Theory Of Consumer Behaviour CBSE Questions & Answers

Theory Of Consumer Behaviour

This is Economics Class 12 Theory of Consumer Behaviour CBSE Questions & Answers. There are 15 questions in this test with each question having around four answer choices.

Questions & Answers

1
A consumer reaches equilibrium at the point where:
  • A
    MU=P
    Correct
  • B
    MU is less than P
  • C
    MU is greater than P
  • D
    TU=P
2
If price elasticity of demand for a good is (-) 3.If the price rises from Rs. 10 to Rs. 12 per unit, what is the percentage change in demand?
  • A
    30 percent
  • B
    40 percent
  • C
    60 percent
    Correct
  • D
    100 percent
3
If price elasticity of demand for a good is (-) 2.If the price falls from Rs. 8 the consumer buys 50 percent more, what is the new price?
  • A
    6
    Correct
  • B
    4
  • C
    5
  • D
    6
4
Due to a 10 percent fall in the price of a good, its demand rises from 400 units to 450 units. Calculate its price elasticity of demand.
  • A
    2.25
  • B
    1.25
    Correct
  • C
    4.25
  • D
    3.25.
5
Due to a rise in the price of a good by Rs.5, its demand rises from 100 units to 95 units. Its price elasticity of demand is (-) 1.2. Calculate the price before the change.
  • A
    Rs. 120
    Correct
  • B
    Rs. 240
  • C
    Rs. 20
  • D
    Rs, 100
6
The elasticity of demand on different points on a linear demand curve is different. It is
  • A
    indefinite
  • B
    Can’t say
  • C
    False
  • D
    True
    Correct
7
What does monotonicity of preferences imply?
  • A
    Consumer always prefer bundle giving same satisfaction
  • B
    Consumer always prefer bundle giving minimum satisfaction
  • C
    Consumer always prefer bundle giving maximum satisfaction
    Correct
  • D
    Consumer will not prefer bundle giving maximum satisfaction
8
What will you say about MU when TU is maximum?
  • A
    It will be one
  • B
    It will be infinity
  • C
    It will be negative
  • D
    It will be zero
    Correct
9
Suppose a consumer’s preferences are monotonic. What can you say about his preference ranking over the bundles (10,10),(10,9) and (9,9)?
  • A
    He will prefer (9,9)
  • B
    He will prefer (10,10)
    Correct
  • C
    He will prefer all
  • D
    He will prefer (10,9)
10
Suppose the price elasticity of demand for a good is – 0.2. How will the expenditure on the good be affected if there is a 10 % increase in the price of the good?
  • A
    Expenditure will not change
  • B
    Expenditure will decrease
  • C
    Expenditure will increase
    Correct
  • D
    Expenditure will remain same
11
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 then the price elasticity of demand will be
  • A
    2
  • B
    3
  • C
    6
  • D
    4
    Correct
12
Price elasticity of demand for wheat is equal to unity and a household demands 40 Kg of wheat when the price is Rs.1 per kg. At what price will the household demand 20 kg of wheat?
  • A
    6
  • B
    2
    Correct
  • C
    5
  • D
    4
13
Which of the following law states that the more a consumer consumes of a product the less is the utility he derives from the additional consumption?
  • A
    Law of equi-marginal utility
  • B
    Law of ordinal utility
  • C
    Law of diminishing marginal utility
    Correct
  • D
    Law of cardinal utility
14
___________ is the rate at which a consumer is willing to substitute one good for the other maintaining the same level of utility?
  • A
    Substitution effect
  • B
    Marginal rate of substitution
    Correct
  • C
    Increasing marginal utility
  • D
    Income effect
15
What does one take on two axes while drawing an indifference curve?
  • A
    Price of the two goods
  • B
    Quantities of two goods
    Correct
  • C
    Quantity along X-axis and price along Y-axis
  • D
    Quantity and price of a good