Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Sita and Geeta are two close friends and both are graduate working women. Sita is an economic graduate and doing research in economics while Geeta is a customer relation manager in a multinational company. In 1sy January, 2023 both the friends decide to go out for a dinner to celebrate new year. Geeta is fond of Ice-Cream (Orange bar) and has decided to but from a street vendor ₹10 unit after discount. She has also offered to Sita but Sita denied as having throat infection.

Geeta has requested to Sita to apply economics principles and to respond, when she should be stopped consuming more ice-cream. On consuming 3rd unit of Ice-cream, Geeta has obtained additional satisfaction of 18 units while the marginal utility of a rupee is 2 utils.

Suppose that you are Sita, being good friend of Geeta you are required to suggest her whether Geeta should stop herself or to consume more units of Ice-creams. (Identify the correct option.)

Options:

Geeta is in surplus and should  consume more units of ice-cream.

Geeta is in equilibrium and should not consume more units of ice cream.

Geeta in deficit, hence she should not consume more units of ice-cream.

Cannot say as given information is incomplete to respond.

Correct Answer:

Geeta in deficit, hence she should not consume more units of ice-cream.

Explanation:

The correct answer is option 3 : Geeta in deficit, hence she should not consume more units of ice-cream.