TN STATEBOARD 11th ECONOMICS CHAPTER 2

TEST SOLUTIONS

CONSUMPTION ANALYSIS CHAPTER TEST

 

TEST –2

PADVIKSHA BLOG

 

TIME: 1 HOUR 15 Minutes

 

TOTAL MARKS: 25

 

 

         

I Multiple Choice Questions (MCQ) (Mark- 5 x 1 = 5)

Write all questions

1.Gossen’s first law is known as.

b. Law of diminishing marginal utility 

2. Elasticity of demand is equal to one indicates

a. Unitary Elastic Demand 

3. When TU diminishes, MU is

a) Negative 

4. Give potential price is Rs.375 and the actual price is Rs.200. Find the consumer surplus.

b) 175

5. If the Co-efficient elasticity is equal to zero it represents ___________ Supply

c. perfectly inelastic 

II ANSWER THE FOLLOWING QUESTIONS IN ONE OR TWO SENTENCES. (3x2=6)

 

Write Any 3 Questions:

1. What is the law of demand?

Answer:

“The quantity demanded increases with a fall in price and diminishes with a rise in price” – Marshall.

2. What are the determinants of elasticity of demand?

Answer: 

Availability of substitutes

Proportion of consumer’s income

Number of uses of commodity

Complementarity between goods.

3. Name the basic approaches to consumer behaviour.

1. Utility approach

2. Indifference curve approach

4. What are Giffen goods? Why it is called like that?

Answer: Giffen Paradox: The Giffen good or inferior good is an exception to the law of demand. When the price of inferior goods, falls, the poor will buy less and vice versa.

5. Mention the classifications of wants.

Answer: (a) Necessaries (b) Comforts (c) Luxuries.

 

III Short answer questions. (3 X 3 = 9)

 

WRITE ANY 3 QUESTIONS

1. Mention the relationship between marginal utility and total utility.

Answer:

Total Utility:

Marginal Utility:

1. If Total utility increases

1. Marginal utility declines

2. If Total utility reaches maximum.

2. Marginal utility reaches zero

3. If Total utility diminishes

3. Marginal utility becomes negative

 

2. Write a note on:

a. Needs: It is defined as goods or services that are required. This would include the needs for food, clothing, shelter and health care.

b. Price line or Budget line: The line joining various combination of the two goods which the consumer can buy at given prices and income.

c. Utility: Utility is the capacity of a commodity to satisfy human wants.

 

3. Explain the theory of “consumer’s surplus”.

 Answer: Alfred Marshall defines consumer's surplus as "the excess of price which a person would be willing to pay a thing rather than go without the thing, over that which he actually does pay is the economic measure of this surplus satisfaction. This may be called consumer's surplus.

Assumptions: 

 

(i) Utility can be measured 

(ii) Marginal Utility of money remain constant. 

(iii) Taste, income and character of consumer does not change. 

 

Measurement: 

Consumer's surplus: Potential Price Actual Price 

Consumer surplus: TU (P x Q) 

 

4. Distinguish between extension and contraction of demand.

 Answer: If the changes in the quantity demanded is due to the change in price alone then it is called extension and contraction of demand. Buying more at lower price is extension of demand and less at higher price is contraction of demand.

IV. Long Answer question (1 x 5 = 5)

 BOTH ANSWERS GIVEN IN WEBSITE LINK

https://padvikshablog.blogspot.com/2020/09/tn-stateboard-11th-economics-unit-2.html

 

1. Explain the law of demand and its exceptions.

2. Elucidate the law of diminishing marginal utility with diagram.

 

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