices C) The total utility a consumer derives D) The income effect and substitution effect None 9. If the price of good X rises, the budget line: A) Shifts outward parallel B) Shifts inward parallel C) Pivots inward along the X-axis D) Pivots outward along the Y-axis None 10. Income effect on an inferior good is: A) Positive B) Negative C) Zero D) Unpredictable None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
