NCERT Class 12 Economics Chapter 2 Question Answers & Notes Theory of Consumer Behaviour Easy PDF

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NCERT Class 12 Economics Chapter 2 Question Answers & Notes Theory of Consumer Behaviour Easy PDf, Economics Class 12th Chapter 2 Notes | Economics Class 12 Chapter 2 Questions And Answers Easy PDF


Theory of Consumer Behaviour


Central Problem — It is solved in different ways in different economies. In a market economy, these are resolved through the interaction of market forces, called the price plant. In a centrally planned economy, these are resolved by a central authority. In a mixed economy, the price plant and the central authority carry out this function by gathering instructions.

There are three central problems—

(i) What should be produced?

(ii) How to produce?

(iii) For whom to produce? Some economists also consider two other problems as central problems, they are

(i) the problem of full utilization of resources and

(ii) The problem of the development of resources. What to Produce – The problem is basically the problem of the selection of goods and services which are to be produced with limited resources.

How to Produce — Essentially a problem of selection of technology. An economy has to choose between labor-intensive technology and capital-intensive technology.

For Whom to Produce — The problem is the problem of distribution of production or income. Production Possibility Curve — This shows the various combinations of two sets of goods that can be produced with the given resources and the given technology.

The production possibility curve is concave to the origin (PPC is concave to the origin)—it suggests that for each additional unit of good X obtained



More and more of commodity-Y has to be sacrificed. Opportunity Cost — is the cost of the second best alternative given up. The opportunity cost of a factor refers to its second-best price. Marginal Opportunity Cost – The meaning of this cost

The decrease in the quantity of output of good Y results from the production of one more unit of good X when resources are diverted from Y to X.


NCERT Class 12 Economics Chapter 2 Question Answers


Class12th 
Chapter NameIntroduction to Macro Economics
Chapter numberChapter 2
Part A
BoardCBSE
Book NCERT
SubjectEconomics
Medium English
Study MaterialsQuestion Answers & Notes
Download PDFNcert class 12 economics chapter 2 pdf
NCERT Class 12 Economics Chapter 2 Question Answers Notes Theory of Consumer Behaviour Easy PDF

VERY SHORT ANSWER TYPE QUESTIONS


1. Write the definition of the consumption bundle.

Ans. Any combination of two goods that is available for consumption is called a consumption bundle.

2. What do we need to understand to understand the idea of ​​scarcity of resources?

Ans. To understand the idea of ​​scarcity of resources, we need to understand that the consumer has limited income to spend on the consumption bundle.

3. How many bundles can be there in the consumer budget set?

Ans. If both the goods are divisible, then the consumer budget set consists of all those bundles greater than and equal to zero whose price is equal to or less than the income of the consumer i.e. P1X1 + P2X2<M

4. What does the absolute value of the slope of the budget line measure?

Ans. The absolute value of the slope of the budget line measures the rate of substitution of good-1 for good-2 when a consumer spends all of his budget income.

5. What are the factors of change in available bundles?

Ans. Factors responsible for the change in available bundles-

(i) a change in the price of both the goods or a change in the price of either of the goods,

(ii) Change in the income of the consumer.

6. What is the relation between the income of the consumer and the vertical part of the budget line if the price of the goods remains the same?

Ans. There is a direct relationship between the income of a consumer and the vertical part of the budget line. If the income of the consumer increases, then the vertical part of the budget line will increase, on the contrary, if the income of the consumer decreases, the vertical part of the budget line will decrease.

7. On what basis does a consumer choose to consume from among the available segments?

Ans. A consumer selects the bundles to be consumed on the basis of likes and dislikes from the available bundles.

8. Write the definition of the indifference curve.

Years, The diagram of all available bundles about which the consumer is indifference is called an indifference curve.

9, Why is the slope of an indifference curve negative?

Ans. Both the goods are desirable for the consumer and the consumer always prefers more units than fewer units, hence the slope of the indifference curve is negative.

10. Write the meaning of a vowel sound.

Years, If one bundle (X) has more units of one good than the other bundle (VJ) and there is no reduction in units of the other, then the consumer prefers the bundle (X2). This is called a vocal preference. .

11. What is the rate of substitution between two goods?

Ans. Being indifferent, the rate at which the consumer substitutes the first good for the second good is called the marginal rate of substitution of the first good for the second good.

12. What does the replacement rate measure?

Ans. The rate of substitution measures the willingness of a consumer to give up one good for another.

13. Define the indifference trap.

Ans. The family of indifference curves showing all the circles preferred by the consumer is called an indifference curve.

14. Define utility function.

Ans. The representation of preferences on the basis of utility numbers is called a utility function.

15. What determines the utility function?

Ans. The utility function assigns a score to each available bundle in such a way that if one of the two bundles is preferred over the other. If it is there, then the rank of its usefulness is high.

16. What is the consumer’s equilibrium?

Ans. It shows how many units of the two goods a consumer will buy at a given fixed income and the price of the two goods.

17. Define the indifference curve.

Ans. It is a curve showing different bundles of two goods, which provide equal satisfaction.

18. What is the budget?

Ans. It shows the quantities of two goods that a consumer can buy at a given price and given income.


SHORT ANSWER TYPE QUESTIONS


1. Briefly explain the concept of consumer budget.

Ans. The income of each consumer is limited. Due to the limitation of income, no consumer can buy all the bundles of goods that he wants to consume. Due to the presence of more buyers in the market, the given market price of that item has to be accepted. At a given income and given prices, the consumer can buy only those bundles whose cost is equal to or less than his income.

2. A consumer spends his entire income on the purchase of good-1 and good-2. Explain the substitution of item-1 for item-2.

Ans. A point on the budget line represents all those bundles whose cost is equal to the total income of the consumer who has to sacrifice some units of good 2 in order to consume more of one additional unit of good 1. How many units of good-2 have to be sacrificed to increase the consumption of one additional unit of good-1? This thing is decided on the basis of the price of both items. If object-1 and object-2

The prices are P1 and P2 respectively. With price P1, he can buy P1÷P2 units of good-2. Using the entire income of this P2 budget, he will have to give up P1÷P2 units of good-2 in order to consume one additional unit of good-2. Thus the absolute P2 value of the slope of the budget line measures the rate of substitution of good 2 for good 1.

3. Write the definition of the indifference curve and show it graphically.

Ans. The geometric representation of indifferent bundles of Objects is called the indifference curve. lower of the indifference curve

Features are-

(i) Indifference curve is continuous,

(ii) the slope of the indifference curve is negative and

(iii) The indifference curve is convex to the origin.

4. If the prices of two goods remain the same, then tell the effect of change in the income of the consumer on the slope of the budget line.

Ans. Let the consumer’s income change from M to M1 and the prices of the two goods P1 and P2 remain the same.

Budget line P1X1 + P2X2 = M

New budget line P1x1+ P2X2= M

P2x2 = M1 – P1x1

X2 = M1÷P2 – P1×P2. x1

When the income of the consumer changes, the slope of the budget line remains the same as before the change in income. Although a change in income changes the vertical part of the budget line

अर्थशास्त्र कक्षा 12वीं अध्याय 2 नोट्स | Economics Class 12 Chapter 2 Questions And Answers In Hindi Easy PDF

5. Why is the indifference curve convex to the origin?

Ans. The indifference curve is convex to the origin because the consumer prefers averages to extremes. This can be explained with an example. Let there be two consumption bundles for the consumer – (x1-x2) and (y1,y2). The consumer is indifferent to both of these bundles.

The average bundle is (1/2×1+1/2y1,1/2×2+1/2y2)

The average bundle represents the average quantities of the two existing consumption bundles. The weighted average of two indifference consumption bundles is preferred over the extreme bundle. The path of the weighted average of two bundles is a straight line joining two points.

The points above the straight line represent the bundles in which there is more quantity of one commodity while the quantity of the other commodity does not decrease.

6. Where is the superior bundle located on the line?

Ans. The point at which the budget line touches an indifference curve is the optimal consumption bundle. The indifference curve that touches the budget line or is the best possible indifference curve within the consumer’s budget.

The indifference curve lying above the budget line is beyond the reach of the consumer. Indifference curves below the budget line are beyond the reach of the consumer. The indifference curve that lies below the budget line has a lower slope than the indifference curve that touches the budget line. a cutter

The point on the indifference curve that touches only the budget line lies above the budget line as compared to other indifference curves. That is, the point of the budget line which touches an indifference curve lies on a higher level of indifference curve than other points of the budget line. Therefore, the point at which the budget line touches an indifference curve represents the optimal bundle.

7. Explain the meaning of the demand function.

Ans. When other factors (price of other goods, consumer’s income, taste and preferences) are equal, then the demand function of the consumer for the commodity and the relation of the commodity has been told. In other words, other things remaining the same, the demand function explains how much quantity of the commodity the consumer will buy at different prices. The demand function can be written mathematically in the following way-

q= d(p) where p is the price of the good and q is the quantity demanded of the good.

8. Consumer’s income, price of related goods and interest of the consumer that is the effect of change in the curve? 

Ans. If the price of the related goods and the consumer’s interest remains the same, then the demand for the commodity changes at each price level due to the change in the income of the consumer. This causes a shift in the demand curve. The demand curve of normal goods shifts to the right and the demand curve of inferior goods to the left when income increases.

If the consumer’s income and preferences remain the same, the demand curve shifts due to the change in the price of the concerned commodity. If the price of a substitute good increases, the demand curve for the good will shift to the right. If there is an increase in the price of the complementary good, then the demand curve of the good will shift to the left.

If the income of the consumer and the price of the related commodity remain the same, the demand curve will shift to the right if there is a favorable change in the interest of the consumer and if there is an unfavorable change, the demand curve will shift to the left.

9, Write the effect of change in the price of the commodity on the demand of the commodity.

Ans. The effect of a change in the price of a commodity on the demand for a commodity can be explained in two ways-

(i) With a fall in the price of good-1, this good becomes relatively cheaper.As a result, the consumer buys more quantity of the commodity.

(ii) When the price of a commodity increases, the commodity becomes relatively expensive, as a result, the consumer demands less quantity of the commodity when the price is high.

10. Write the meaning of linear demand.

Ans. The linear demand curve is shown as follows-

d(p) = a-bp

where a = vertical portion b = slope of the demand curve

Demand at zero price level @ and demand at any price equal to or greater than will be zero. When there is a unit change in the price of the commodity, the demand for the commodity will decrease by b units.

11. Differentiate between transmission along the demand curve and shift in the demand curve.

Ans. Transmission along the demand curve and shift in the demand curve – Other things remain the same, transmission along the demand curve occurs when there is a change in price. On the contrary, when the price of the commodity remains the same, there is a shift in the demand curve when the income of the consumer, the price of the related commodity and the demand change.

Other things remain the same, a decrease in the price of a commodity causes a downward movement along the demand curve and an increase in the price of a commodity causes a downward movement along the demand curve.

Price remains the same, a favorable change in other factors shifts the demand curve to the right/upward and an unfavorable change in other factors shifts the demand curve to the left/downward.

अर्थशास्त्र कक्षा 12वीं अध्याय 2 नोट्स | Economics Class 12 Chapter 2 Questions And Answers In Hindi Easy PDF

LONG ANSWER TYPE QUESTIONS


Q1. Explain the law of diminishing marginal utility.

Ans. This rule is an important and basic rule of economics, which was scientifically explained by Gosan.

Later Marshall developed this law. This law is based on the assumption that as a person consumes more and more units of a commodity, the intensity of need for that commodity decreases and hence the marginal utility derived from that commodity also falls.

Marshall has defined this law in the following words: “The greater advantage a man derives from an increase in the quantity of a commodity, decreases with each increase.”

In short, when a person satisfies any of his wants by continuous consumption of units of a commodity, then the utility derived from each subsequent unit i.e. marginal utility goes on falling. In economics, this economic trend or rule is called the law of diminishing marginal utility.

In Chapman’s words, “The more we have of a thing, the less we want to increase it.” To understand this rule in a more proper way, let’s go through the table and picture given below. May go.

अर्थशास्त्र कक्षा 12वीं अध्याय 2 नोट्स | Economics Class 12 Chapter 2 Questions And Answers In Hindi Easy PDF

It is clear from the table and figure that marginal utility is decreasing is zero at the seventh unit and becomes negative after that.

Assumptions – The ‘Law of Diminishing Marginal Utility is based on the following assumptions-

(i) stable interests There should be no change in consumer preferences. Consumer habits, fashion, taste etc. should remain the same when more and more units of a commodity are used.

(ii) Fixed income consumers There should be no change in the income of Not only the money income of the consumer should be constant but also the quantity of other goods with him should remain the same. If the income of the consumer or the quantity of other goods changes

If so, the preferences of the consumers do not remain the same.

(iii) Continued consumption of the commodity This rule is applicable only if the time of consumption is continuous. This means that once consumption starts it should not stop. If one cup of coffee is consumed in the morning and the other in the evening, then this rule does not apply.

(iv) No change in prices When a consumer consumes more and more units of a commodity, there should be no change in the price of that commodity as well as the prices of other commodities. This recognition is very important because if the price of a commodity to be consumed increases, the consumer derives more utility from this commodity as it becomes cheaper in comparison to other commodities.

(v) All the units of the commodity should be the same in quality and size This rule will not apply when a person drinks water from a spoon to quench his thirst. In such a situation, the tendency of marginal utility to increase rather than decrease will be found.

2. What is the Indifference curve? Explain.

Ans. In case of goods consumer equilibrium has been explained using indifference curve technique. The indifference curve method is based on the assumption that it is not possible to numerically measure the utility derived from the use of a good; It can only be felt whether it is greater, less or equal.

There are many combinations of two goods (say X and Y) that give the same level of satisfaction to a consumer. When these combinations are represented graphically, the curve obtained is known as the indifference curve. Therefore, all the combinations represented by this curve provide equal level of satisfaction. Since all the combinations are providing the same level of satisfaction; Any combination can be given to a consumer from the point of view of the level of satisfaction. It shows his indifference behavior towards a combination on the indifference curve.

it shows. Here a schedule of combinations of goods X and Y is given. These are shown graphically and the curve thus obtained is the indifference curve. Given at points a, b, c, d on this curve. The given combinations give equal satisfaction to a consumer.

अर्थशास्त्र कक्षा 12वीं अध्याय 2 नोट्स | Economics Class 12 Chapter 2 Questions And Answers In Hindi Easy PDF

What is the marginal rate of substitution? – It can be defined as the quantity of good Y that a consumer of good is willing to replace with one unit of good X. In simple terms, the marginal rate of substitution (MRS) refers to how much utility a consumer gives up of good Y in order to obtain one unit of good X. mathematically,

MRS = AY (change in Y) AX (change in X)

3, Explain the factors affecting the elasticity of demand.

 Ans. Factors affecting the elasticity of demand-

(i) Availability of close substitutes – The more close substitutes are available in the market for a commodity, the higher its demand elasticity. Pepsi, Coke, Thums up etc. are close substitutes for each other. That’s why their elasticity of demand is high.

(ii) Diverse uses of the commodity The more the number of uses of the commodity, the more elastic is its demand, for example, the number of uses of milk and electricity is more, hence their demand is elastic. On the other hand, the demand for goods which have less number of uses is inelastic.

(iii) Proportion in Total Expenditure If the proportion of expenditure on a commodity is low, then the demand is inelastic and if the proportion of expenditure on a commodity is high, then the demand for that commodity is elastic.

(iv) Habit of the consumer If the consumer gets used to the consumption of a commodity. – So the demand for that commodity is inelastic because the consumer cannot live without consuming that commodity after being addicted to consumption. Therefore, a change in price has little effect on the demand for a commodity.

(v) Fashion- The demand for goods which are demanded by the consumer for fashion or for show off, is less elastic.

(vi) Postponement of consumption – The demand for goods whose consumption can be postponed by the consumer for some time is elastic and the demand for those goods whose consumption cannot be postponed for the future is inelastic.

4, (a) Distinguish between individual demand and market demand. ,b) Write the factors affecting the market demand of a commodity.

Ans. (a) Individual demand and market demand – The quantity purchased by an individual consumer at a given time and at a given price is called individual demand of the commodity. Market demand is the sum of the quantities of a commodity purchased by all the buyers present in the market at a certain price and at a certain time.

(b) Factors affecting market demand- (i) Price of the commodity – The market demand of the commodity has a lot more influence than its own price. The higher the price of a commodity, the lower its market demand. On the contrary, the lower the price of the commodity, the higher its market demand.

(ii) Number of consumers – The more buyers of a commodity in the market, the more

The market demand is that much. On the contrary, the fewer the consumers of a commodity, the less its market demand.

(iii) Distribution of income- Distribution of income also has an effect on the market demand of the commodity. The more equal the distribution of income, the greater the market demand. Conversely, the greater the inequality in the distribution of income, the lesser will be the market demand.

(iv) Climate and weather: If the climate and weather are favourable for the consumption of a commodity, then the market demand for that commodity is high. When the climate and weather are adverse, the market demand for the commodity decreases.

(v) Level of national income If the level of national income in the economy is high, then the market demand for the commodity is high, on the contrary, at a low level of national income, the market demand is low.

5, Explain the expenditure method of elasticity of demand for a commodity. 

Ans. The expenditure incurred on a commodity is equal to the product of the quantity purchased and the price per unit of the commodity. A change in the price of a commodity will increase or decrease the expenditure on the commodity, depending on how much the demand for the commodity reacts to the change in price.

There is an inverse relationship between the demand and price of a commodity.

If the percentage decrease in demand is more than the percentage increase in price, then the expenditure on the commodity will increase. If the percentage decrease in demand is more than the percentage increase in price, then the expenditure on the commodity will increase. If the percentage decrease in demand is equal to the percentage increase in price, then the expenditure on the good will remain the same.

6, Why is the slope of the demand curve negative to the right?

Ans. The slope of the demand curve is to the right and negative due to the following reasons-

(i) Law of Diminishing Marginal Utility This law greatly influences the law of demand. A rational consumer is prepared to pay the price of a commodity on the basis of utility derived from it. According to this law, marginal utility is derived from each subsequent unit at a diminishing rate. Hence the consumer is also prepared to pay a price for each subsequent unit. That is why there is an inverse relationship between the demand for a commodity and its price.

(ii) Income effect: By income, effect is meant the change in the real income of the consumer. When the price of a commodity decreases, the purchasing power of money increases. Therefore, the consumer can buy more units of the commodity when the price is lower than the currency-fixed units.

That is when the price of the commodity decreases, the consumer can buy more units of that commodity. On the contrary, when the price of a commodity increases, the purchasing power of money decreases. That is, at a higher price, real income decreases and the consumer is able to buy fewer units of a given amount of money. In this way, the income effect gives birth to an inverse relationship between the demand and the price of the commodity.

(iii) Substitution Effect – If the price of a commodity increases, then the substitute commodity seems relatively cheaper, the consumer can increase the consumption of the substitute commodity in place of the commodity.

On the contrary, when the price of the commodity decreases, the substitute commodity becomes expensive and the consumer can increase the consumption of the commodity in place of the substitute commodity. For example, when the price of coffee decreases, the demand for tea decreases and on the contrary, when the price of coffee increases, the demand for tea increases.

(iv) Multiple uses of a commodity Some commodities have multiple uses like milk is used for making curd, paneer, sweets, tea etc. If the price of such goods increases, then the number of its uses decreases, that is, at a higher price, the value of the commodity decreases. On the contrary, if the price of such a commodity decreases, then the number of consumers increases or the demand for the commodity increases.

7. Mention the factors affecting the elasticity of demand.

Ans. (i) Availability of substitute goods: When substitute goods are available, the demand for the commodity will be elastic. For example, when Coca-Cola is expensive, we will buy Limca.

(ii) Withholding of consumption – The demand for those needs which can be postponed is elastic and the demand for those needs which cannot be postponed will be bello.

(iii) Proportion of Expenditure – The elasticity of demand for a commodity depends on the fact what part of the income is spent on the commodity. Demand is generally inelastic for goods on which only a small portion of income is spent. These things are needles, thread, and buttons. On the contrary, the demand for those goods on which the bulk of the income is spent is very elastic. These items are woollen cloth and luxuries.

(iv) Nature of the commodity- The elasticity of demand for necessities is very less, as it has to be satisfied even at a high cost whereas the demand for luxuries is elastic.

(v) Multiple uses of the commodity – Generally, all goods which have multiple uses have elastic demand. On the contrary, the demand for a commodity having a single use is elastic. When the price of a commodity of multiple uses falls, its demand increases because of these multiple uses.

(vi) Time Period: The demand for a commodity is always related to a time period, such as a day, a week or a month etc. The elasticity of demand keeps on changing with the change in the time period.

Generally, the longer the time period, the greater the elasticity of demand and vice versa, which means that demand is elastic in the long run and inelastic in the short run. This is because in the short run the demand may not change at the same time as the change in price, although this is possible in the long run.

(vii) Change in income- The demand for various goods keeps on changing with the change in income. When the income of the consumer increases, the demand for luxury goods increases. Similarly, with a decrease in income, the demand for luxury goods decreases. Thus the demand for luxury goods is strongly influenced by income.

(viii) Habits – If the consumer has a habit of using a particular commodity, then the demand for these commodities will generally be inelastic. Because they will continue to use that commodity even when its value has increased. For example, a cigarette smoker does not reduce the number of cigarettes he smokes even when the price of cigarettes increases.

(ix) Joint Demand – If goods are demanded jointly, like cars and petrol, then the elasticity of demand for one good will be affected by the elasticity of demand for the other good.

(x) Distribution of Income The elasticity of demand also depends on the fact that how is the distribution of income in society. The more equal the distribution of income, the lower the middle class. The demand for middle-class people will be more elastic.

If the distribution of income is not equal, then there will be more poor people who will buy only the things of necessity, then the demand will be inelastic, on the contrary, the demand of rich people will also be inelastic because their demand is not affected by the change in price. Thus equality of income increases the price elasticity of demand and generally decreases it.

(xi) Price level – Generally, the demand for very expensive and very cheap goods is Balor. This is because very expensive goods are demanded by rich people and their demand is not affected by changes in price. For example, if the price of a Maruti car increases from Rs 2,00,000 to Rs 2,20,000, there will be no difference in its demand. Similarly, a change in the price of very cheap goods such as salt will not affect its demand because a very small part of the income is spent on these goods.


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FAQs


Q. Define Marginal Rate of Substitution (MRS).

Ans. It is the quantity of good X, which a consumer is willing to devote to get one unit of the good. In short, MRS = ∆x2÷∆x1

Q. Where is the consumer’s equilibrium established in the case of two goods?

Ans. At the point where the budget line touches the indifference curve.

Q. Define marginal utility.

Ans. It is the change in total utility that is derived from the consumption of one additional unit of a commodity.


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