CBSE Class 11 Economics Utility Analysis Worksheet

Question. The consumer will attain maximum satisfaction, and will be in equilibrium when MU of money spent on various goods that he buys are-
(a) Equal
(b) Decreasing
(c) Zero
(d) Increasing
Answer: A

Question. Consumer will attain ……… satisfaction, and will be in equilibrium when MU of money spent on various goods that he buys are equal
(a) Constant
(b) Minimum
(c) Maximum
(d) Infinite
Answer: C 

Question. The consumer will attain maximum satisfaction, and will be ……… when MU of money spent on various goods that he buys are equal
(a) In equilibrium
(b) Irrational
(c) In happiness
(d) In sadness
Answer: A

Question. The consumer will attain maximum satisfaction, and will be in equilibrium when ………… goods that he buys are equal
(a) MU of different goods
(b) Marginal utility of Money spent on various goods
(c) MU of different goods
(d) All of the above
Answer: B

Question. State whether the given statement is true or false in context of cardinal approach to utility ‘Human satisfaction can be expressed in monetary terms, and price of a commodity in the market indicates the level of consumer satisfaction’
(a) True
(b) False
(c) Partially true
(d) Cannot be commented at all
Answer: A 

Question. Total utility that Mr. Rowdy derives from consumption of 6 Apple is 300.
MU of 7th Apple is 30. What will be the total utility of 7 Apple?
(a) 330
(b) 270
(c) 300
(d) 30
Answer: A

Question. Rational person does not act unless-
(a) The action makes money for the person
(b) The action is ethical
(c) Marginal benefits exceeds marginal cost
(d) Marginal cost exceeds marginal benefits
Answer: C

Question. Rational decision means-
(a) Error-free decision
(b) One’s choice that do not involve trade-off
(c) One’s choices never vary
(d) One’s choice be consistent with one’s goals
Answer: D

Question. Law of diminishing marginal utility is not applicable in case of.
(a) Gold
(b) Money
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. After reaching a saturation point, consumption of additional units of commodity causes-
(a) Total utility & Marginal utility both to increases
(b) Total Utility to fall and Marginal utility to increase
(c) Total utility to fall & Marginal utility to become negative
(d) Total utility to become negative & Marginal utility to fall
Answer: C 

Question. In the above diagram, consumers total utility is given by-
(a) Area under OMBC
(b) Area under OABC
(c) Area under AMB
(d) None of the above
Answer: A

Question. Which of the following gives maximum consumer surplus?
(a) Car
(b) TV
(c) Mobile
(d) Wheat
Answer: D

Question. Consumer surplus is the area-
(a) Below demand curve and above price line
(b) Above supply cure and below price line
(c) Above Demand curve and below price line
(d) Any of the above
Answer: A 

Question. As per which law, ‘If marginal utility of money spent on commodity X is greater than marginal utility of money spent on commodity Y, then the consumer will withdraw some money from purchase of Product Y and will spent on purchase of X, till MU of money in two cases becomes equal’?
(a) Law of demand
(b) Law of supply
(c) Law of Equi-marginal utility
(d) Law of diminishing marginal utility
Answer: C

Question. Consumer surplus means-
(a) The area between average revenue and marginal revenue curves
(b) The area inside budget line
(c) Difference between the maximum amount a person is willing to pay for a good and its market price.
(d) Both (b) and (c)
Answer: C

Question. Total utility-
(a) Will always be positive
(b) Will always be negative
(c) Can be positive or negative but not zero
(d) Can be positive or negative or zero
Answer: C

Question. Law of consumer surplus is based on-
(a) Law of diminishing marginal utility
(b) Reveled preference theory
(c) Law of substitution
(d) All of the above
Answer: A

Question. “The excess of the price which he would be willing to pay rather than go without the thing over that which he actually does pay in economic measure of his surplus satisfaction” is given by
(a) Alfred Marshall
(b) Lionel Ribbins
(c) J.R. Hicks
(d) Edge Worth.
Answer: A

Question. In the above diagram, price paid by the consumer is given by-
(a) Area under OMBC
(b) Area under OABC
(c) Area under AMB
(d) None of the above
Answer: B

Question. As per which principle-‘The consumer will be willing to buy a commodity, as long as the MU (additional satisfaction) derived is equal to price of the commodity’?
(a) Consumers Equilibrium
(b) Consumer’s surplus
(c) Consumer advantage
(d) Consumer exploitation
Answer: A

Question. Marshallian utility analysis is known as ……………. analysis
(a) Ordinal
(b) cardinal
(c) Classic
(d) Modern
Answer: B

Question. Law of diminishing marginal utility, continuous consumption means there should be…………… between consumption of one unit and another unit.
(a) Equal time gap
(b) No time gap
(c) Long time gap
(d) Any of the above
Answer: B

Question. Total utility that Mr. Ram derives from consumption of 4 cup of tea is 10.
Total utility on consuming 5 cups is 9.
What is MU of 5th cup?
(a) 1
(b) -1
(c) 0
(d) 19
Answer: B

Question. If the price paid by the consumer is more than the additional satisfaction derived from that item, the consumer will-
(a) Stop buying the item
(b) Start selling the item
(c) Start buying the item
(d) Nothing can be said
Answer: A

Question. Consumer surplus is derived from which of the following concept
(a) Law of supply
(b) Law of demand
(c) Law of diminishing marginal utility
(d) All of the above
Answer: C

Question. The concept of Consumer surplus arises because -
(a) MU increases but price remains constant
(b) MU declines but price remains constant
(c) MU increases but price decreases
(d) MU decreases but price increases
Answer: B

Question. When total utility increases at diminishing rate, the marginal utility is………
(a) Diminishing
(b) Zero
(c) Maximum
(d) One
Answer: C

Question. The difference betw een the price a consumer is ready to pay less what he actually pays is called as
(a) Consumer Equilibrium
(b) Excess price
(c) Consumer surplus
(d) Exploitation
Answer: C

Question. Consumer surplus arise in respect of-
(a) All quantities purchased up to consumer’s equilibrium level
(b) All quantities purchased beyond `consumer’s equilibrium level
(c) Quantities purchased at equilibrium level only
(d) None of the above
Answer: A

Question. Consumer surplus is higher in case of-
(a) Luxuries
(b) Comfort
(c) necessities
(d) All of the above
Answer: C

Question. ………. Consumer surplus indicates higher level of efficiency in economy.
(a) Higher
(b) Lower
(c) Balanced
(d) Negative
Answer: C 

Question. ……………... is useful for designing government policies and implementing welfare programs.
(a) Law of diminishing return
(b) Consumer surplus
(c) Law of Equi-marginal utility
(d) Income and substitution effect
Answer: B

Question. Consumer surplus arises because-
(a) MU is initially higher than the price
(b) MU is always equal to price
(c) MU is always equal to zero
(d) MU is initially lower than the price
Answer: A

Question. Under which of the following market type consumer surplus will be 
(a) Monopolistic competition
(b) Monopoly
(c) All of the above
Answer: B

Question. Under which of the following market type consumer surplus will be generally maximum?
(a) Perfect competition
(b) Monopolistic competition
(c) Monopoly
(d) All of the above
Answer: A

Question. If MUx/Px> MUy/Py then the consumer will-
(a) Increase consumption of X and reduce consumption of Y
(b) Increase consumption of Y and reduce consumption of X
(c) Will increase consumption of both the products X and Y
(d) Will decrease consumption of both the products X and Y
Answer: A 

Question. In case of necessaries, the Marginal utility for first few items will be-
(a) Zero
(b) High
(c) Infinite
(d) None of the above
Answer: C

Question. Which of the following statement/s is true -
i. The consumer surplus derived from a product is affect by availability of substitute
ii. The consumer surplus derived from a product is affect by availability of complementary items
iii. The concept of consumer surplus fails in case of articles which are used for their prestigious value.
Example diamond.
iv. If we make assumption that utility cannot be expressed in monetary terms, the concept of consumer surplus will still apply
(a) i,ii,iv
(b) i,ii,iii,iv
(c) i,ii,iii
Answer: C 

Question. In the above diagram, market price at consumer equilibrium is given by-
(a) OA
(b) OC
(c) MM’
(d) None of the above
Answer: A 

Question. Consumer surplus can be best represented as-
(a) What a consumer is ready to pay less what he actually pays
(b) What producer actually produce less what he actually pays
(c) What a consumer is ready to pay less what he actually not pays
(d) None of the above
Answer: A

Question. Consumer stops purchasing of addition commodity when-
(a) MU starts decreasing
(b) MU becomes zero
(c) MU is equal to MU of the money
(d) Total utility is increasing
Answer: C

Question. In case of two or more products, a consumer will reach equilibrium when- .
(a) MUx/Px=MUy/Py
(b) MUx.Px=MUy.Py
(c) MUx+Px=MUy+Py
(d) MUx/Py=MUy+Px
Answer: A

Question. Which of the following is the drawback of consumer surplus-
(a) It cannot be measured in terms of money as the marginal utility of money of money changes
(b) It is highly hypothetical concept
(c) It ignores interdependency of the goods
(d) All of the above
Answer: D

Question. Consumer consumed three products.
MU derived from consumption of three products is INR 400, INR 350, and INR 300. If price of the product is 300, what is the consumer surplus?
(a) 0
(b) 100
(c) 150
(d) 50
Answer: C

Question. Consumer consumed three products.
MU derived from consumption of first two units is INR 400, INR 350. If the price of the product is INR 300 and the consumer is in equilibrium at 3 units, the MU of 3rd unit is-
(a) 100
(b) 200
(c) 300
(d) 400
Answer: C 

Question. If the prices of ice-cream and chocolate are 40 and 30 respectively and MU of chocolate is 150, what is MU of ice cream assuming consumer is in equilibrium?
(a) 112.5
(b) 125
(c) 200
Answer: C

Question. Suppose there are three computes available to be purchased. Mr Shyam is willing to pay 25000, Mr Raju is willing to pay 20000 and Mr. Babubhai is ready to pay 15000. If the price of the computer is 20000, what is the consumer surplus in this market and how many units will be sold?
(a) Consumer surplus is 5000 and 2 units will be sold.
(b) Consumer surplus is 60,000 and 2 units will be sold.
(c) No consumer surplus and 2 units will be sold
(d) Consumer surplus is 5000 and 3 units will be sold.
Answer: A

Question. Which of the following statements regarding consumer surplus is not true?
(a) It is useful for designing government policies and implementing welfare programs
(b) It helps in monopolist to fix the price of a commodity
(c) On the basis of consumer surplus only domestic trade can be advocated and international trade should be avoided
(d) It can also be used to measure health of the economy
Answer: C 

Question. The concept of consumer surplus is based on the assumption that Marginal utility of the money is-
(a) Zero
(b) Infinite
(c) Negative
(d) Constant
Answer: D

Question. What is the value of “C” in the above table?
(a) 3
(b) 2400
(c) 700
(d) Cannot be determined
Answer: C

Question. What is the value of “D” in the above table?
(a) 3000
(b) 4
(c) 600
(d) Cannot be determined
Answer: A

Question. What is the value of “E” in the above table?
(a) 3500
(b) 5
(c) 500
(d) Cannot be determined
Answer: C

Question. What is the value of “F” in the above table?
(a) 6
(b) 3900
(c) 400
(d) Cannot be determined
Answer: B 

Question. What is the value of “A” in the above table?
(a) 0
(b) 1
(c) 900
(d) Cannot be determined
Answer: C

Question. What is the value of “B” in the above table?
(a) 2
(b) 1700
(c) 800
(d) Cannot be determined
Answer: B

Question. What is the value of “K” in the above table?
(a) 100
(b) -100
(c) 11
(d) Cannot be determined
Answer: B

Question. What is the value of “L” in the above table?
(a) 300
(b) -300
(c) 4100
(d) -4100
Answer: C

Question. What is the value of “H” in the above table?
(a) 4400
(b) 200
(c) 8
(d) Cannot be determined
Answer: B

Question. What is the value of “J” in the above table?
(a) 4500
(b) 10
(c) 0
(d) Cannot be determined
Answer: A 

Question. At the point of consumer’s equilibrium
(a) Consumer’s surplus is maximum
(b) Consumer’s surplus is negative
(c) Consumer’s surplus is zero
(d) All of the above
Answer: C

Question. Suppose the price of new phone is 5000 and Mr. Ranveer values new phone at 7000. What will be the consumer surplus if Mr. Ranveer buys the phone?
(a) 2000
(b) 3000
(c) 12000
(d) 5000
Answer: A

UTILITY ANALYSIS

I. Answer in one sentence each ( 1 marks)

a. When marginal utility is zero, Total utility will be

b. When MUx/Px > MUy/Py, Wha twill the Consumer do?

c. If a commodity is available at free of cost, how many unit will a consumer consume in order to be at equilibrium?

d. State the law of diminishing marginal utility.

e. Define utility.

 

II. Answer in around sixty words. ( 3 marks )

a. Why should a consumer buy more units of a good when its price falls? Explain in terms of utility analysis.

b. What are the assumptions of utility analysis of consumer behavior?

c. Distinguish between cardinal measurement and ordinal measurement

d. What are the limitations of utility analysis

e. Lakshmi purchases 5 units of ice cream when its price was Rs.Rs.10 per unit and is at equilibrium. Should she consume more or less to be at equilibrium when its price decreases to Rs.5 per unit? State reason.

 

III. Answer in around 70 words. ( 4 marks)

a. How many units of a commodity should a consumer consume in order to maximize her satisfaction? Explain in terms of utility analysis.

b. A consumer consumes two goods, good X and good Y. Prices of the two goods are Px and Py respectively. Explain how consumer reaches equilibrium in the consumption of two goods.

c. Consider the following utility schedule. How many units of a commodity should a consumer consume to be in equilibrium if market price of the good is Rs. 3 per unit. Explain with reason.

Units consumed:   1     2     3     4     5     6     7     8
Total Utility:         10   18   24    28   31   33   33   29

If market price of the good decreases to Rs. 2 per unit, what adjustment will she make in her purchase so that she gets maximum satisfaction and be at equilibrium.

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