CBSE Class 12 Micro Economics Consumer Behaviour And Demand Utility Analysis Worksheet

  Consumer behavior and Demand Utility Analysis

Question. In which approach is utility ranked in
(a) Ordinal approach
(b) Cardinal approach
(c) Both cardinal and ordinal approach
(d) Independent variable approach
Answer: A

Question. All point in indifference curve represents-
(a) Same satisfaction
(b) Equal satisfaction
(c) Similar satisfaction
(d) All of the above
Answer: D

Question. Indifference curve is convex to the origin because of-
(a) Increasing trend of MRS
(b) Decreasing trend of MRS
(c) Constant trend of MRS
(d) No trend of MRS
Answer: B

Question. Which of the approaches dispense with money measurement concept of utility?
(a) Cardinal approach
(b) Ordinal approach
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: B

Question. Budget line shows all the combination
(b) Three
(c) Many
(d) None of the above
Answer: A

Question. Indifference curve shows various combinations of two goods that give…… amount of satisfaction –
(a) Lower
(b) Higher
(c) Same/ equal
(d) Constant
Answer: C

Question. As the consumer’s income and spending increase, the price/ budget line
(a) Remains at the same level
(b) Shifts towards the origin
(c) Shifts away from the origin
(d) None of the above
Answer: C

Question. As per Indifference curve analysis, in order to maximise satisfaction, a consumer will try to-
(a) Reach to higher IC possible
(b) Reach to lowest IC possible
(c) Will remain on same IC
(d) IC has no relation with consumer’s satisfaction
Answer: A 

Question. Indifference curve slopes-
(a) Downward to the right
(b) Upward to the right
(c) Downward to the left
(d) Upward to the left
Answer: A

Question. Indifference curve is convex to the origin, the reason is-
(a) Increasing marginal rate of substitution
(b) Constant marginal rate of substitution
(c) Diminishing Marginal rate of substitution
(d) None of the above
Answer: C

Question. Indifference curve –
(a) Is downward sloping
(b) Had negative slope
(c) Slopes downwards towards right
(d) All of the above
Answer: D

Question. …………… has negative slope and cannot intersect each other
(a) Isoquants
(b) Demand and supply curve
(c) Indifference curve
(d) Both (b) and (c)
Answer: C

Question. General assumption in consumer behavior under Indifference curve analysis is that more goods are preferred to less of them. This statement is
(a) True
(b) False
(c) Partially true
(d) Cannot be commented at all
Answer: A 

Question. Ordinal utility approach is also called as-
(a) Indifference curve approach
(b) Hicks and Allen approach
(c) Both (a) and (b)
(d) None of the above
Answer: C

Question. Which of the following is the feature of Indifference curve-
(a) IC curve is negatively sloped
(b) IC is convex to the origin
(c) All of the above
Answer: C

Question. ………… shows various combinations of two goods that give same amount of satisfaction.
(a) Isoquants
(b) Isocost curve
(c) Marginal utility curve
(d) Indifference curve
Answer: D

Question. If two goods are perfect substitute of each other, then Indifference curve relating to two goods will be-
(a) Convex with constant MRS
(b) Straight line with constant MRS.
(c) Straight line parallel to Y axis
(d) Concave to the origin
Answer: B

Question. The consumer’s objective of reaching highest Indifference curve and maximising satisfaction is restricted by-
(a) Totality utility curve
(b) Marginal utility curve
(c) Marginal rate of substitutions
(d) Price line
Answer: D

Question. MUx of X is 100 and MUy is 300. If the price of Y is 6000, what will be the price of X at Equilibrium?
(a) 6000
(b) 9000
(c) 2000
(d) 4000
Answer: C

Question. Consumer is said to be …….. among different points on IC–
(a) Intelligent
(b) Irrational
(c) Indifferent
(d) Intersecting
Answer: C

Question. Generally Marginal rate of substitution shows-
(a) Increasing trend
(b) Decreasing trend
(c) Constant trend
(d) No trend at all
Answer: B

Question. As per Indifference curve approach to utility analysis., utility can be -
(a) Measured in cardinal numbers
(b) Ranked
(c) Measured in nominal value
(d) All of the above
Answer: B

Question. Which of the following is not a feature of Indifference curve-
(a) IC is convex to the origin
(b) higher IC gives higher satisfaction to the consumer
(c) No two IC will cut/ intersect/touch each other
(d) IC moves upward to the right.
Answer: D

Question. The consumer is in equilibrium when -
(a) He save at least one-third of his income
(b) EMI is less than Salary of consumer
(c) Slope of price line is equal to slope of Indifference curve
(d) Any of the above
Answer: C

Question. Which of the following is not a feature of Indifference curve-
(a) IC must be downward sloping to the right
(b) The elasticity of substitution between two goods to a consumer is zero.
(c) Convexity of the curve is due to diminishing nature of MRS
(d) Total effect of a change in price of a product on its quantity demanded is called as price effect.
Answer: B

Question. Indifference curve approach deals with-
(a) One commodity only
(b) Two commodities at a time
(c) Multiple commodities at a time
(d) No commodity at all
Answer: B

Question. As per the ordinal approach-
(a) Measurement of utility us not possible through n=money
(b) Measurement of utility is possible but cannot be ranked
(c) Measurement of utility is not possible in cardinal number but can be ranked
(d) None of the above
Answer: C

Question. At equilibrium point on Indifference curve which of the following is satisfied?
(a) Slope of price line < Slope of IC
(b) Slope of price line = Slope of IC
(c) Slope of price line > Slope of IC
(d) Any of the above
Answer: B

Question. The farther the IC is from the Origin, then-
(a) The lower is the satisfaction level
(b) The higher is the satisfaction level
(c) Same satisfaction level will be obtained
(d) Nothing can be said
Answer: B

Question. If a combination is above price line, it indicates that there is
(a) Over utilisation of resources
(b) Optimum utilisation of resources
(c) under utilisation of resources
(d) None of the above
Answer: A

Question. Which of the approaches helps to explain the Law of Demand?
(a) Cardinal
(b) Ordinal
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. Which of the following is not an assumption in consumer equilibrium analysis under Indifference curve approach
(a) There is a given Indifference map with difference level of satisfactions
(b) Income of the consumer is fixed
(c) Price of the commodity is constantD
Answer: D

Question. Indifference curve slopes down towards right, this is because more of one commodity and less of another gives -
(a) Same satisfaction
(b) Less satisfaction
(c) Maximum satisfaction
(d) Infinite satisfaction
Answer: A

Question. ……………..indicates how much of one commodity is substituted for how much of another commodity
(a) Marginal utility
(b) Marginal income
(c) Marginal rate of substitutions
(d) Marginal cost
Answer: C

Question. Marginal rate of substitution is indicated by-
(a) Slope of Indifference curve at a particular point.
(b) Angle between IC and X axis.
(c) Angle between IC and Y axis
(d) None of the above
Answer: A

Question. No two Indifference curve can/ intersect each other. This statement is-
(a) True
(b) False
(c) Partially true
(d) Cannot be commented at all
Answer: A

Question. Which of the following Economists are not concerned with ordinal approach to utility
(a) Hicks
(b) Allen
(c) Marshall
(d) All of the above
Answer: C

Question. In consumer Equilibrium analysis under Indifference curve approach, the consumer is assumed to spend his income............. on two goods
(a) Keeping 20 % Margin
(b) Wholly
(c) Partially
(d) Either (b) or (c)
Answer: B

Question. Ordinal approach to utility analyses-
(a) One commodity at a time.
(b) Two commodities at a time
(c) Many commodities at a time
(d) Does not analyses any commodity at all
Answer: B

Question. As per………… approach to utility ‘Human Satisfaction is psychological phenomenon and cannot be measured quantitatively?
(a) Cardinal
(b) Ordinal
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: B

Question. ………….. Shows all those combinations of two goods which a consumer can buy spending his given money income on two goods at their given prices.
(a) Budget line
(b) Indifference curve
(c) Demand curve
(d) Supply curve
Answer: A

Question. Ordinal approach is also called as
(a) Cardinal utility approach
(b) Marshallian approach
(c) Hicks and Allen approach
(d) All of the above
Answer: C

Question. Every point on Budget line represents ….. spending by the consumer
(a) Over
(b) Under
(c) Full
(d) Any of the above
Answer: C

Question. If two goods are perfect substitute of each other, then Indifference curve relating to two goods will be-
(a) Concave
(b) Curvilinear
(c) Parallel to X axis
(d) Linear
Answer: D 

Question. Combination lying on higher Indifference curve contains more of-
(a) One commodity only
(b) More of both commodity
(c) Either (a) or (b)
(d) Neither (a) nor (b)
Answer: C

Question. constrains. These constrains are explained by-
(a) Price line
(b) Budget line
(c) Price opportunity line
(d) All of the above
Answer: D

Question. Indifference curve approach to utility analysis was given by-
(a) Hicks and Allen
(b) Alfred Marshall
(c) Lionel Ribbins
(d) Adam smith
Answer: A

Question. Decreasing MRS makes the indifference curve-
(a) Concave to the origin
(b) Parallel to X axis
(c) Parallel to Y axis
(d) Convex to the origin
Answer: D

Question. Budget line is also called as
(a) Price line
(b) Price opportunity line
(c) Price income line
(d) All of the above
Answer: D

Question. Budget line/ price line of a consumer is-
(a) Parallel to X axis
(b) Parallel to Y axis
(c) Straight line joining two axis
(d) None of the above
Answer: C

Question. If a combination is below price line, it indicates that there is-
(a) Over utilisation of resources
(b) Under utilisation of resources
(c) Optimum utilisation of resources
(d) None of the above
Answer: B

Question. Which of the following is not an assumption of Indifference curve
(a) Rationality of the consumer
(b) Ordinal measurement of satisfaction
(c) Cardinal measurement of utility
(d) Consistent consumption pattern behaviour of the consumer
Answer: C

Question. If an indifference curve is L shaped, then two goods will be-
(a) Perfect Substitute goods
(b) Perfect Complementary goods
(c) Substitute goods
(d) Complementary goods
Answer: B

Question. The consumer is in equilibrium at a point where the Budget line-
(a) Cut an indifference curve
(b) Is tangential to an indifference curve
(c) Is below Indifference curve
(d) Is above the Indifference curve
Answer: B

Question. Under Income effect, the consumer will-
(a) Moves along original Indifference curve
(b) Moves to higher or lower Indifference curve
(c) Always purchase higher quantity of both the commodities
(d) None of the above
Answer: B

Question. Lower Indifference curve shows-
(a) Higher satisfaction
(b) Similar satisfaction
(c) Equal satisfaction
(d) Lower satisfaction
Answer: D

Question. If Marginal rate of substitution is increasing then shape of Indifference curve is-
(a) Concave to the origin
(b) Convex to the origin
(c) L shaped
(d) None of the above
Answer: A

Question. A set of indifference curves is called as ………….
(a) Price map
(b) Consumer preference
(c) Budget line
(d) Indifference map
Answer: D

Question. Indifference curve is-
(a) Convex to the origin
(b) Concave to the origin
(c) Parallel to X axis
(d) Parallel to Y axis
Answer: A

 

Question. Which of the following is a determinant of Individual demand?
(a) Cost of Production
(b) Nature of Product, i.e. socially desirable vs other goods
(c) Tastes and Preferences of Consumers
(d) Economic Policies of the Government
Answer: C

Question. Market Demand is the sum total of —
(a) All quantities that Producers can produce
(b) All quantities actually sold in the market
(c) All quantities demanded byindividual households and consumers
(d) All of the above
Answer: C

Question. Which of the following pairs of goods in an example of substitutes?
(a) Tea and Sugar
(b) Tea and Coffee
(c) Tea and Ball Pen
(d) Tea and Shirt
Answer: B

Question. If an increase in the price of Blue Jeans leads to an increase in the demand for Tennis Shoes, then Blue Jeans and Tennis Shoes are —
(a) Complements
(b) Inferior Goods
(c) Normal Goods
Answer: A

Question. is the sum total demand of all individuals in '`the market.
(a) Individual Demand
(b) Market Demand
(c) Household Demand
(d) Firm Demand
Answer: B

Question. Substitute Goods are goods which can be
(a) Only when the goods are used for a variety of purposes
(b) Together or simultaneously
(c) In place of one another
(d) Only at high income levels of Consumer
Answer: C

Question. Which of the following influence most the price level in the very short—run period?
(a) Demand
(b) Supply
(c) Cost
(d) Production
Answer: A

Question. Which of the following is not a determinant of Demand?
(a) Price of the Commodity
(b) Price of Related Commodities
(c) Level of Consumers' Income
(d) None of these
Answer: D

Question. All of the following are determinants of demand except
(a)Tastes and Preferences
(b)Quantity supplied
(c) Income
(d) Price of related goods
Answer: B

Question. Household Demand is also called —
(a) Producer Demand
(b) Individual Demand
(c) Industry Demand
(d) Market Demand
Answer: B

Question. are goods which are consumed in place of one another.
(a) Inferior Goods
(b) Normal Goods
(c) Complementary Goods
(d) Substitute Goods
Answer: D

Question. Individual Demand is also called —
(a) Industrial Demand
(b) Market Demand
(c) Household Demand
(d) All of the above
Answer: C

Question. Which of the following is an example of Substitutes?
(a) Coffee and Milk
(b) Diamond and Cow
(c) Pen and Ink
(d) Mustard Oil and Coconut Oil
Answer: D

Question. Demonstration Effect is generally found in respect of
(a) Necessary Goods
(b) Luxury and Quasi—Luxury Goods
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: B

Question. If A = Household Demand and B = Market Demand, then —
(a) A > B
(b) A < B
(c) A = B = 0
(d) None of the above
Answer: B

Question. Market Demand is also called —
(a) Producer Demand
(b) Individual Demand
(c) Industry Demand
(d) Household Demand
Answer: C

Question. In which of the following will the Demonstration Effect be high?
(a) Water
(b) Rice
(c) Cellphone
(d) Plant and Machinery
Answer: C

Question. are goods which are consumed together or simultaneously.
(a) Inferior Goods
(b) Normal Goods
(c) Complementary Goods
(d) Substitute Goods
Answer: C

Question. Complementary Goods are goods consumed —
(a) Only when the goods are distributed as free compliment to the Consumer
(b) Together or simultaneously
(c) In place of one another
(d) Only at high income levels of Consumer
Answer: B

Question. A relative price is
(a) Price expressed in terms of money
(b) What you get paid for baby-sitting your cousin
(c) The ratio of one money price to another
(d) Equal to a money price
Answer: C

Question. Which of these is not a Complementary Good for Pen?
(a) Refills
(b) Paper
(c) Notebooks
(d) Wheat
Answer: D

Question. Demand for Resources and Factors of Production is –
(a) Direct Demand
(b) Derived Demand
(c) Irrelevant in Economics
(d) Not a Demand at all
Answer: B

Question. If Household Demand and Market Demand are equal in a situation, it means that —
(a) There is only one Producer
(b) There is only one Consumer
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: B

Question. If two goods are Complements, it means that a rise in the price of one commodity will lead to —
(a) Upward Shift in demand for the other
(c) Downward Shift in demand for the other commodity
(d) No shift in the demand for the other commodity
Answer: C

Question. Market Demand shows the quantities of demand for a commodity at various prices by —
(a) a particular consumer
(b) the entire market
(d) Neither (a) nor (b)
Answer: B

Question. Goods covered by Demonstration Effect can be best described as -
(a) Necessities of Life
(b) Conspicuous Necessities
(c) Absolute Luxuries
(d) All of the above
Answer: B

Question. In case of Complementary Goods, decrease in price of a product will —
(a) Decrease the demand for the other product.
(b) Increase the price of the other product
(c) Increase the demand for the other product
(d) Not affect the demand for the other product
Answer: C

Question. If X and Y are Complementary Goods, the price of X and the Demand of Y are —
(a) directly related
(b) inversely related
(c) proportionally related
(d) any of the above
Answer: B

Question. If X and Y are Complementary Goods, if there is an increase in Price of X, then —
(a) Demand of X will decrease and Demand of Y will increase.
(b) Demand of X will increase and Demand of Y will decrease.
(c) Demand of X and Y will increase.
(d) Demand of X and Y will decrease.
Answer: D

Question. If X and Y are Complementary Goods, if there is an decrease in Price of X, then —
(a) Demand of X will decrease and Demand of Y will increase.
(b) Demand of X will increase and Demand of Y will decrease.
(c) Demand of X and Y will increase.
(d) Demand of X and Y will decrease.
Answer: C

Question. Individual Demand shows the quantities of demand for a commodity at various prices by —
(a) A particular consumer
(b) The entire market
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: A

Question. The demand for two—wheelers is likely to decrease with an increase in petrol prices because two-wheelers and petrol are
(a) Inferior Goods
(b) Normal Goods
(c) Complementary Goods
(d) Substitute Goods
Answer: C

Question. The demand for factors of production is demand
(a) Fundamental
(b) Derived
(c) Market
(d) Joint
Answer: B

Question. When a Consumer wants a product by seeing another person use that product, it is called —
(a) Disturbance Effect
(b) Comparison Effect
(c) Demonstration Effect
(d) Marshallian Effect
Answer: C

Question. Which of the following pairs of goods is an example of Substitutes?
(a) Tea and Sugar
(b) Tea and Coffee
(c) Pen and Ink
(d) Shirt and Trousers
Answer: B

Question. When a Consumer prefers a commodity due to prestige attached to it, it is known as
(a) Substitution Effect
(b) Demonstration Effect
(c) Income Effect
(d) All of the above
Answer: B

Question. Industry Demand is also called -
(a) Household Demand
(b) Market Demand
(c) Individual Demand
(d) All of the above
Answer: B

Question. In case of Complementary Goods, increase in price of a product will —
(a) Decrease the demand for the other product
(b) Increase the price of the other product
(c) Increase the demand for the other product
(d) Not affect the demand for the other product
Answer: A

I. Answer in one sentence each ( 1 mark each)

(a) When marginal utility is zero, Total utility will be

(b) When MUx/Px > MUy/Py What will 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 each )

(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 ₹10 per unit and is at equilibrium. Should she consume more or less to be at equilibrium when its price decreases to ₹5 per unit? State reason.

 

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

(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. If Marginal Utility of good X and good Y are 4 and 3 respectively and Px and Py are ₹ 3 each. Is the consumer at equilibrium? If yes why? If not, what should the consumer do to be at equilibrium?

(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 ₹ 3 per unit. Explain with reason. If the price falls to ₹2. what adjustment will she make to be at equilibrium?

(d) From the given utility schedule, find out the marginal utility at each level of unit consumed. When will a consumer reach a state of equilibrium? Explain with reference to the law of diminishing marginal utility.

 

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