MCQ Chapter 2 Theory of Consumer Behaviour Class 12 Economics

Please refer to Theory of Consumer Behaviour MCQ Questions Class 12 Economics below. These MCQ questions for Class 12 Economics with answers have been designed as per the latest NCERT, CBSE books, and syllabus issued for the current academic year. These objective questions for Theory of Consumer Behaviour will help you to prepare for the exams and get more marks.

Theory of Consumer Behaviour MCQ Questions Class 12 Economics

Please see solved MCQ Questions for Theory of Consumer Behaviour in Class 12 Economics. All questions and answers have been prepared by expert faculty of standard 12 based on the latest examination guidelines.

MCQ Questions Class 12 Economics Theory of Consumer Behaviour

Question. Movement along the demand curve is also known as ………… .
(a) Change in demand
(b) Change in quantity demanded
(c) Change in demand of related goods
(d) None of the above

Question. Price elasticity of demand measures relation between
(a) quantity demanded and price
(b) demand and income of the consumer
(c) demand and price of related good
(d) All of the above

Question. Which of the following are an example of derived demand?
(a) Car and Petrol
(b) Tea and Coffee
(c) Building and Brick
(d) None of these

Question. There are ………… degrees of elasticity of demand.
(a) three
(b) four
(c) five
(d) None of the above

Question. Which of the following is/are determinants of demand?
(a) Price of the good
(b) Income of the consumer
(c) Price of related goods
(d) All of the above

Question. With rise in price of good X, demand for good Y also increase, then how these goods are related?
(a) Substitute goods
(b) Complementary goods
(c) Inferior goods
(d) Giffen goods

Question. Complementary goods are always demanded at the same proportion. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. Which of the following statements are true?
(a) Market demand curve is the vertical summation of individual demand curves
(b) Market demand curve is the horizontal summation of individual demand curves
(c) Market demand curve is steeper than individual demand curves
(d) None of the above

Question. Shift in the demand curve is also known as ………… .
(a) Change in demand
(b) Change in quantity demanded
(c) Change in demand of related goods
(d) None of the above

Question. Which of the following is/are components of change in demand? 
(i) Increase in demand
(ii) Decrease in demand
(iii) Contraction in demand
(iv) Expansion in demand 
Choose from the options below.
(a) (i) and (iii)
(b) (ii) and (iv)
(c) (i) and (ii)
(d) (iii) and (iv)

Question. Which of the following is/are components of change in quantity demanded?
(i) Increase in demand
(ii) Decrease in demand
(iii) Contraction in demand
(iv) Expansion in demand
Choose from the options below.
(a) (i) and (iii)
(b) (ii) and (iv)
(c) (i) and (ii)
(d) (iii) and (iv)

Question. Non-linear demand curve is drawn as
(a) downward sloping straight line
(b) upward sloping straight line
(c) rectangular hyperbola
(d) None of the above

Question. When demand for a good depends upon the demand for the other, it is known as
(a) Joint demand
(b) Composite demand
(c) Derived demand
(d) None of the above

Question. When two goods are consumed together to get satisfaction, it is referred to as …… .
(a) Joint demand
(b) Composite demand
(c) Derived demand
(d) None of the above

Question. With decrease in price of substitute goods, demand for the concerned goodwill
(a) shift to the right
(b) shift to the left
(c) move downward along demand curve
(d) move upward along demand curve

Question. Elasticity of demand for good X is half of elasticity of demand for good Y. If 10% fall in price of good Y leads to 20% rise in its quantity demand, what will be the elasticity of demand of good X?
(a) 2
(b) 1
(c) 0.5
(d) 0

Question. The relationship between demand for a good and its own price is known as ………… .
(a) Quantity demanded
(b) Demand
(c) Composite demand
(d) None of these

Question. Which of the following are exceptions of law of demand?
(a) Giffen goods
(b) Addictions
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. Which of the following is an assumption of law of demand?
(a) Price of the commodity should not change
(b) Quantity of the good should not change
(c) Income of the consumer should not change
(d) None of the above

Question. Which of the following factors causes demand curve to be downward sloping?
(i) Law of DMU
(ii) Substitution effect
(iii) Income effect
(iv) Number of uses of a good
(v) Number of buyers in the market
Choose from the options below.
(a) (i), (ii), (iii) and (v)
(b) (i), (ii), (iv) and (v)
(c) (ii), (iii), (iv) and (v)
(d) (i), (ii), (iii), (iv) and (v)

Question. Due to 15% rise in price, demand changes from 100 to 80 units. Price elasticity of demand will be equal to
(a) 1
(b) 1.33
(c) 1.5
(d) 2

Question. When more quantity is demanded at the same price, it indicates expansion in demand. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. If price elasticity of demand is 2, a 10% fall in price of good leads to increase in demand by
(a) 10%
(b) 15%
(c) 20%
(d) 25%

Question. Elasticity of demand is an ………… approach.
(a) quantitative
(b) qualitative
(c) utility
(d) None of these

Question. What will be the elasticity of demand for school uniform?
(a) Perfectly elastic
(b) Perfectly inelastic
(c) Unitary elastic
(d) Inelastic

Question. Slope of a downward sloping demand curve is
(a) increasing
(b) decreasing
(c) constant
(d) infinity

Question. Increase in price of substitute goods leads to expansion of demand. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. If a 10% rise in price of good X leads to 20% fall in its quantity demanded, its elasticity of demand is
(a) elastic
(b) inelastic
(c) unitary elastic
(d) perfectly inelastic

Question. Which of the following statements is/are not true about elasticity of demand?
(i) Demand curve for a perfectly elastic demand is horizontal line parallel to X-axis.
(ii) Demand curve for a perfectly inelastic demand is vertical line parallel to Y-axis.
(iii) Demand for luxury goods is highly elastic.
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) Only (iii)

Question. Law of demand is an ………… approach.
(a) qualitative
(b) quantitative
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. Law of demand assumes other factors constant in a given demand function. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. On a straight-line downward sloping demand curve, the maximum elasticity of demand occurs at
(a) vertical intercept of demand curve
(b) horizontal intercept of demand curve
(c) at the midpoint of demand curve
(d) on both vertical and horizontal intercepts

Question. If a good has multiple substitute goods available, its elasticity will be
(a) equal to zero
(b) less than one
(c) equal to one 
(d) more than one

Question. Which of the below statement is true about elasticity of demand?
(a) The units used to measure price but not to measure quantity
(b) The units used to measure price as well as quantity
(c) The units used to measure quantity but not to measure price
(d) Neither the units used to measure price nor the units used to measure quantity

Question. With rise in price of good X, demand for good Y also decrease, then how these goods are related?
(a) Substitute goods
(b) Complementary goods
(c) Inferior goods
(d) Giffen goods

Question. Law of demand was propounded by ………… .
(a) Prof. Adam Smith
(b) Prof. Alfred Marshall
(c) Prof. Gossen
(d) Prof. Pigeou

Question. If the price elasticity of demand is 2, then a 10 per cent increase in the price results in a ………….. decrease in its quantity demanded.
(a) 5%
(b) 10%
(c) 20%
(d) 25%

Question. The price elasticity of demand ranges between
(a) -1 to 0
(b) 0 to 1
(c) 0 to infinity
(d) Negative infinity to infinity

Question. If the price elasticity of demand ranges between 0 to 1, demand is
(a) inelastic
(b) elastic
(c) perfectly elastic
(d) unit elastic

Question. Demand for a good depends on which of the following factor(s)?
(a) Willingness to pay
(b) Ability to pay
(c) Price of the good
(d) All of these

Question. Demand is same as wants of a consumer. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. The demand for food is more elastic under which group of people?
(a) Who has low level of income
(b) Who has moderate level of income
(c) Who has high level of income
(d) Who lives in urban areas

Question. What will be the impact of fall in income of the good on the demand for an inferior good?
(a) Rise in demand
(b) Fall in demand
(c) Demand remains constant
(d) None of the above

Question. Law of demand is based on which of the following laws?
(a) Law of indifference curve
(b) Law of diminishingmarginal utility
(c) Law of variable proportion
(d) None of the above

Question. Which of the below statements is/are true?
(i) Price elasticity of demand for normal goods is higher than inferior goods.
(ii) Elasticity of demand for giffen goods is perfectly elastic.
(iii) Liner demand curve has higher elasticity of demand as compared to non-linear demand curve.
Choose from the options below.
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) Only (i)

Question. In case of inferior goods like bajra, a fall in its price tends to
(a) make the demand remain constant
(b) reduce the demand
(c) increase the demand
(d) change the demand in an abnormal way

Question. A good can be normal for one person and inferior for the other person at the same time. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. Elasticity of demand and slope of demand curve are inversely related. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. Of the given goods below, demand is expected to be inelastic for
(a) alcohol
(b) car
(c) uniform
(d) pizza

Question. All of these are a cause of shift in demand except
(a) change in income
(b) change in price
(c) change in fashion
(d) change in price of substitute goods

Question. If a consumer spends larger proportion of his income on a good, its demand will be
(a) elastic
(b) inelastic
(c) unit elastic
(d) cannot be defined

Question. What is the elasticity of demand on a rectangular hyperbola shaped demand curve?
(a) Perfectly elastic demand
(b) Perfectly inelastic demand
(c) Unitary elastic demand
(d) Elastic demand

Case Based MCQ Questions Class 12 Economics Chapter 2 Theory of Consumer Behaviour to Microeconomics

Direction Read the following case study and answer questions on the basis of the same.

Salt has no close substitute and moreover, a household has to share a negligible part of his entire budget. Therefore, even in spite of increase in price of salt, its demand will not be affected. 
However, demand for a particular brand of toothpaste is comparatively more elastic as there are many brands of toothpaste available in the market, so the consumers can switch over to any other brand in case of hike in the price of a particular brand of toothpaste.

Question. Which of the following is not a determinant of elasticity of demand?
(a) Availability of substitutes
(b) Nature of the good
(c) Number of buyers in the market
(d) Expenditure on a commodity

Question. The elasticity of demand of salt is …… .
(a) elastic
(b) inelastic
(c) perfectly elastic
(d) perfectly inelastic

Question. Assertion (A) Any good which has inelastic demand must be necessity of life. 
Reason (R) Elastic goods are highly price sensitive in nature as compared to inelastic goods.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Question. Why demand for toothpaste is elastic in nature?
(a) It is not a necessity of life
(b) It has a competitive market
(c) Consumer has a preference for it
(d) All of the above

Question. ……… makes demand for salt inelastic.
(a) Necessity
(b) Non-availability of substitute
(c) Both (a) and (b)
(d) None of the above

Direction Read the following case study and answer questions on the basis of the same.

Year 2020 has witnessed many ups and downs, there were natural calamities around the globe, political tensions and what not. 
The outbeeak of coronavirus pandemic had led to worldwide lockdown for several months. 
The world almost stopped during April, 2020. India is also not untouched with the impact of pandemic.
Many people lost their jobs during this time, specially migrant workers. Government announced relief packages but still it didn’t boost enough demand.

Question. How should the demand be affected due to the relief package announced by the government?
(a) Increase in demand
(b) Expansion in quantity demanded
(c) Decrease in demand
(d) Contraction in quantity demanded

Question. What will be the impact on the consumption demand of necessity goods during the pandemic?
(a) Demand curve shifts to the right
(b) Demand curve shifts to the left
(c) No change in demand curve
(d) Downwardmovement along the demand curve

Question. Assertion (A) Demand for medical equipments was high during the pandemic making its demand highy elastic.
Reason (R) When more goods are demanded even at a higher price, demand becomes elastic.
Alternatives 
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Both are false

Question. People loose their jobs during the nationwide lockdown, how will this impact the demand curve for inferior goods?
(a) Rightward shift in demand curve
(b) Leftward shift in demand curve
(c) Downward movement along demand curve
(d) Upward movement along demand curve

Question. Demand for automobile industry decreased inspite of decreasing price during pandemic. This is referred to as ……… .
(a) Contraction in demand
(b) Exception of demand
(c) Both (a) and (b)
(d) None of the above

Direction Read the following case study and answer questions on the basis of the same.

Demand for gold is widespread observable fact around the world, in which India’s share alone comes to around 25%. 
Hutti gold mine company located in Karnataka is the only company in India which produces gold by mining and processing the gold ore. Over the past 5 years; Indians have recycled an average of 105 tons of gold per annum. 
In October, 2008, demand for gold increased; celebrations like Diwali and Akshaya Tritiya was the main factor for this vast increase in demand.
Imports of gold started falling from December, 2008 by 83%, followed by 91% in January, 2009. In March, 2009 imports were zero.
In 2010, demand went up and the price also went up. Indian people tend to invest in gold because of culture and belief, so the demand always remains elastic.
In 2011, Indians enjoyed a rapid increase in income, which made the Indians to consume more and more gold even though the price was increasing.
Certain non-price factors like income of the consumer, prices of related goods, consumers taste and preferences, population and expected future price of the good also effects the increase in the price of gold.
Later on, in the year 2012, platinum, which is a substitute good for gold started declining from ` 35,000 to ` 22,000 which made the people of India to purchase platinum as a substitute good for gold.

Question. What is the nature of demand curve for gold in Indian market?
(a) Upward sloping
(b) Downward sloping
(c) Horizontal line parallel to X-axis
(d) Vertical line parallel to Y-axis

Question. What will be impact on demand curve for gold jewellery if government imposes heavy tariff on import of gold?
(a) Movement upwards
(b) Movement downwards
(c) Shifts to the right
(d) Shifts to the left

Question. In spite of recent pandemic ‘COVID-19’, the demand for gold in Indian market remained ……….. .
(a) high
(b) low
(c) constant
(d) Either (a) or (b)

Question. What are the various determinants of gold price in India except its own price?
(a) Income of consumer
(b) Price of related goods
(c) Taste and preferences
(d) All of the above

Question. Assertion (A) Constant demand for gold during pandemic shows the strong preference of Indians for gold.
Resons (R) Gold is demanded in India both for investment and jewellery purposes.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Direction Read the following case study and answer questions on the basis of the same.

How quickly will American businesses reopen after COVID-19 lockdowns end? 
A nationwide survey was conducted of small businesses to measure firms’ expectations about their re-opening and future demand. A plurality of firms in our sample expect to reopen within days of the end of legal restrictions, but a sizable minority expect to delay their reopening.
While health-related variables, such as COVID-19 case rates and physical proximity of workers, do explain the prevalence and expected duration of regulated lockdown, these variables have little or no
correlation with post-lockdown reopening intentions.
Instead, almost one half of closed or partially open businesses said that their reopening would depend on the reopening of related businesses, including customers and suppliers. Owners expect demand to be one-third lower than before the crisis through autumn. Firms with more pessimistic expectations
about demand predict a later reopening. Using an instrumental variables strategy, we estimate the relationship between demand expectations and reopening.
These estimates suggest that post-lockdown delays in reopening can be explained by low levels of expected demand. 
Source-Harvard Business School Working Knowledge Baker Library.

Question. Assertion (A) Owners of general stores expected demand to be one-third lower in post pandemic situation.
Reason (R) Worldwide lockdowns lead to fall in economic activities and per capita income of the country.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Question. What is the elasticity of demand for necessity goods in the above situation?
(a) Elastic
(b) Inelastic
(c) Perfectly inelastic
(d) Perfectly elastic

Question. Demand curve for essential commodity will have ………… shape.
(a) upward sloping and steeper   
(b) downward sloping and flatter
(c) downward sloping and steeper
(d) upward sloping and flatter 

Question. Why demand was low even after the lockdown restrictions were lifted in America? 
(a) Fall in income
(b) Lack of availability of factors
(c) Fear of corona virus outbreak
(d) Both (a) and (c)

Question. As a result of fall in demand, demand curve will ……… .
(a) shifts rightwards
(b) shifts leftwards
(c) moves downwards
(d) moves upwards