Frank solutions for Economics [English] Class 12 ISC chapter 3 - Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis [Latest edition]

Which of the following formula is correct?

When TU is maximum then MU is ______.

When marginal utility becomes negative then TU ______.

Point of saturation refers to a situation when ______.

When TU is increasing at a decreasing rate MU will be ______.

If a consumer consumes only one commodity 'X' he will be in equilibrium when ______.

When a consumer consumes two commodities X and Y, then he will be in equilibrium when:

The slope of the indifference curve is equal to ______.

If marginal rate of substitution increases throughout the indifference curve, the slope of the indifference curve will be ______.

Indifference curves never intersect each other due to ______.

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 ______.

The slope of the budget line in case of commodity X and Y is affected by ______.

For a stable consumer's equilibrium of MRSxy must be ______.

Define Utility.

When can utility be negative?

Define marginal utility. 

Define 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 the marginal rate of substitution between two goods.

Explain why an indifference curve is downward sloping from left to right.

Explain why the 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 the indifference curve approach.

State two differences between utility analysis and indifference curve analysis.

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.

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.

Explain the law of diminishing marginal utility.

A marginal utility schedule of a person is given below. Discuss the law underlying the given schedule.

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?

Explain the law of equi-marginal utility with the help of a numerical example.

A consumer consumes goods X and Y. Given below is his marginal utility schedule for goods X and Y. Suppose the price of X is ₹ 2 of Y is ₹ 1 and income is ₹ 12. State the law of equimarginal Utility and explain how the consumer will attain equilibrium.

Explain the equilibrium of a consumer in case of two commodities with the help of utility approach.

What is an indifference curve?

Explain any two properties (characteristics) of the indifference curve with the help of a diagram.

Explain consumer's equilibrium using indifference curve analysis.

Why does the consumer choose a point where the indifference curve is tangent to the budget line?

Study the schedule given below and identify how much of the commodity A and commodity B will a utility maximising consumer buy.

Note: Price of A = ₹ 2 Price of B = ₹ 4 Income = ₹ 20

Economists have been discussing for long the diamond-water paradox, i.e., why is the market value (price) of diamond more than the value of water even though the total utility of water is much more than the utility of diamond. How would you explain the diamond-water paradox?

Explain the following:

What will be the shape of an indifference curve when Marginal rate of substitution between two goods is constant?

Explain the following:

What will be the shape of an indifference curve when Two goods are perfect substitutes?

Explain the following:

What will be the shape of an indifference curve when Two goods are complementary?

What happens to budget line if both the prices of the good and income of the consumer double.

How does the budget line change when the price of the commodity shown on X-axis falls while income remain unchanged?