‘ OUR OWN HIGH SCHOOL DUBAI

WORK SHEET

CHAPTER: CONSUMER EQUILIBRIUM GRADE 11

General Instructions:

i) 1-mark question need to be attended in one or two sentences only of the correct choice of MCQ with
choice answer need to be written.
ii) 3 marks questions are Short-answer type questions and are to be answered in 60-80 words each.
iii) 4 marks questions are also Short-answer type questions and are to be answered in 80-100 words each
iv) Diagrams must be properly labelled.

1 Read the following statements and choose the correct alternative given below. 1
Statement 1 – if Mux /Px > Mum, the consumer will react by ___________________________ .
a Increasing consumption of the good X b Decreasing consumption of the good X
c Shifting the consumption to some ither good. d Stoping the consumption the good X
2 Which of the following must be true when the marginal utility is negative? 1
a Total utility is increasing b Total utility is constant
c Total utility is diminishing d Total utility is negative.
3 Which set will be the monotonic preference of the consumer ? 1
a 10,6 b 11,6
c 8. 6 d 9, 6
3 The following budget line shows a shift in the units of Cheese and Butter consumption marked on X 1
and Y axis respectively. Identify the cause from the alternatives given below.

a Increase in price of cheese & decrease in b Decrease in price of cheese & increase
price of butter in price of butter
c Increase in consumer’s income d Decrease in price of both cheese and
butter

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5 Read the following statements – Assertion (A) and Reason (R). Choose one of the correct 1
alternatives given below
Assertion (A): Rotation of budget line is caused by change in consumer’s income and price of one
good.
Reason (R): Rotation of budget line results in change in the consumption of both goods for a
consumer.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of
Assertion (A).
c) Assertion (A) is true but Reason (R)is false
d) Assertion (A) and Reason (R)I is false
6 A consumer will increase the consumption of Good Y when _______________________ 1
a Mux/Px < MUy/Py b Mux/Px > MUy/Py
c Mux/Px = MUy/Py d None of the above
7 Study the following table and choose the correct alternative to re-arrange the items given in Column 1
2 to match with items given in column 1.

Column 1 Column 2
i Diminishing marginal utility 1 Constant value
ii Indifference sets 2 Increasing Total utility
iii Marginal utility of money 3 Same level of satisfaction
iv MRSxy < Px/Py 4 Equilibrium state

Alternatives:
a) 4, 3, 1, 2. b) 4, 2, 1, 3.
c) 1, 2, 4, 3. d) 2, 3, 1, 4.
8 Which among the alternatives is not a property of IC curves? 1
a IC’s intersect each other b IC’s are negatively sloped
c Sets on an IC gives different satisfaction d IC’s are convex to origin
9 If a consumer consumes two goods X and Y whose price is ₹ 8 and ₹ 5 respectively. At a certain level 1
of consumption his Marginal utility is 80 uts and 60 uts. The price of Good Y for the consumer to be
in equilibrium is __________________ .
a ₹7 b ₹ 10
c ₹8 d ₹6

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10 A consumer consumes 12 units of a good a receive a Total utility of 88 uts. Suppose by consuming 1
15 units his total utility is 107 utils , the marginal utility of the consumer is ________________ .
a 10 b 15
c 12 d 20
11 Fill in the blanks with respect to Marginal rate of substitution. Based on the behaviour comment on 3
the slope of the indifference curve.
Set A B D E F
Good X 8 9 12 14 -
Good Y 60 50 - 14 10
MRSxy - - 8 - 4

12 Why can’t two indifference curves intersect each other? 3

13 By spending his entire income only on two goods X and Y, a consumer finds that 3

How will the consumer react in this situation?

14 What is marginal rate of substitution? Why is it assumed to be diminishing? 3

15 How can you explain the satisfaction a consumer derives when he consumes more units of a 4
commodity successively? Explain with schedule and diagram.

16 A consumer consumes only two goods X and Y both priced at ₹ 3 per unit. If the consumer chooses a 4
combination of these two goods with marginal rate of substitution equal to 3, is the consumer is in
equilibrium? Give reasons. What will a rational consumer do in this situation? Explain

17 A consumer consumes only two goods X and Y whose prices are ₹ 2 and ₹ 1 per unit respectively. If 4
the consumer chooses a combination of the two goods with marginal utility of X being 4 and that of
Y also being 4, is the consumer in equilibrium? Give reasons. Explain what will a rational consumer
do in this situation. Use marginal utility analysis

18 A consumer consumes two goods X and Y. Discuss the conditions of his equilibrium under utility 6
approach. Show diagram.

19 A consumer wants to consume two goods. The prices of the goods are ₹ 4 and ₹ 5 respectively. The 4
consumer’s income is ₹ 20.
i) Write down the equation of the budget line.
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 ii) How much of Good-1 can the consumer consume if she spends her entire income on the
good
iii) How much of Good-2 can the consumer consume if she spends her entire income on the
good?
iv) What is the slope of the budget ?

20 Define consumer’s equilibrium. Explain the conditions of equilibrium under Indifference curve 6
approach.

21 Why does a consumer strike equilibrium only at the point of tangency of budget line and 6
indifference curve? Explain with diagram the rationale of this condition.

22 A consumer consumes Mangoes and Carrots whose price is ₹ 20 per Kg and ₹ 40 per Kg respectively. 6
He has a budget of ₹ 2000. answer the questions given below.
i) Determine and draw a budget set where the entire budget is not spent
ii) Determine and draw a budget set on the budget line
iii) Show a budget line when price of carrot decreases to ₹ 35 per Kg.
iv) What will happen to the budget line if consumer’s income and price of both goods double .

23 Why does a consumer demand less when the price of Good increases? Explain with utility analysis 4
using a numerical schedule
24 Raj consumes two X and y whose price is ₹ 8 and ₹ 4 respectively he has a budget of ₹ 80. 4
Given below the Marginal utility schedule of Good x and Good Y of Raj. Determine the budget set at
which Raj strikes equilibrium under utility approach.
Units 1 2 3 4 5 6 7 8 9
Mux 50 36 32 30 28 23 21 20 14
MUy 18 15 12 10 7 4 1 0 (2)

25 Explain any three properties of Indifference curve ? 6

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