Question

Part 1: Write true or false for the following statements on the separate answer sheet provided.

1. In cardinal utility theory it is assumed that money has constant marginal utility.

2. Indifference curves slopes down ward from right to left.

3. If the quantity demanded does not show any Change as price changes, then

elasticity is zero.

4. The equality of MC and MR determines the equilibrium position of the firm

under all market situations.

5. In a perfectly competitive market structure the marginal cost curve is also its

supply curve.

Answer 1

Solution:

1. In cardinal utility theory it is assumed that money has constant marginal utility – True.

2. Indifference curves slopes down ward from right to left – True.

3. If the quantity demanded does not show any Change as price changes, then

elasticity is zero – True.

4. The equality of MC and MR determines the equilibrium position of the firm

under all market situations – True.

5. In a perfectly competitive market structure the marginal cost curve is also its

supply curve – True.