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# NCERT solutions for Class 12 Economics chapter 2 - Theory Of Consumer Behaviour

## Chapter 2: Theory Of Consumer Behaviour

Exercise

#### NCERT solutions for Class 12 Economics Chapter 2 Exercise [Pages 34 - 35]

Exercise | Q 1 | Page 34

What do you mean by the budget set of a consumer?

Exercise | Q 1 | Page 34

What do you mean by the budget set of a consumer?

Exercise | Q 2 | Page 34

What is a budget line?

Exercise | Q 2 | Page 34

What is a budget line?

Exercise | Q 3 | Page 34

Explain why the budget line is downward sloping.

Exercise | Q 3 | Page 34

Explain why the budget line is downward sloping.

Exercise | Q 4.1 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

Write down the equation of the budget line.

Exercise | Q 4.1 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

Write down the equation of the budget line.

Exercise | Q 4.2 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

How much of good 1 can the consumer consume if he/she spends his/her entire income on that good?

Exercise | Q 4.2 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

How much of good 1 can the consumer consume if he/she spends his/her entire income on that good?

Exercise | Q 4.3 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

How much of good 2 can be consumed if he/she spends his/her entire income on that good?

Exercise | Q 4.3 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

How much of good 2 can be consumed if he/she spends his/her entire income on that good?

Exercise | Q 4.4 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

What is the slope of the budget line?

Exercise | Q 4.4 | Page 34

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

What is the slope of the budget line?

Exercise | Q 5 | Page 34

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged ?

Exercise | Q 5 | Page 34

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged ?

Exercise | Q 6 | Page 34

How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?

Exercise | Q 6 | Page 34

How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?

Exercise | Q 7 | Page 34

What happens to the budget set if the prices as well as the income double?

Exercise | Q 7 | Page 34

What happens to the budget set if the prices as well as the income double?

Exercise | Q 8 | Page 34

Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if he/she spends her entire income. The prices of two goods are Rs 6 and Rs 8. How much is the consumer’s income?

Exercise | Q 8 | Page 34

Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if he/she spends her entire income. The prices of two goods are Rs 6 and Rs 8. How much is the consumer’s income?

Exercise | Q 9 | Page 34

Suppose a consumer wants to consume two goods that are available only in integer units. The two goods are equally priced at Rs 10 and the consumer’s income is Rs 40.
(i) Write down all the bundles that are available to the consumer.
(ii) Among the bundles that are available to a consumer, identify those that cost will him/her exactly Rs 40.

Exercise | Q 9 | Page 34

Suppose a consumer wants to consume two goods that are available only in integer units. The two goods are equally priced at Rs 10 and the consumer’s income is Rs 40.
(i) Write down all the bundles that are available to the consumer.
(ii) Among the bundles that are available to a consumer, identify those that cost will him/her exactly Rs 40.

Exercise | Q 10 | Page 34

What do you mean by monotonic preferences?

Exercise | Q 10 | Page 34

What do you mean by monotonic preferences?

Exercise | Q 11 | Page 34

If the consumer has monotonic preferences, then can he/she be indifferent towards bundles (10, 8) and (8, 6)?

Exercise | Q 11 | Page 34

If the consumer has monotonic preferences, then can he/she be indifferent towards bundles (10, 8) and (8, 6)?

Exercise | Q 12 | Page 35

Suppose a consumer’s preferences are monotonic. What can you say about his/her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

Exercise | Q 12 | Page 35

Suppose a consumer’s preferences are monotonic. What can you say about his/her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

Exercise | Q 13 | Page 35

Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?

Exercise | Q 13 | Page 35

Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?

Exercise | Q 14 | Page 35

Suppose there are two consumers in the market for a good and their demand functions are as follows:

d1(p) = 20 − p for any price less than or equal to 20 and d1(p) = 0 at any price greater than 20.

d2(p) = 30 − 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.

Find out the market demand function.

Exercise | Q 14 | Page 35

Suppose there are two consumers in the market for a good and their demand functions are as follows:

d1(p) = 20 − p for any price less than or equal to 20 and d1(p) = 0 at any price greater than 20.

d2(p) = 30 − 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.

Find out the market demand function.

Exercise | Q 15 | Page 35

Suppose there are 20 consumers for a good and they have identical demand functions:

D(p) = 10 − 3p for any price less than or equal to10/3 and d1(p) = 0 at any price greater than 10/3.
What is the market demand function?

Exercise | Q 15 | Page 35

Suppose there are 20 consumers for a good and they have identical demand functions:

D(p) = 10 − 3p for any price less than or equal to10/3 and d1(p) = 0 at any price greater than 10/3.
What is the market demand function?

Exercise | Q 16 | Page 35

Consider a market where there are just two consumers and suppose their demands for the good are given as follows:

Calculate the market demand for the goods.

 p d1 d2 1 2 3 4 5 6 9 8 7 6 5 4 24 20 18 16 14 12
Exercise | Q 16 | Page 35

Consider a market where there are just two consumers and suppose their demands for the good are given as follows:

Calculate the market demand for the goods.

 p d1 d2 1 2 3 4 5 6 9 8 7 6 5 4 24 20 18 16 14 12
Exercise | Q 17 | Page 35

What do you mean by a normal good?

Exercise | Q 17 | Page 35

What do you mean by a normal good?

Exercise | Q 18 | Page 35

What do you mean by an ‘inferior good’? Give some examples.

Exercise | Q 18 | Page 35

What do you mean by an ‘inferior good’? Give some examples.

Exercise | Q 19 | Page 35

What do you mean by substitutes? Give examples of two goods which are complements of each other.

Exercise | Q 19 | Page 35

What do you mean by substitutes? Give examples of two goods which are complements of each other.

Exercise | Q 20 | Page 35

What do you mean by complements? Give examples of two goods which are complements of each other.

Exercise | Q 20 | Page 35

What do you mean by complements? Give examples of two goods which are complements of each other.

Exercise | Q 21 | Page 35

Explain price elasticity of demand.

Exercise | Q 21 | Page 35

Explain price elasticity of demand.

Exercise | Q 22 | Page 35

Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose the price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity.

Exercise | Q 22 | Page 35

Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose the price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity.

Exercise | Q 23 | Page 35

Consider the demand curve D(p) = 10 − 3p. What is the elasticity at price 5/3 ?

Exercise | Q 23 | Page 35

Consider the demand curve D(p) = 10 − 3p. What is the elasticity at price 5/3 ?

Exercise | Q 24 | Page 35

Suppose the price elasticity of demand for a good is −0.2. If there is a 5% increase in the price of the good, then by what percentage will the demand for the good go down?

Exercise | Q 24 | Page 35

Suppose the price elasticity of demand for a good is −0.2. If there is a 5% increase in the price of the good, then by what percentage will the demand for the good go down?

Exercise | Q 25 | Page 35

Suppose the price elasticity of demand for a good is −0.2. How will the expenditure on the good be affected if there is a 10% increase in its price ?

Exercise | Q 25 | Page 35

Suppose the price elasticity of demand for a good is −0.2. How will the expenditure on the good be affected if there is a 10% increase in its price ?

Exercise | Q 26 | Page 35

Suppose there was a 4% decrease in the price of a good, and as a result, the expenditure on the good increased by 2%. What can you say about the elasticity of demand ?

Exercise | Q 26 | Page 35

Suppose there was a 4% decrease in the price of a good, and as a result, the expenditure on the good increased by 2%. What can you say about the elasticity of demand ?

Exercise

## NCERT solutions for Class 12 Economics chapter 2 - Theory Of Consumer Behaviour

NCERT solutions for Class 12 Economics chapter 2 (Theory Of Consumer Behaviour) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the CBSE Introductory Microeconomics - Textbook in Economics for Class - 11 solutions in a manner that help students grasp basic concepts better and faster.

Further, we at Shaalaa.com provide such solutions so that students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and acts as a perfect self-help guidance for students.

Concepts covered in Class 12 Economics chapter 2 Theory Of Consumer Behaviour are Consumer'S Equilibrium, Meaning of Utility, Total Utility and Marginal Utility, Diminishing Marginal Utility, Conditions of Consumer's Equilibrium Using Marginal Utility Analysis, Consumer's Budget, Preferences of the Consumer, Cardinal Approach (Utility Analysis), Ordinal Approach (Utility Analysis), Demand, Market Demand, Change in Demand, Change in Quantity Demand, Determinants of Demand, Demand Schedule, Demand Curve and Its Slope, Movement Along and Shifts in the Demand Curve, Elasticity of Demand, Type of Elasticity of Demand, Factors Affecting Price Elasticity of Demand, Degrees of Elasticity of Demand, Measurement of Elasticity of Demand, Marginal Rate of Substitution (MRS), Indifference Curve, Consumer'S Equilibrium, Meaning of Utility, Total Utility and Marginal Utility, Diminishing Marginal Utility, Conditions of Consumer's Equilibrium Using Marginal Utility Analysis, Consumer's Budget, Preferences of the Consumer, Cardinal Approach (Utility Analysis), Ordinal Approach (Utility Analysis), Demand, Market Demand, Change in Demand, Change in Quantity Demand, Determinants of Demand, Demand Schedule, Demand Curve and Its Slope, Movement Along and Shifts in the Demand Curve, Elasticity of Demand, Type of Elasticity of Demand, Factors Affecting Price Elasticity of Demand, Degrees of Elasticity of Demand, Measurement of Elasticity of Demand, Marginal Rate of Substitution (MRS), Indifference Curve.

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