Download 11 Economics - Consumer's Equilibrium and Demand - Assignment

Microeconomics
Class - XI
Consumer's Equilibrium and Demand – Assignment
All questions to be attempted in your economics register.
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Consumer's Equilibrium
1. State the law of diminishing marginal utility.
2. If Marginal Rate of Substitution is constant throughout, the indifference curve will be: (Choose the
correct alternative)
(a) Parallel to the X-axis.
(b) Downward sloping concave.
(c) Downward sloping convex.
(d) Downward sloping straight line.
3. _________ gives the slope of indifference curve. (Choose the correct alternative)
(a) Budget Line
(b) Marginal Rate of Substitution
(c) Income of the consumer
(d) Price Ratio
4. A consumer would buy more of X if: (Choose the correct alternative)
(a) MRS < Px/Py
(b) MRS = Px/Py
(c) MRS > Px/Py
(d) None of these.
5. A consumer would buy less of X if: (Choose the correct alternative)
(a) MUx/Px < MUy/Py
(b) MUx/Px > MUy/Py
(c) MUx/Px = MUy/Py
(d) None of these.
6. Giving reason, state whether the following statements are True or False:
a. As more of X is consumed, MRSxy increases.
b. When TU is maximum, MU is also maximum.
c. When TU falls, MU also falls.
d. When MU falls, TU falls.
7. Discuss briefly the following properties of an indifference curve:
(a) Convexity to origin
(b) Downward sloping from left to right
8. How does a consumer decide how much to buy of a commodity, given income of the consumer and
price of the commodity?
9. Explain the conditions of consumer’s equilibrium when the consumer consumes two commodities X
and Y using indifference curve approach. Use diagram.
10. A consumer consumes two goods X and Y and is in equilibrium. Price of X falls. Explain the reaction
of a rational consumer using utility analysis.
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Demand
1. If a rise in price of good Y leads to a rise in the demand for good X, then how are the two goods X
and Y related and why?
2. Arrange the following coefficients of price elasticity of demand in ascending order:
–0.87, –0.53, –3.1, –0.80
3. Demand for water is inelastic because __________ . (Fill up the blank with correct answer)
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4. A decrease in demand of a good X may be due to _____________ . (Choose the correct alternative)
(a) increase in the price of its substitute good Y.
(b) increase in its own price.
(c) increase in the price of its complementary good Z.
(d) decrease in its own price.
5. When demand for a commodity is perfectly inelastic, an increase in price by 2%, leads to decrease in
quantity demanded by ______________. (Choose the correct alternative)
(a) 10%
(b) 0%
(c) 3%
(d) 2%
6. Price elasticity of demand of two goods A and B is (–) 3 and (–) 4 respectively. Which of the two
goods is more elastic and why?
7.
With the help of diagrams, differentiate between ‘increase in demand’ and ‘increase in quantity
demanded’ of a good.
8.
Define market demand curve. Derive the market demand curve for a good using two individual
demand curves for that good.
9. State any four factors that can cause a rightward shift in the demand curve of a commodity.
10. Giving reason, state the impact of the following on the demand curve of normal good 'X' if:
(i) Price of its complementary good falls.
(ii) Income of consumer increases.
11. Distinguish between normal goods and inferior goods, with examples.
12. A consumer buys 40 units of a good at a price of `4 per unit. When price rises to `5 per unit he buys
30 units. Calculate the price elasticity of demand.
13. A consumer buys 2000 units of good at a price of `20 per unit. When the price falls, he buys 2500
units. If price elasticity of demand is (-)2, what is the new price?
14. At a price of `20 per unit the quantity demanded of a commodity is 400 units. When its price falls by
10%, the quantity demanded rises by 80 units. Calculate its price elasticity of demand.
15. Explain any four factors that affect the price elasticity of demand of a good with the help of examples.
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