Theory of Consumer Behaviour Exam Questions Class 12 Economics

Please see Theory of Consumer Behaviour Exam Questions Class 12 Economics below. These important questions with solutions have been prepared based on the latest examination guidelines and syllabus issued by CBSE, NCERT, and KVS. We have provided Class 12 Economics Questions and answers for all chapters in your NCERT Book for Class 12 Economics. These solved problems for Theory of Consumer Behaviour in Class 12 Economics will help you to score more marks in upcoming examinations.

Exam Questions Theory of Consumer Behaviour Class 12 Economics

MCQs

Question. Which of the following statements regarding utility is not true?
(a) It is a satisfying power of a commodity.
(b) Utility is always measurable
(c) It helps consumers to make choices.
(d) It is purely a subjective entity.

Question. _____________ is the addition to total utility by the consumption of one additional unit of the commodity?
(a) Ordinal utility
(b) Total utility
(c) Marginal utility
(d) Average utility

Very Short Answer Type Questions

Question. What do you mean by utility?
Answer : Utility is the want satisfying power of a commodity.

Question. State the law of equi-marginal utility.
Answer : It states that a consumer gets maximum satisfaction when the ratio of the marginal utilities of two goods and their prices is equal, i.e.
MU_x / P_x = MU_y / P_y

Question. Give the reason behind a convex indifference curve.
Answer : Diminishing marginal rate of substitution is the reason behind a convex indifference curve.

Question. Indifference curve slopes___________?
Answer : Downward to the right

Question. According to the law of diminishing marginal utility, _________?
Answer : After a point, any addition in the consumption causes a reduction in total utility.

Question. The total utility divided by the number of units consumed is known as?
Answer : Average utility

Short Answer Type Questions

Question. A consumer buys 50 units of a good at Rs. 4/- per unit. When its price falls by 25 percent its demand rises to 100 units. Find out the price elasticity of demand.
Answer : Elasticity of demand is 4.

Question. The quantity demanded of a commodity at a price of Rs.10 per unit is 40 units.
Its price elasticity of demand is -2. Its price falls by Rs.2/- per unit. Calculate its quantity demanded at the new price.
Answer : 56 units.

Long Answer Type Questions

Question. What are the methods of measuring price elasticity of demand?
Answer : The methods of measuring price elasticity of demand are as follows:

For e.g.: Price of ice candy is Rs. 20 each and demand is for 200 ice candies. If the price of ice candy falls to Rs. 15, demand increases to 300. Calculate elasticity of demand.

Question. How is equilibrium achieved with the help of indifference curve analysis?
Answer : When a consumer gets maximum satisfaction from his expenditure, he is said to be in equilibrium consumer’s equilibrium means maximum satisfaction level consumer can attain at given income and prices. We can explain the equilibrium of consumer with the help of the indifference curve technique.

Assumptions which are made to determine the consumer’s equilibrium position are as follows:
(i) Rationality: The consumer is rational. He wants to obtain maximum satisfaction given his income and prices.
(ii) Utility is ordinal: It is assumed that the consumer can rank his preference according to the satisfaction of each combination of goods.
(iii) Consistency of choice: It is also assumed that the consumer is consistent in the choice of goods.
(iv) Perfect competition: There is perfect competition in the market from where the consumer is purchasing the goods.
(v) Total utility: The total utility of the consumer depends on the quantities of the good consumed.