# Unseen Passage

For Class 4 to Class 12

# Theory of Consumer Behaviour MCQ Class 12 Economics

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

C

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

C

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

A

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

D

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

A

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)

C

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

B

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

B

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

A

Question. Elastic demand is shown by:

A

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

B

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

B

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

A

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

B

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

A

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

A

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

B

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

D

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

D

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.

B

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

D

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

B

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.

B

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)

C

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

D

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

C

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

D

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

A

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

B

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

B

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

B

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

C

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

A

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)

C

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

A

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

B

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

C

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

D

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

C

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

A

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

A

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

D

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

C

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

B

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

C

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

A

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

B

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

A

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

D

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

A

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

B

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

C

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

A

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

A

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

B

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

A

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

B

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

A

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

C

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

A

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

A

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

B

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

A

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

B

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

A

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

A

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

B

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

A

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

C

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

A

### 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

B

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

D

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

B

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

C

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

B

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

D

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

B

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

C

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

D

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)

C

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

B

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

C

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

B

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)

C

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

B

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

B

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)

A

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)

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

A

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