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Chapters
Chapter 1: Microeconomics and Macroeconomics: Introduction
2: Demand and Law of Demand
▶ 3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
Chapter 4: Elasticity of Demand
5: Supply - Law of Supply and Price Elasticity of Supply
Chapter 6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market
Chapter 7: Laws of Returns - Returns to a Factor and Returns to Scale
Chapter 8: Cost and Revenue Analysis
Chapter 9: Forms of Market
Chapter 10: Producer's Equilibrium
Chapter 11: Determination of Equilibrium Price and Output Under Perfect Competition
SECTION 2: THEORY OF INCOME AND EMPLOYMENT
Chapter 12: Theory of Income and Employment
SECTION 3: MONEY AND BANKING
Chapter 13: Money: Meaning and Functions
Chapter 14: Banks: Commercial Bank and Central Bank
SECTION 4: BALANCE OF PAYMENTS AND EXCHANGE RATE
Chapter 15: Balance of Payments and Exchange Rate
SECTION 5: PUBLIC FINANCE
Chapter 16: Fiscal Policy
Chapter 17: Government Budget
SECTION 6: NATIONAL INCOME
Chapter 18: National Income and Circular Flow of Income
Chapter 19: National Income Aggregates
Chapter 20: Methods of Measuring National Income
SECTION 7: PROJECT WORK
Chapter 21: Project Work
Chapter 22: Model Short Answer Questions
![Frank solutions for Economics [English] Class 12 ISC chapter 3 - Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis - Shaalaa.com](/images/economics-english-class-12-isc_6:557367fb4d974c67badae9e1dbdc022d.jpg "Frank solutions for Economics [English] Class 12 ISC chapter 3 - Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis")
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Solutions for Chapter 3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
Below listed, you can find solutions for Chapter 3 of CISCE Frank for Economics [English] Class 12 ISC.
Frank solutions for Economics [English] Class 12 ISC 3 Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis TEST YOURSELF QUESTIONS [Pages 48 - 50]
Select the correct option for each of the following questions:
Which of the following formula is correct?
MUnth = TUn + TUn + 1
MUnth = TUn - TUn - 1
MUnth = TUn - TUn + 1
TUn = MU1 + MU2 + ... MUnth
When TU is maximum then MU is ______.
zero
neagative
decreasing
increasing
When marginal utility becomes negative then TU ______.
increases
remain same
decreases
negative
Point of saturation refers to a situation when ______.
TU is rising
TU is falling
MU is negative
MU is zero
If a consumer consumes only one commodity 'X' he will be in equilibrium when ______.
MUx > Px
MUx = Px
MUx < Px
None of these
If a consumer consumes only one commodity 'X' he will be in equilibrium when ______.
MUx > Px
MUx = Px
MUx < Px
None of these
When a consumer consumes two commodities X and Y, then he will be in equilibrium when:
MUx = Px
`(MU_x)/(P_x)=P_y/(MU_y)`
`(MU_x)/(P_x)=(MU_y)/P_y`
None of these
The slope of the indifference curve is equal to ______.
one
marginal utility
marginal rate of substitution
none of these
If marginal rate of substitution increases throughout the indifference curve, the slope of the indifference curve will be ______.
straight line
concave to the origin
convex to the origin
horizontal
Indifference curves never intersect each other due to ______.
different level of satisfaction
same level of satisfaction
convex to the origin
concave to the origin
If the prices of both the goods X and Y remain unchanged, the increase in the income of the consumer will shift the budget (price) line to ______.
right
left
remain unchanged
budget line will become steeper
The slope of the budget line in case of commodity X and Y is affected by ______.
price of commodity X-alone
price of commodity Y-alone
taste and preference of the consumer
prices of both the commodities
For a stable consumer's equilibrium of MRSxy must be ______.
constant
diminishing
increasing
none of the these
Very short Answer Questions
Define Utility.
When can utility be negative?
Define marginal utility.
Define or explain the following concept:
Total utility
How is marginal utility derived from total utility?
How is total utility derived from marginal utility?
What is the shape of marginal utility curve?
When total utility is maximum, how much is the marginal utility?
When does marginal utility become negative?
Explain the law of diminishing marginal utility.
State and explain the assumptions of the law of diminishing marginal utility.
Explain the condition of consumer's equilibrium with the help of utility analysis.
Explain the Law of Equi-Marginal Utility.
What is the difference between cardinal and ordinal measurement of utility?
What is an indifference curve?
What is an indifference map?
Explain an indifference map with the help of a diagram.
What is scale of preference?
State two assumptions of indifference curve analysis.
Discuss any two properties of the indifference curve.
Explain marginal rate of substitution between two goods.
Explain why an indifference curve is downward sloping from left to right.
Explain why indifference curve is convex to the origin.
Why two indifference curves cannot intersect each other?
What is a budget line?
Explain why the budget line is downward sloping.
What determines the slope of the budget line?
What is meant by consumer's equilibrium?
Explain the condition of consumer's equilibrium with the help of utility analysis.
State the condition of consumer's equilibrium in terms of indifference curve approach.
State two differences between utility analysis and indifference curve analysis.
Short Answer Questions
Explain the relationship between Total utility and Marginal utility.
State the assumptions of marginal utility analysis.
The following table shows the marginal utility derived from the purchase of books. The price of the book is ₹ 500. Draw a diagram to explain consumer's equilibrium where MU = P.
| Number of books | MU |
| 1 | 700 |
| 2 | 600 |
| 3 | 500 |
| 4 | 400 |
| 5 | 300 |
Explain any two properties (characteristics) of the indifference curve with the help of a diagram.
What is diminishing marginal rate of substitution?
How does diminishing marginal rate of substitution affect the shape of indifference curve?
Explain the properties of budget-line.
State two assumptions of indifference curve analysis.
Draw an indifference curve.
Explain an indifference curve convexity to the point of origin.
Long Answer Questions
Explain the law of diminishing marginal utility.
A marginal utility schedule of a person is given below. Discuss the law underlying the given schedule.
| Pens (units) | 1 | 2 | 3 | 4 | 5 |
| MU (utils) | 25 | 20 | 15 | 10 | 5 |
Explain why consumer's equilibrium is attained when the marginal utility of a product is equal to its price.
Explain consumer's equilibrium in case of a single commodity in terms cardinal utility theory.
Using the utility approach, discuss how a consumer attains equilibrium?
Solutions for 3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
Frank solutions for Economics [English] Class 12 ISC chapter 3 - Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
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