Please refer to Chapter 2 Theory of Consumer Behaviour MCQ Class 12 Economics with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Economics. Students should refer to MCQ Questions for Class 12 Economics with Answers to score more marks in Grade 12 Economics exams. Students should read the chapter Theory of Consumer Behaviour and then attempt the following objective questions.

MCQ Questions Class 12 Economics Chapter 2 Theory of Consumer Behaviour

Theory of Consumer Behaviour MCQ Class 12 Economics provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. Which of the following is a demand function ?
(a) PX
(b) DX = PX
(c) Dx = (Px)
(d) None of these

Question. For normal goods, Law of Demand states the relationship between price and quantity of goods:
(a) Direct
(b) Positive
(c) Indirect
(d) None of the above

Question. With rise in coffee price, the demand of tea:
(a) Rises
(b) Falls
(c) Remains stable
(d) None of these

Question. Which is a reason of change in demand ?
(a) Change in consumer’s income
(b) Change in price of related goods
(c) Population increase
(d) All pf these

Question. With a rise in price the demand for ‘Giffin’ goods:
(a) increases
(b) decreases
(c) remains constant
(d) becomes unstable

Question. With an increase in income consumer decreases the consumption of which goods ?
(a) Inferior goods
(b) Normal goods
(c) Giffin goods
(d) Both (a) and (b)

Question. Elasticity of demand is a:
(a) Qualitative Statement
(b) Quantitative Statement
(c) Both (a) and (b)
(d) None of the above

Question. For Giffin goods, price elasticity of demand is :
(a) Negative
(b) Positive
(c) Zero
(d) None of these

Question. Which of the following shows elasticity less than one ?
(a) Necessity Goods
(b) Comforts
(c) Luxuries
(d) All of these

Question. Elastic demand is shown by:

Question. Who propounded the percentage or proportionate method of measuring elasticity of demand ?
(a) Marshall
(b) Flux
(c) Hicks
(d) None of these

Question. How many types elasticity of uemand has ?
(a) Three
(b) Five
(c) Six
(d) Seven

Question. Price elasticity of demand means :
(a) Change in demand due to change in price
(b) Change in demand
(c) Change in real income
(d) Change in Price

Question. If the demand for a good changes by 60% due to 40% change in price, the elasticity of demand is :
(a) 0.5
(b) -1.5
(c) 1
(d) zero

Question. Any statement about demand for a good is considered complete only when the following is/are mentioned in:
(a) Price of the good
(b) Quantity of the good
(c) Period of time
(d) All of these

Question. Consumer’s behaviour is studied in:
(a) Micro Economics
(b) Macro Economics
(c) Income Analysis
(d) None of these

Question.________ can influence the consumers’ thoughts about products.
(a) Marketing and popularity
(b) Advertising, sales promotions, salespeople, and publicity
(c) Sales promotion, popularity, and marketing
(d) Billboards

Question. The family in a buyers life consisting of parents and siblings is the ________.
(a) family of procreation
(b) family of influence
(c) family of efficiency
(d) family of orientation

Question.Secondary reference groups include ________________.
(a) Family and close friends
(b) Sports groups
(c) Ethnic and religious groups
(d) Fraternal organizations and professional associations

Question. According to total outlay method, the demand of a good is sinelastic when:
(a) Price will fall with the increase in amount spent
(b) When price of good decreases and money spent decreases
(c) Expenditure remains the same, even if price falls
(d) Expenditure decreases with the increase in price.

Question. Which is a reason of change in demand ?
(a) Change in consumer’s income
(b) Change in price of related goods
(c) Population increase
(d) All pf these

Question. Who propounded the percentage or proportionate method of measuring elasticity of demand ?
(a) Marshall
(b) Flux
(c) Hicks
(d) None of these

Question. Consumer purchases are influenced strongly by cultural, social, personal, and :
(a) psychographic characteristics.
(b) psychological characteristics.
(c) cpsychometric characteristics.
(d) supply and demand characteristics. 

Question. According to Marshall, utility of a commodity:
(a) Can be measured by money
(b) Cannot be measured by money
(c) Can be measured in cardinal numbers
(c) Both (a) and (b)

Question. Which of the following is a characteristic of utility ?
(a) Utility is a psychological phenomenon
(b) Utility is subjective
(c) Utility is a relative concept
(d) All of these

Question. Who basically propounded the concept of Law of Equimarginal Utility ?
(a) Marshall
(b) Gossen
(c) Ricardo
(d) J. S. Mill

Question.Which need in Maslow’s hierarchy reflects a desire for love, friendship, affiliation, and group acceptance?
(a) safety
(b) self-actualization
(c) physiological
(d) belongingness

Question. Which of the following would be the best illustration of a subculture?
(a) a religion
(b) a group of close friends
(c) your university
(d) a fraternity or sorority

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

Question.In terms of consumption decisions, middle class consumers prefer to _________
(a) Buy at a market that sells at a whole sale rates
(b) Buy what is popular
(c) Buy only the brands which sell at affordable prices
(d) Analyze the market and select the best at the lowest prices

Question. The elasticity of demand at the mid-point of a straight line demand curve:
(a) will be zero
(b) will be unity
(c) will be infinity
(d) None of these

Question.__________ is the single factor that best indicates social class.
(a) Time
(b) Money
(c) Occupation
(d) Fashion

Question. A _____________ is a need that is sufficiently pressing to direct the person to seek satisfaction of the need.
(a) motive
(b) want
(c) demand
(d) requirement

Question. With an increase in income consumer decreases the consumption of which goods ?
(a) Inferior goods
(b) Normal goods
(c) Giffin goods
(d) Both (a) and (b)

Question. The subject of the Study of Macro Economics is:
(a) The Principle of National Income
(b) The Principle of Consumer
(c) The Principle of Producer
(d) None of these

Question. ________ refers to a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli.
(a) Image
(b) Personality
(c) Psychological transformation
(d) Lifestyle 

Question.Many sub cultural barriers are decreasing because of mass communication, mass transit, and _______________
(a) The rising unemployment situation
(b) An influence of political power
(c) The use of new technology
(d) A decline in the influence of religious values

Question.Which of the following is a situation in which consumer behavior occurs?
(a) communications situation
(b) purchase situation
(c) usage situation
(d) All of the above 

Question. For normal goods, Law of Demand states the relationship between price and quantity of goods:
(a) Direct
(b) Positive
(c) Indirect
(d) None of the above

Question. Consumer is in equilibrium when:
(a) MUx = PUx
(b) MUx > PUx
(c) MUx < Px
(d) MUx ÷ Px

Question. Indifference curves never intersect each other due to:
(a) Different levels of satisfaction
(b) Same levels of satisfaction
(c) Convex to origin
(d) Concave to origin

Question. Utility is related to:
(a) Usefulness
(b) Morality
(c) Satisfaction of human wants
(d) All the above

Question.In large nations, the population is bound to lose a lot of its homogeneity, and thus _________________ arise.
(a) Multilingual needs
(b) Cultures
(c) Subcultures
(d) Product adaptation requirements

Question. At the top of Maslow’s hierarchy of needs (shown as a pyramid in the text) are ________ needs.
(a) esteem
(b) self-actualization
(c) social
(d) safety 

Question. Increase in Stock of Capital is known as:
(a) Capital Loss
(b) Capital Profit
(c) Capital Formation
(d) None of these

Question. Why are the intermediate goods not included in the National Income while measuring National Income?
(a) To avoid double accounting
(b) It decreases income
(c) Intermediate goods are not good
(d) All of these

Question. For Giffin goods, price elasticity of demand is :
(a) Negative
(b) Positive
(c) Zero
(d) None of these

Question.Understanding of consumer needs and then develops a marketing mix to satisfy these needs.
(a) The marketing concept
(b) The strategic plan
(c) The product influences
(d) The price influences

Question. The law of equi marginal utility considers price of money as:
(a) zero
(b) less than one
(c) more than one
(d) one

Question. In which goods, price fall does not make any increase in demand ?
(a) Necessities Goods
(b) Comfort Goods
(c) Luxuries Goods
(d) None of these

Question. Indifference curve slopes:
(a) From right to left
(b) From left to right
(c) Both (a) and (b)
(d) None of these

Question. Which utility is added to the total utility by consuming one additional unit of the commodity?
(a) Ordinal Utility
(b) Total Utility
(c) Marginal Utility
(d) Average Utility

Question. Law of Demand is a:
(a) Qualitative Statement
(b) Quantitative Statement
(c) Both (a) and (b)
(d) None of these

Question. Consumer’s equilibrium takes at a point where:
(a) MU = Price
(b) MU < Price
(c) MU > Price
(d) None of these

Question. Total utility is maximum when :
(a) Marginal utility is maximum
(b) Marginal utility is Zero
(c) Average utility is maximum
(d) Average utility is Zero

Question: How are goods X and Y when, as a result of rise in the price of good-X , demand for good-Y increases ?
a) Substitute goods
b) Complementary goods
c) Normal goods
d) Inferior goods

Question: Law of demand must fall in case of :
a) Normal goods
b) Giffen goods
c) Inferior goods
d) None of these 

Question: Inferior goods are those whose income effect is :
a) Negative
b) Positive
c) Zero
d) None of these 

Question: Shift in demand curve means :
a) Fall in demand due to rise in own price of the commodity
b) Rise in demand due to fall in own price of the commodity
c) Change in demand due to factors other than the change in own price of the commodity
d) None of these

Question: When there is no change in quantity demand in response to any change in price, it is a situation of :
a) Zero price elasticity
b) Infinite price elasticity
c) Unitary price elasticity
d) None of these 

Question: When total expenditure increases in response to decrease in the price of the commodity the elasticity of demand is :
a) Greater than unity
b) Less than unity
c) Unity
d) Infinity

Question: Which of the following pairs represents substitute goods ?
a) Car and petrol
b) Coffee and tea
c) Bread and butter
d) All of the above

Question: In case of normal goods, demand curve shows :
a) A negative slope
b) A positive slope
c) Zero slope
d) None of these

Question: In case of Giffen’s Paradox the slope of demand curve is
a) Negative
b) Positive
c) Parallel to X-axis
d) Parallel to Y-axis

Question: According to IC analysis , a consumer attains equilibrium when :
a) MRSxy = Px/Py
b) MRSxy> Px/Py
c) MRSxy< Px/Py
d) None of these 

Question: As a result of rise in consumer’s income , demand curve for coarse grain (inferior good) :
a) Shifts to the left
b) Shifts to the right
c) Becomes a horizontal straight line
d) Becomes a vertical straight line 

Question: If two goods are complementary then rise in the price of one results in
a) Rise in demand for the other
b) Fall in demand for the other
c) Rise in demand for both
d) None of these 

Question: On all points of rectangular hyperbola demand curve, elasticity of demand is
a) Equal to unity
b) Zero
c) Greater than unity
d) Less than unity

Question: The graphic presentation of a table showing price and demand relationship for a commodity in the market is called :
a) Individual demand curve
b) Producer’s demand curve
c) Market demand curve
d) Consumer’s demand curve

Question: When demand curve is parallel to X-axis, elasticity of demand is
a) Unity
b) Zero
c) Greater than unity
d) Infinity 

Case Based MCQ Questions Class 12 Economics Chapter 2 Theory of Consumer Behaviour to Microeconomics

Direction Read the following case study and answer questions on the basis of the same.

Ravi has fallen on hard times due to lockdown. His income per week is ` 400, spending ` 200 on food and ` 200 on all other goods. However, he is also receiving a social allowance in the form of ` 10 food stamps per week from government. The coupons can be exchanged for ` 10 worth of food, and he only has to pay ` 5 for such coupons.

Question. What will be the equation of budget line food and non-food items (with food coupons)?
(a) Price (food) + Price (non-food) = 210
(b) Price (food) + Price (non-food) = 410
(c) Price (food) + Price (non-food) < 410
(d) Price (food) + Price (non-food) = 405

Question. If Ravi is to be at equilibrium point, what should be the condition?
(a) MRS = 2
(b) MRS= 4
(c) MUx / MUy = 2
(d) Can’t be determined

Question. Assertion (A) Ravi will be in a better situation after subsidies as compared to before subsidy situation.
Reason (R) Food subsidy or coupons has no impact on the equilibrium as the pandemic is a rare situation.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Question. Preferences are considered as monotonic when ………… .
(a) equal units of goods are more preferred
(b) less units of goods are more preferred
(c) more units of the goods are more preferred
(d) All of the above

Question. What will be the equation of budget line food and non-food items (without food coupons)?
(a) Price (food) + Price (non-food) = 200
(b) Price (food) + Price (non-food) = 400
(c) Price (food) + Price (non-food) < 400
(d) Price (food) + Price (non-food) > 400

Direction Read the following case study and answer questions on the basis of the same.

In economic terms, a consumer is an economic agent, who consumes a good or service for satisfaction of his/her wants. Keeping in mind the said definition, every individual consumer is a rational consumer and understands his/her best interest. However, on certain occassions, we can observe that people buys goods or services without their choice or needs, i.e. influenced by certain external factors/components. In such situations, utility is derived by mere purchase of goods and not from its consumption. Also, under such cases determining optimum level of consumption becomes difficult. One such example can be drawn from festive buying in India.

Question. Which of the following statements is/are true for utility?
(a) Utility is thewant satisfying power of a commodity
(b) Utility depends upon want and choice
(c) Same good may give different utility in different situations
(d) All of the above

Question. Rationality of a consumer depends upon which of the following factors?
(a) Consumer’s taste and preferences
(b) Utility from consumption of a good
(c) Based upon the habit of a consumer
(d) All of the above

Question. When a consumer buys goods without their need, consumer’s equilibrium becomes ………….. .
(a) static/constant
(b) dynamic
(c) unambiguous
(d) stable

Question. Assertion (A) A consumer is an economic agent who maximises profits.
Reason (R) At equilibrium point, utility from units of goods consumed can be negative as well.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Both are false

Question. In the above case, utility should be considered as ………… in nature.
(a) qualitative
(b) quantitative
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Direction Read the following case study and answer questions on the basis of the same.

We buy many goods and services to satisfy our wants. Using up of goods and services to satisfy wants is called consumption and the economic agent who buys goods and services
is called a consumer. When a consumer buys any good or service, his/her main objective is to get maximum satisfaction from the quantity of the commodities purchased by spending
his/her income at the given market price. The way a consumer maximises his/her satisfaction from spending his/her income on various goods and services is the subject matter of consumer’s behaviour.

Question. As the income levels increases, the equilibrium condition ……… .
(a) remains unchanged
(b) changes
(c) unstable
(d) None of these

Question. Which approach of utility gives more stable equilibrium condition?
(a) Cardinal
(b) Ordinal
(c) Both (a) and
(b) (d) Neither (a) nor (b)

Question. Assertion (A) When a consumer buys a good without the need, his equilibrium becomes unstable.
Reason (R) Price of the good and income of the consumer are the most important components of equilibrium.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Question. Consumer’s behaviour is the study of which of the following?
(a) Consumer’s equilibrium
(b) Demand
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. All goods that consumer consumes satisfy human wants. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Direction Read the following case study and answer questions on the basis of the same.

When consumers make choices about the quantity of goods and services to consume, it is presumed that their objective is to maximise total utility. In maximising total utility, the consumer faces a number of constraints, the most important of which are the consumer’s income and the prices of the goods and services that the consumer wishes to consume. The consumer’s effort to maximise total utility, subject to these constraints, is referred to as the consumer’s problem. The solution to the consumer’s problem, which entails decisions about how much the consumer will consume of a number of goods and services, is referred to as consumer equilibrium.
Consider the simple case of a consumer who cares about consuming only two goods: good 1 and good 2. This consumer knows the prices of goods 1 and 2 and has a fixed income or budget that can be used to purchase quantities of goods 1 and 2. The consumer will purchase quantities of goods 1 and 2 so as to completely exhaust the budget for such purchases. The actual quantities purchased of each good are determined by the condition for consumer equilibrium, which is
  Marginal utility of good 1 / Price of good 1
    = Marginal utility of good 2 / Price of good 2
      = …. = Marginal utility of good N / Price of good N

Question. The consumer’s effort to maximise total utility, subject to these constraints, is referred to as ……… .
(a) utility analysis
(b) consumer’s problem
(c) Both (a) and (b)
(d) None of these

Question. The given law in case study is studied under which of the following approaches?
(a) Cardinal utility
(b) Ordinal utility
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. The above equation of equilibrium given in the case study is based upon…… .
(a) first psychological law of consumption
(b) second psychological law of consumption
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. Consumer should consume combination of both goods in a such way that it
(a) exhaust his entire income
(b) save a part of his income
(c) Either (a) or (b)
(d) None of these

Question. Assertion (A) When consumers make choices about the quantity of goods and services to consume, it is presumed that their objective is to maximise total utility.
Reason (R) In maximising total utility, the consumer faces a number of constraints, the most important of which are the consumer’s income and the prices of the goods and services that the consumer wishes to consume. 
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A) 
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

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