Consumer Behaviour Cardinal And Ordinal Utility Analysis — Important Questions
ICSE · Class 12 · Economics
68 important questions from Consumer Behaviour Cardinal And Ordinal Utility Analysis for ICSE Class 12 Economics, with answers.
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Important Questions from Consumer Behaviour Cardinal And Ordinal Utility Analysis
In an indifference schedule, Geeta has bundles: 1 food and 12 clothing; 2 food and 8 clothing; 3 food and 5 clothing. What is the total clothing given up to obtain the third unit of food, and what is the diminishing MRS pattern?
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7 clothing units in total; MRS falls from 4 to 3
From 1 to 2 food, Geeta gives up 4 clothing. From 2 to 3 food, she gives up 3 clothing. Total clothing given up to reach 3 food is 7 units, and MRS falls from 4 to 3.
For a good, TU is 10, 18, 24, 28, 30, 30, and 28 for the first seven units. What are the marginal utilities of the 2nd, 5th, 6th, and 7th units?
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8, 2, 0, and -2 units of utility
MU is the change in TU. So MU2 = 18 - 10 = 8, MU5 = 30 - 28 = 2, MU6 = 30 - 30 = 0, and MU7 = 28 - 30 = -2.
A consumer spends ₹24 on X and Y. Px = ₹2, Py = ₹3. The marginal utilities are MUx = 20, 18, 16, 14, 12, 10 for X and MUy = 24, 21, 18, 15, 12, 9 for Y. Which bundle gives equilibrium?
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6 units of X and 4 units of Y
Compute per rupee utility: MUx/Px = 10 at 1 unit, 9 at 2 units, ..., 5 at 6 units. MUy/Py = 8, 7, 6, 5, ... The equality occurs at MUx/Px = 5 for 6 units of X and MUy/Py = 5 for 4 units of Y.
A consumer's budget line shifts rightward when income rises from ₹100 to ₹120. If Px = ₹20 and Py = ₹10 remain unchanged, what are the new maximum quantities of X and Y, and why does the line remain parallel?
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6 units of X and 12 units of Y; because the price ratio stays the same
New maxima are 120/20 = 6 units of X and 120/10 = 12 units of Y. The budget line remains parallel because the price ratio Px/Py does not change.
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