CUET Economics Chapter-Theory of consumer behaviours

Important MCQ Questions on CUET Economics Chapter-Theory of consumer behaviours with Detailed explanation

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MCQ Questions for CUET Economics Chapter-Theory of consumer behaviours Set-1

Macroeconomic Economics - MCQ on Theory of Consumer Behaviour

Class XII

Q.1.What is utility

I. Utilization of resources

II. Capacity to satisfy human wants

III. The outcome of inputs

IV. Optimum utilization of resources

Answer:

II.Capacity to satisfy human wants

Explanation: Utility is the capacity to satisfy human wants. It is different than usefulness

Q.2.Which one among them is not a utility?

I. Initial Utility

II. Total Utility

III. Marginal Utility

IV. Average utility

Answer:

IV. Average utility

Explanation: There does not exist any average utility

Q.3.What is marginal utility?

I. Utility is the consumption of first unit

II. Utility means the total satisfaction

III. Addition made to total utility

IV. None

Answer:

III. Addition made to total utility

Explanation:Marginal utility is the addition made to total utility by consuming one more unit of the commodity.

Q.4.What is Mathematical relationship between marginal utility?

I. TU_n-TU_n-2

II. TU_n-TU_n-1

III. TU_n-1-TU_n

IV. TU_n-TU

Answer:

TU_n-TU_n-1

Explanation: MU= TU_n-TU_n-1

MU= Marginal utility

TU_n=Total utility from n units

TU_n-1= Total utility from n-1 units

Q.5 Rationality refers to

I. Equality

II. No interest

III. Self interest

IV. Foolishness

Answer:

III. Self interest

Explanation: Rationality refers to the tendency of an individual to promote his self-interest. A consumer is rational in his behavior if he attempts to maximize his satisfaction while he is spending money on the purchase of different goods and services. Likewise a producer is rational, if he attempts to maximize his profits.

Q.6 When more and more units are continuously consumed then it is called

I. Law of increasing marginal utility

II. Law of diminishing marginal utility

III. Law of equal marginal utility

IV. None

Answer:

II.Law of diminishing marginal utility

Explanation: Law of marginal utility states that as more and more standard units of a commodity are continuously consumed marginal utility derived from every additional unit must decline after a while.

Q.7.Consumer’s equilibrium means

I. When producer’s supply and consumer’s demand is equal

II. When consumer is getting more than he demanded

III. Maximum satisfaction out of income

IV. All

Answer:

III.Maximum satisfaction out of income

Explanation: Consumer’s equilibrium means the maximum satisfaction of the consumer’s out of the product he purchased and income he spent.

Q.8.What are the variables on which a consumer’s equilibrium is based?

I. Price of the commodity

II. Marginal utility of the commodity

III. Marginal utility of money

IV. All

Answer:

IV. All

Explanation: Consumer’s equilibrium variables are price of commodity ,marginal utility of the commodity and marginal utility

Q.9.What is the effect on total utility when marginal utility increases

I. TU will increase with an increasing rate

II. TU will decrease at increasing rate

III. TU will increase at decreasing rate

IV. TU will remain constant

Answer:

I.TU will increase with an increasing rate

Explanation: When marginal utility increases the total revenue will also start increasing

Q.10.When marginal utility is Zero the total utility is

I. TU is minimum

II. TU is constant

III. TU is maximum

IV. TU starts increasing

Answer:

TU is maximum

Explanation: When the total utility is maximum then the marginal utility is zero

then there is no need for any additional unit

Q.11.When TU starts diminishing then

I. MU is zero

II. MU is negative

III. MU is increasing

IV. MU is constant

Answer:

II.MU is negative

Explanation:TU starts diminishing then MU is negative because no additional amount will be added so it will become negative

Q.12.Sum of marginal utilities is known as

I. Average utility

II. Total utility

III. Common utility

IV. Even utility

Answer:

II. Total utility

Explanation: Total utility is the sum of marginal utilities

Q.13.The factor that cause changes in demand

I. Price of commodity

II. Prices of related goods

III. Income of the consumer

IV. All

Answer:

IV.All

Explanation: The change is demand happens due to price of commodities and related goods as well as income of the consumer

Q.14.Tabular statement containing quantities demanded at different price is called

I. Demand Chart

II. Demand Schedule

III. Demand Table

IV. Demand Curve

Answer:

II. Demand Schedule

Explanation: Demand schedule refers to a tabular statement containing different quantities of a commodity that would be demanded at different prices

Q.15.Which one is the substitute goods

I. Pen and ink

II. Sugar and salt

III. Milk and curd

IV. Gur and Sugar

Answer:

IV.Gur and Sugar

Explanation: Substitute goods are the goods which a satisfy a given want with the equal ease and which can be replaced

MCQ Questions for CUET Economics Chapter-Theory of consumer behaviours Set-2

Q.16.Which one is the complementary goods

I. Pen and ink

II. Gur and sugar

III. Ghee and oil

IV. Pen and ink pen

Answer:

IV.Pen and ink

Explanation: Complementary goods may be defined as goods which are dependent upon each other

Q.17.How does demand for complementary goods respond to change in price

I. Directly related

II. Inversely related

III. Indirectly related

IV. None

Answer:

II. Inversely related

Explanation: When the price of a commodity falls the demand for complementary commodity increases, when price raises then the demand for a complementary commodity falls

Q.18.What is price elasticity of demand

I. Responsiveness of price to change in Income

II. Responsiveness of demand to change in price

III. Responsiveness of price to change in inferior demand

IV. Responsiveness of price to change in price of giffen goods

Answer:

II. Responsiveness of demand to change in price

Explanation: Price elasticity of demand is the degree of responsiveness of demand to change in price of a commodity

Q.19.What is the nature of Demand curve?

I. Upward Sloping

II. Downward Sloping

III. Rightward Sloping

IV. Leftward Sloping

Answer:

II.Downward Sloping

Explanation: A demand curve is downward sloping because of the law of diminishing marginal utility

Q.20.What is the price elasticity demand for luxury products?

I. Inelastic

II. Elastic

III. Constant

IV. None

Answer:

II. Elastic

Explanation:Price elasticity of demand for luxury product is elastic

Q.21.Under what condition the demand curve will be parallel to y-axis

I. Inelastic

II. Elastic

III. Constant

IV. None

Answer:

I. Inelastic

Explanation:When the demand of a product is perfectly inelastic the demand will be parallel to y- axis

Q.22.The demand for product X is perfectly inelastic .Its price falls from Rs 10 to Rs 5 per unit .how wills a consumer will react to this change

I. Demand will increase

II. Demand will decrease

III. No Change

IV. Depends from person to person

Answer:

III. No change

Explanation:If the demand is inelastic then rise or fall in price will not effect demand.

Q.23 .When the quantity is inversely related to price is called

I. Law of Supply

II. Law of Demand

III. Law of elasticity

IV. Law of income

Answer:

II. Law of Demand

Explanation: Law of Demand states that Quantity demanded is inversely related to the price of the commodity i.e. demand of increases when price decreases

Q.24.Equi marginal utility is also called

I. Producer’s equilibrium

II. Consumer’s equilibrium

III. Market equilibrium

IV. Demand equilibrium

Answer:

II. Consumer’s equilibrium

Explanation: A consumer will be at equilibrium when he spends his income in such a way that the marginal utility derived from a commodity derived from a commodity is equal to price

Q.25.When the substitute become cheaper

I. Consumers buy more commodities

II. Consumer buy less commodity

III. Consumer buy equal quantity

IV. None

Answer:

Consumers buy less commodities

Explanation: Whenever the substitute become cheaper or income declines then consumer will buy less quantity

Q.26.If the price of goods X rises and this leads to decrease in demand for Y good how are two goods related

I. X and Y are substitute goods

II. X and Y are complementary goods

III. X and Y inferior goods

IV. X and Y are giffen goods

Answer:

X and Y are complementary goods

Explanation: Complementary goods may be defined as goods which are dependent upon each other if price of one or other product rises or falls it will effect the complementary product.

Q.27.Longer the time horizon

I. More elastic would be the demand

II. Less elastic would be the demand

III. No elasticity

IV. None

Answer:

More elastic would be the demand

Explanation: Longer the time horizon, then the demand elasticity will increase

Q.28. Which of the commodity has inelastic demand

I. Medicine

II. Pen

III. Sugar

IV. Car

Answer:

Medicine

Explanation: Medicine has no close substitute and it is a necessity ,Hence medicine has inelastic demand