Consider the following statements about indifference curves: 1. Indifference curves are convex to the origin. 2. Higher indifference curve represents higher level of satisfaction. 3. Two indifference curves cut each other. Which of the statements given above is/are correct?
- A.1 only
- B.1 and 2
- C.2 and 3
- D.3 only
Correct answer
Explanation
The correct answer is B, 1 and 2. Statements 1 and 2 are correct; statement 3 is wrong because two indifference curves can never cut each other.
An indifference curve shows the combinations of two goods that give a consumer the same satisfaction. It is convex to the origin because of the diminishing marginal rate of substitution: as a consumer gets more of one good, they are willing to give up less and less of the other for one more unit. A curve further from the origin has more of at least one good, so it shows a higher level of satisfaction. If two curves crossed, the point of crossing would give two different levels of satisfaction at once, which is a contradiction.
A is wrong because statement 2 is also correct. C is wrong because statement 3 is false. D is wrong because it picks only the false statement.
Exam tip: Indifference curves: slope downward, convex to the origin, higher means better, never intersect.
Practice Questions
View allSaubhagya, a Government of India Scheme, relates to which of the following areas?
- A.Achieving universal household electrification
- B.Providing clean cooking fuel to poor households
- C.Rationalizing subsidies on LPG
- D.Stopping female foeticide
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Read the full explanation →India's reliance on imported energy exposes it to geopolitical supply shocks. In this context, what is the most likely short-term impact of a major disruption in crude oil imports?
- A.Decrease in inflation
- B.Strengthening of the rupee
- C.Higher input costs and inflation pressure
- D.Increase in exports
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- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1,2 and 3
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All three statements about the Digital India Land Records Modernisation Programme are correct.
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- A.2 only
- B.2 and 3
- C.1,3 and 4
- D.2 and 4
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All details are right only in rows 2 and 4. The L.C.
Read the full explanation →In India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers ?
- A.Central Statistics Office
- B.Department for Promotion of Industry and Internal Trade
- C.Labour Bureau
- D.National Technical Manpower Information System
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Read the full explanation →