Please refer to Theory of Consumer Behaviour Class 12 Economics Important Questions with answers below. These solved questions for Chapter 2 Theory of Consumer Behaviour in NCERT Book for Class 12 Economics have been prepared based on the latest syllabus and examination guidelines issued by CBSE, NCERT, and KVS. Students should learn these solved problems properly as these will help them to get better marks in your class tests and examinations. You will also be able to understand how to write answers properly. Revise these questions and answers regularly. We have provided Notes for Class 12 Economics for all chapters in your textbooks.

Important Questions Class 12 Economics Chapter 2 Theory of Consumer Behaviour

All Theory of Consumer Behaviour Class 12 Economics Important Questions provided below have been prepared by expert teachers of Standard 12 Economics. Please learn them and let us know if you have any questions.

MCQs

Question. Which of the following utility approach is based on the theory of Alfred Marshall?
(a) Ordinal utility approach
(b) Cardinal utility approach
(c) Independent variable approach
(d) None of the these

Very Short Answer Type Questions

Question. Is the demand for the following elastic, moderate elastic, highly elastic? Give reasons.
(i) Demand for petrol
(ii) Demand for text books
(iii) Demand for cars
(iv) Demand for milk
Answer :
i) Demand for petrol is moderately elastic, because when the price of the petrol goes up, the consumer will reduce the use of it.
ii) Demand for text books is completely inelastic. In case of text books, even a substantial change in price leaves the demand unaffected.
iii) Demand for cars is elastic. It is a luxury good, when the price of the car rises, the demand for the car comes down.
iv) Demand for milk is elastic, because price of the milk increases then the consumer purchase less quantity milk.

Question. How is total utility derived from marginal utility?
Answer : Total utility is the sum total of marginal utilities of various units of a commodity.
TU_n + MU₁+MU₂+MU₃ ———MU_n

Question. What will you say about MU when TU is maximum?
Answer : MU is zero when TU is maximum.

Question. ____________ shows various combinations of two goods that give same amount of satisfaction to the consumer?
Answer : Indifference curve

Question. _____________ is defined as the difference between what the consumer is willing to pay for a product and what he is able to pay?
Answer : Consumer Surplus

Question. What is called point of satiety?
Answer : The point where marginal utility becomes zero.

Short Answer Type Questions

Question. Explain the various degrees of price elasticity of demand with the help of diagrams.
Answer : There are five degrees of price elasticity of demand. They are as follows:-
a) Perfectly elastic demand (Ed=∞):- a slight or no change in the price leads to infinite changes in the quantity demanded.

b) Perfectly Inelastic demand (Ed=0):- Demand of a commodity does not change at all irrespective of any change in its price.

c) Unitary elastic demand (Ed=1):- When the percentage change in demand (%) of a commodity is equal to the percentage change in price.

d) Greater than unitary elastic demand (Ed>1):- When percentage change in demand of a commodity is more than the percentage change in its price.

e) Less than unitary elastic demand (Ed<1):- When percentage change in demand of a commodity is less than the percentage change in its price.

Question. 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 36 kg of wheat?
Answer : The price of wheat rises to Rs.1.10 per kg.

Question. Explain any four determinants of demand for a commodity.
Answer : Below mentioned are the determinants of demand:-
1. Price of the commodity: When the price of a commodity increases, the demand for that commodity decreases and vice versa.
2. Income of the consumer: When the income increases, the demand for normal commodity also increases and vice versa.
3. Price of related goods: In complementary goods, demand rises with fall in price of complementary goods. In case of substitute goods, demand for a commodity falls with a fall in the price of other substitute goods.
4. Taste and preference of the customer: With favourable taste and likings, demand increase and if it’s unfavourable, demand gets decrease for any goods.

Long Answer Type Questions

Question. Explain the factors affecting the market demand of a commodity.
Answer : The market demand for a commodity means the total demand for a commodity made by all the individuals in the market. The market demand for a commodity gives the alternative amounts of a commodity demanded per time period, at various alternative prices, by all the individuals in the market. It depends on all the factors as the individuals demand depends on.
Below mentioned factors affecting the market demand of a commodity are as follows:
1. Tastes and Preferences of the Consumers – The changes in demand for various goods occur due to the changes in fashion and also due to the pressure of advertisements by the manufacturers and sellers of different products.
2. Income of the People – The demand for goods also depends upon the incomes of the people. The greater the incomes of the people, the greater will be their demand for goods.
3. Changes in Prices of the Related Goods – The demand for a good is also affected by the prices of other goods, especially those which are related to it as substitutes or complements. When we draw the demand schedule or the demand curve for a good we take the prices of the related goods as remaining constant.
4. Consumers’ Expectations with Regard to Future Prices – If due to some reason, consumers expect that in the near future prices of the goods would rise, then in the present they would demand greater quantities of the goods so that in the future they should not have to pay higher prices.
5. The Number of Consumers in the Market – The market demand for a good is obtained by adding up the individual demands of the present as well as prospective consumers of a good at various possible prices. The greater the number of consumers of a good, the greater the market demand for it.