List of top Microeconomics Questions on Consumer theory

Let an inverse demand function for a commodity be $𝑝 = e^{\frac{-x}{2}$, where 𝑥 is the quantity and 𝑝 is the price. Then, at 𝑝 = 0.5, the consumer surplus is equal to _______ (rounded off to two decimal places).

Suppose that the utility function \(𝑢: R^𝑛_+→R_+\) represents a complete, transitive and continuous preference relation over all bundles of 𝑛 goods. Then select the choices below in which the function also represents the same preference relation.

A consumer has utility function 𝑢(𝑥₁, 𝑥₂ ) = max {0.5 𝑥₁ , 0.5 𝑥₂} + min{𝑥₁ , 𝑥₂}.
She has some positive income 𝑦, and faces positive prices 𝑝₁, 𝑝₂ for goods 1 and 2 respectively. Suppose 𝑝₂ = 1. There exists a lowest price 𝑝̅̅₁ such that if 𝑝₁ > 𝑝̅̅₁ then the unique utility maximizing choice is to buy ONLY good 2. Then 𝑝̅̅₁ is _________ (in integer).

In a two period model, a consumer is maximizing the present discounted utility
𝑊𝑡 = ln(𝑐_𝑡) +\(\frac{ 1}{ 1 + }\) ln(𝑐_𝑡+1) 
with respect to 𝑐𝑡 and 𝑐𝑡+1 and subject to the following budget constraint 
\(𝑐_𝑡 +\frac{ 𝑐_𝑡+1}{ 1 + 𝑟} ≤ 𝑦_𝑡 +\frac{ 𝑦_𝑡+1 }{1 + 𝑟 }\)
where 𝑐𝑖 and 𝑦𝑖 are the consumption and income in period 𝑖 (𝑖 = 𝑡,𝑡 + 1) respectively, 𝜃 ∈ [0, ∞) is the time discount rate and 𝑟 ∈ [0, ∞) is the rate of interest. Suppose, consumer is in the interior equilibrium and 𝜃 = 0.05 and 𝑟 = 0.08. In equilibrium, the ratio \(\frac{𝑐_𝑡+1}{ 𝑐_𝑡}\) is equal to _____ (round off to 2 decimal places).

When the supply curve S_x is backward bending and the demand curve Dx is downward sloping as shown in the figure, there are two equilibria M and N, respectively. Which of the following statements is CORRECT?

A long-run cost function for a product exhibits economies of scale if

The short-run production function of a firm is $Q = 200 + 0.2L^2 -0.0004L^3$. If wage rate equals Rs. 140 and the number of labours (L) is 100, then the Marginal Cost and the Average Variable Cost, respectively, are

The demand function (\(Q^D_x\)) and supply function \((Q^S_x)\) are given as:
\(Q^D_x=f(P_x,I)\ and\ Q^S_x=g(P_x,A)\) where I (Income) and A (Advertisement expenses) are the exogenous factors affecting quantity demanded and supplied, respectively. Further, \(\frac{\partial f}{\partial P_x}\lt0,\frac{\partial g}{\partial P_x}\gt0\) but \(\frac{\partial f}{\partial I}\) and \(\frac{\partial g}{\partial A}\) may have any sign. Considering that there exists an equilibrium \((Q_x^D=Q_x^S=Q)\), which of the following is/are CORRECT?

Monthly per capita consumption expenditure (MPCE) of 10 households in a region is given below.

Households	H1	H2	H3	H4	H5	H6	H7	H8	H9	H10
MPCE(in Rs.)	2800	3000	1200	3500	1400	2500	4000	1000	900	1300

Assuming the poverty cutoff (Z) of MPCE to be Rs. 2000, the squared poverty gap ratio is _______(round off to 3 decimal places)

The Total Variable Cost (TVC) for a firm is given by TVC = $x^3-bx^2$. The Total Fixed Cost is 848. The value of b for which the Marginal Cost is minimum at x = 16 is________ (in integer).

In a market, two firms F₁ and F₂ are producing homogenous products. The inverse demand function is given by p=120-0.5(q₁+q₂), where p is the unit price of the product, and q₁ and q₂ are the outputs from F₁ and F₂, respectively. Suppose the cost functions of F₁ and F₂ are C₁ = 20q₁ and C₂ = 10 +0.5q₂², respectively. Then the total profit earned by both the firms assuming a competitive situation is (in integer).