R.

N Institute of Professional Studies

D-12 Main Kanti Nagar Krishna Nagar Delhi-51

Consumer behaviour and Demand

1.Define the following

Utility, Marginal utility, TU, Indifference curve and map, Budget line, Budget set, MU of one rupee, MRS,
monotonic Preferences, Demand, Market DD, Demand function, Demand schedule, Demand curve, Market
DD schedule and curve, Slope of Budget line, Cross price effect, Saturation Point

2. State law of diminishing MU with the help of schedule and diagram

3. Define consumer equilibrium .Explain its conditions assuming that the cons. Consume only one commodity.

4. How many units of a commodity a consumer would like to consume at a given level of price.

5. Starting from an initial situation of consumers equilibrium suppose MU of one rupee increases. Will it increase
or decrease the quantity demanded of the product.

6. Derive the law of demand from the single commodity eq. condition MU=Price?

7. A consumer consumes only two goods X and Y. State and explain the condition of consumers eq with the help of
utility analysis.

8. A consumer consumes only two goods X and Y and is in eq. Price of X rises. Explain the reaction of consumer
with the help of utility analysis.

9. State the relationship b/w MU and TU. Use diagram.

10. Define Budget line. Why is it downward sloping. What does a point on and inside Budget line indicate.

11. Eq. equation is common to all the consumer, but not the eq. quantity. Do you agree. How.

12. Mention the factors responsible for shift in budget line. How.

13. Explain the properties of Indifference Curve.

14. Explain the conditions of consumer equilibrium using IC approach.

15. A consumer consumes only two goods. Why is the consumer said to be in equilibrium. When he buys only that
combination of the two goods which lies at that point on Indifference Curve where the slope of budget line is equal
to slope of Indifference Curve

16. Distinguish between cardinal and ordinal measurement of utility.

17. How does the following affect the demand of the commodity.

(a) Price of related commodity. (b) Income of the consumer.

18. Distinguish between

(a) Movement and Shift in DD curve (b) Expansion And increase in DD curve (c) Contraction and decrease in DD
curve (d) Substitute commodity and complimentary commodity (e) normal commodity and inferior commodity (f)
Individual and market DD curve (g) Budget set and Budget line.

19. Mention the fractals responsible for right ward and left ward shift in DD curve.

20. Why does law of Demand operate.

21. Explain factors affecting ED.

22. Explain the following methods for cal Ed

(a) Percentage method (b) Expenditure method (c) Point method.

23. If a product price increases, family spending on the product also rises True or False. Explain.

24. Priya is indifferent to the bundle (4,7 and (4,8) indicate whether she has monotonic Preference or not.

25. A good may either be normal and inferior both True or False. Explain.

26. Distinguish between law of DD and ED.

27. Define those ED which has the same ED at the different point on the curve.

28. How many units of a commodity a consumer will consume if the commodity is available at free of cost?

29. Why is unity elastic demand curve a rectangular hyperbola?

30. How does budget line changes if income of the consumer increase to Rs 40,But price remain same.

31. How is market demand curve derived from individual demand curve.

32. A new steel plant comes up in jharkhand. Many people who were previously unemployed in the area are now
employed. How will this affect demand curve for B.W.TV and Colour TV?

33. In order to encourage tourism in Goa, Indian Airlines reduces the air fare to Goa. How will it affect market demand
curve for air travel to Goa?

34. There are train and bus services between New Delhi and Jaipur. Suppose that the train fare between the two cities
comes down. How will this affect demand curve for bus travel between the two cities?

35. What does the slope of budget line indicate.