MCQs For NCERT Class 12 Economics Chapter 2 Theory of Consumer Behaviour

Please refer to the MCQ Questions for Class 12 Economics Chapter 2 Theory of Consumer Behaviour with Answers. The following Theory of Consumer Behaviour Class 12 Economics MCQ Questions have been designed based on the latest syllabus and examination pattern for Class 12. Our experts have designed MCQ Questions for Class 12 Economics with Answers for all chapters in your NCERT Class 12 Economics book.

Theory of Consumer Behaviour Class 12 MCQ Questions with Answers

See below Theory of Consumer Behaviour Class 12 Economics MCQ Questions, solve the questions and compare your answers with the solutions provided below.

Question. Law of Demand is a:
a) Qualitative Statement
b) Quantitative Statement
c) Both a) and b)
d) None of these

Question. When change in the price of goods-X affects the demand of goods-Y, this demand is called:
a) Price Demand
b) Income Demand
c) Cross Demand
d) All of these

Question. Which of the following is a reason for fall in demand ?
a) Fall in Income
b) Fall in Number of Buyers
c) Fall in Taste of Consumer
d) All the above

Question. Contraction in demand appears when:
a) Price rises and demand falls
b) Price rises and demand also rises
c) Price remains stable and demand falls
d) Price falls but demand remains stable

Question. For a change in which of the following, there is no change in demand ?
a) Change in price
b) Change in income
c) Change in taste and fashion
d) None of these

Question. Hie slope of the demand Curve of a normal goods is:
a) Negative
b) Positive
c) Zero
d) Undefined

Question. The demand curve of a good shifts from DD’ to dd

a) fail in the price of the goods
b) rise in the price of the goods
c) rise in the price of substitute goods
d) rise in the price of complementary goods

Question. Which of the following is a formula for measuring the elasticity of demand ?

Question. Following figure shows:

a) High Elastic Demand
b) Perfectly Elastic Demand
c) Perfectly Inelastic Demand
d) Inelastic Demand

Question. With which method, elasticity of demand is measured ?
a) Total Expenditure Method .
b) Percentage or Proportionate Method
c) Point Method
d) All of these

Question. What is the price elasticity in following example ?

a) -2.5
b) + 3.5
c) + 4.0
d) None of these

Question. Which of the following factor affects elasticity of demand ?
a) Nature of Goods
b) Price Level
c) Income Level
d) All of these

Question. Elasticity of demand for necessities is :
a) Zero
b) Unlimited
c) Greater than unity
d) Less than unity

Question. The elasticity of demand at the mid-point of a straight line demand curve:
a) will be zero
b) will be unity
c) will be infinity
d) None of these

Question. For luxury goods the demand is:
a) Inelastic
b) Elastic
c) Highly elastic
d) Perfectly Inelastic

Question. When there is no change in quantity demand in response to any change in price, it is a situation of :
a) Zero price elasticity
b) Infinite price elasticity
c) Unitary price elasticity
d) None of these 

Question. Law of DMU doesn’t hold true under which of the following situations?
a) Money
b) Hobbies
c) Addictions
d) All of these 

Question. Which of the following are the assumptions of Law of DMU?
(i) Continuous consumption
(ii) Standard units of consumption
(iii) Price of good and income of consumer should remain constant
(iv) Marginal utility of money should remain constant
(v) Quality of goods should remain the same
Choose from the options below.
a) (i), (ii) and (iv)
b) (ii), (iii) and (iv)
c) (iii), (iv) and (v)
d) (i), (ii), (iii), (iv) and (v) 

Question. If a commodity is available for free,how many units consumer should consume to be in equilibrium using one-commodity case of cardinal utility
approach?
a) 5 units
b) 10 units
c) Till MU becomes zero
d) Can’t be determined 

Question. Marginal utility curve of a consumer is also consider as his
a) indifference curve
b) total utility curve
c) supply curve
d) demand curve 

Question. When total expenditure increases in response to decrease in the price of the commodity the elasticity of demand is :
a) Greater than unity
b) Less than unity
c) Unity
d) Infinity 

Question. The slope of indifference curves is measured by
a) Marginal rate of transformation
b) Marginal rate of substitution
c) Marginal rate of technical substitution
d) None of these 

Question. When TU is increasing at a diminishing rate, MU must be :
a) Increasing
b) Decreasing
c) Constant
d) Negative 

Question. Marginal utility of a particular commodity at the point of saturation is :
a) Zero
b) Unity
c) Greater than unity
d) less than unity

Question. Which of the following equations is incorrect ?
a) MU= TUn+2 – TUn+1
b) MU= TU/Q
c) MU= TUn-TUn-1
d) TU= ΣMU 

Question. If the consumer consume only one commodity ‘X’ he will be in equilibrium when : [Here, MUx= Marginal utility of the good X (in terms of money); Px= Price of good –X]
a) MUx <Px
b) MUx= Px
c) MUx >Px
d) None of these 

Question. What will be the condition of total utility when marginal utility stays positive ?
a) Maximum
b) Diminishing
c) Increasing
d) Minimum 

Question. In which analysis can utility be measured in definite numbers such as 1,2,3,4 etc ?
a) Cardinal utility analysis
b) Ordinal utility analysis
c) Both of these
d) None of these 

Question. Diagrammatic presentation of consumer’s indifference set is called ?
a) Indifference curve
b) Utility curve
c) Budget line
d) Transformation curve 

Question. Budget line indicates :
a) Price ratio
b) Income ratio
c) Cost ratio
d) None of these 

Question. Law of Diminishing Marginal Utility states that when more and more units of a commodity ate consumed, marginal utility:
a) begins to increase
b) remains constant
c) begins to decrease
d) becomes zero 

Question. When total utility is maximum, marginal utility becomes :
a) Unity
b) Negative
c) Zero
d) Positive 

Question. An indifference curve is related to
a) Choice and preferences of the consumer
b) Consumer’s income
c) Prices of goods X and Y
d) Total utility from goods X and Y 

Question. Inferior goods are those whose income effect is :
a) Negative
b) Positive
c) Zero
d) None of these 

Question. Shift in demand curve means :
a) Fall in demand due to rise in own price of the commodity
b) Rise in demand due to fall in own price of the commodity
c) Change in demand due to factors other than the change in own price of the commodity
d) None of these 

Question. Attainable combinations of X and Y are drawn on the assumption that Px and Py are
a) Constant
b) Variable
c) Change in the same ratio
d) Equal to each other 

Question. According to IC analysis , a consumer attains equilibrium when :
a) MRSxy = Px/Py
b) MRSxy> Px/Py
c) MRSxy< Px/Py
d) None of these

Question. Given the fact that MRS between goods X and Y is diminishing , IC is:
a) Convex to the origin
b) Concave to the origin
c) Straight line
d) None of these

Question. Ed> 1 represents
a) Elastic demand
b) Inelastic demand
c) Unitary elastic demand
d) None of these

Question. On all points of rectangular hyperbola demand curve, elasticity of demand is
 a) Equal to unity
b) Zero
c) Greater than unity
d) Less than unity 

Question. When demand curve is parallel to X-axis, elasticity of demand is
a) Unity
b) Zero
c) Greater than unity
d) Infinity 

Question. Which of the following pairs represents substitute goods ?
a) Car and petrol
b) Coffee and tea
c) Bread and butter
d) All of the above 

Question. In case of Giffen’s Paradox the slope of demand curve is
a) Negative
b) Positive
c) Parallel to X-axis
d) Parallel to Y-axis

 Question. As a result of rise in consumer’s income , demand curve for coarse grain (inferior good) :
a) Shifts to the left
b) Shifts to the right
c) Becomes a horizontal straight line
d) Becomes a vertical straight line 

Question. If two goods are complementary then rise in the price of one results in
a) Rise in demand for the other
b) Fall in demand for the other
c) Rise in demand for both
d) None of these 

Question. The graphic presentation of a table showing price and demand relationship for a commodity in the market is called :
a) Individual demand curve
b) Producer’s demand curve
c) Market demand curve
d) Consumer’s demand curve

Question. How are goods X and Y when, as a result of rise in the price of good-X , demand for good-Y increases ?
a) Substitute goods
b) Complementary goods
c) Normal goods
d) Inferior goods 

Question. In case of normal goods, demand curve shows :
a) A negative slope
b) A positive slope
c) Zero slope
d) None of these 

Question. Law of demand must fall in case of :
a) Normal goods
b) Giffen goods
c) Inferior goods
d) None of these 

Question. Law of equi-marginal utility is a law of
(a) production of wealth
(b) consumption of wealth
(c) distribution of wealth
(c) exchange of wealth 

Question. Given the budget line 2x + 5y = 100, what will be its slope?
(a)−5/ 2
(b) 5/2
(c)−2/5
(d) 2/5 

Question. Which of the following statements are true about consumer’s equilibrium?
(a) It is the situation of rest
(b) There is only possible equilibrium at given point of time
(c) Consumer’s preferences continuously changes until it reaches equilibrium
(d) All of the above 

Question. At the point of equilibrium, a consumer always reaches to the maximum point of total utility curve. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement 

Question. As per ordinal approach, utility is ……… approach.
(a) qualitative
(b) quantitative
(c) Both (a) and (b)
(d) Neither (a) nor (b) 

Question. An ideal shape of indifference curve is always
(a) concave to the origin
(b) convex to the origin
(c) L-shaped
(d) a vertical straight line 

Question. The slope of indifference curve is called as ……… .
(a) market rate of exchange
(b) marginal rate of transformation
(c) marginal rate of substitution
(d) All of the above 

Question. Indifference curves between income and leisure for an individual are generally
(a) concave to the origin
(b) convex to the origin
(c) negatively sloped straight lines
(d) positively sloped straight lines 

Question. Choose the correct statement from below.
(a) At the point of equilibrium, consumer reaches the highest possible IC with given income
(b) At the equilibrium, not all the bundle lying on the IC are affordable
(c) IC which is beyond the budget line is not achievable
(d) All of the above are true 

Question. Law of DMU does not hold true in the absence of its assumptions. Choose from the option below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement 

Question. A consumer’s total expenditure is restricted by
(a) budget constraint
(b) utility
(c) satisfaction
(d) All of these

Question. Indifference curve is convex to the origin due to
(a) increasingmarginal rate of substitution
(b) diminishingmarginal rate of substitution
(c) increasingmarginal rate of substitution
(d) diminishingmarginal rate of substitution 

Question. ……… shows various combinations of two products that give same amount of satisfaction.
(a) ISO cost curve
(b) Indifference curve
(c) Marginal utility curve
(d) ISO quant 

Question. An indifference curve is always drawn for ……… commodities.
(a) one
(b) two
(c) three
(d) N-number 

Question. MRSYX is equal to which of the following equation?
(a) Change in X / Change in Y
(b) Change in Y / Change in X
(c) P_X/P_Y
(d) None of the above 

Question. What will be the impact of change in income on the budget line?
(a) Shifts to the right
(b) Shifts to the left
(c) Either (a) or (b)
(d) Neither (a) nor (b) 

Question. Ordinal utility approach was given by ……… .
(a) Prof. Alfred Marshall
(b) Prof. Hicks
(c) Prof. Samuelson
(d) Prof. Gossen 

Question. Which of the following is the vertical intercept of budget line?
(a) M/P_x
(b) M/P_y
(c) P_x /P_y
(d) None of these 

Question. What will be the impact of fall in price of good X on the slope of budget line?
(a) Rise
(b) Fall
(c) Remain constant
(d) Not defined 

Question. Which of the following is/are the feature(s) of utility?
(a) Subjective in nature
(b) Depend upon urgency of wants
(c) Both (a) and (b)
(d) None of the above 

Question. A consumer is in equilibrium consuming two goods when
(a) marginal utilities of different goods are equal
(b) slope of MRS is equal to slope of budget line
(c) Both (a) and (b)
(d) None of (a) and (b) 

Question. Which of the following are the properties of indifference curve?
(i) Downward sloping
(ii) Convex to the origin
(iii) Higher ICrepresents higher satisfaction
(iv) Two IC cannot intersect each other
(v) IC cannot touch either axis
(vi) IC need not to be parallel
Choose from the options below.
(a) (i), (ii), (iii), (iv) and (vi)
(b) (i), (ii), (iii), (iv) and (v)
(c) (i), (iii), (iv) and (vi)
(d) (i), (ii), (iii), (iv), (v) and (vi) 

Question. Budget line can change due to
(a) change in income
(b) change in price of either good X or good Y
(c) change in price of both goods
(d) All of the above 

Question. What will be the impact of rise in price of good Y on the budget line?
(a) Rotate inward from vertical axis
(b) Rotate outward from vertical axis
(c) Rotate inward from horizontal axis
(d) Rotate outward from horizontal axis 

Question. A set of indifference curve is known as
(a) Indifference map
(b) Indifference chart
(c) Indifference curve
(d) None of these 

Question. Under monotonically preferred bundle, a consumer gets more units of at least one commodity with no less units of other commodity or more units of both commodities. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement 

Question. The want satisfying power of a good is known as ……… .
(a) Utility
(b) Usefulness
(c) Both (a) and (b)
(d) None of these   

Question. Intersection of two indifference curves gives same level of satisfaction. Choose from the options below.
(a) True
(b) False
(c) Partially true
(d) Incomplete statement 

Question. An indifference curve which is drawn by taking economic bad commodity on both axis, will be
(a) convex to the origin
(b) concave to the origin
(c) L-shaped
(d) straight line   

Question. Marshall has given the law of Equimarginal utility related:
(a) Related to goods
(b) Related to money
(c) In relation to both
(d) None of these.

Question. Indifference curves were first introduced by the English economist in 1881 by:
(a) Edge worth
(b) Pareto
(c) Myers
(d) Hicks.

Question. If price of goods ‘X’ falls leading to increase in demand of goods ‘ Y’ then both the goods are:
(a) Substitute goods
(b) Complementary goods
(c) Not related
(d) Competitor.

Fill in the blanks:

Question. Consumer is a …………. human being.
Answer: Rational

Question. …………. propounded the law of Diminishing Returns.
Answer: Gossen

Question. An indifference curve gives …………. level of satisfaction to the consumers.
Answer: Equal

Question. There is …………. relation between price and demand.
Answer: inverse

State true or false:

Question. The proportion of the cost of two goods measures the slope of budget line.
Answer: True

Question. Budget set is a collection of all bundles that a consumer purchases from their income at market prices.
Answer: True