Theory of Consumer Behaviour Class 12 MCQ

Theory of Consumer Behaviour Class 12 MCQ Questions covers certain important topics, which are covered under syllabus for ISCE Class 12 and are coming in Term I examination for the academic year 2022-23. Theory of Consumer Behaviour Class 12 MCQ Test contains 41 questions. MCQ on Economics Class 12 ISC have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.




Theory of Consumer Behaviour Class 12 MCQ

Marginal Utility Analysis and Utility

1.A consumer will be in equilibrium when he spends his given income on the purchase of different goods in such a way so as to maximize his ________

(a)  Marginal Utility

(b) Demand

(c) Cardinal Utility

(d) Total Utility

Answer

Answer: (d) Total Utility


 

2.______ refers to the want satisfying power of a commodity

(a) Supply

(b) Demand

(c) Utility

(d) Indifference Curve

Answer

Answer: (c) Utility


 

3.Which one of the following is NOT a characteristic of Utility

(a) Utility is Relative

(b) Utility is same as demand

(c) Utility is different from usefulness

(d) Utility is subjective

Answer

Answer: (b) Utility is same as demand





4. A consumer will be _______ when he spends his given income on the purchase of different goods in such a way to maximize his total utility

(a) satisfied

(b) in a state of rest

(c) in equilibrium

(d) all of the above

Answer

Answer: (d) all of the above


 

5. A consumer will maximize his total utility when he allocates his income among various commodities in such a way that the _________ utility of the last rupee spent on each commodity is ______

(a) total, equal

(b) marginal, unequal

(c) marginal, equal

(d) Total, unequal

Answer

Answer: (c) marginal, equal


 

Theory of Consumer Behaviour Class 12 MCQ

Meaning of Utility – Total and Marginal

6. Utility refers to the _______ of a commodity

(a) price

(b) want-satisfying power

(c) weight

(d) none of the above

Answer

Answer: (b) want-satisfying power


 

7. Since utility is _______, it cannot be measured in objective terms

(a) relative

(b) Subjective

(c) a power

(d) none of the above

Answer

Answer: (b) Subjective





8.Smoking a cigarette has harmful effects on a person, even after this, why does it possess utility.

(a) Utility is not measurable

(b) Utility is abstract

(c) Utility is different from usefulness

(d) none of the above

Answer

Answer: (c) Utility is different from usefulness


 

Theory of Consumer Behaviour Class 12 MCQ

Relationship between T.U and M.U

9. What is the formula for calculating M.U of nth term ?

(a) TU n + TU n+1

(b) TU n – TU n+1

(c) TU n – TU n-1

(d) TU n – TU n -1

Answer

Answer: (d) TU n – TU n -1


 

10. What is Point of Satiation

(a) Point at which TU Is maximum

(b) Point at which MU is least

(c) Point at which MU is maximum

(d) Point at which MU = TU

Answer

Answer: (a) Point at which TU Is maximum


 

11. When M.U keeps on decreasing, T.U increases as long as the M.U is

(a) positive

(b) negative

(c) constant

(d) none of the above

Answer

Answer: (a) positive


 

12. MU is 0 when,

(a) T.U is increasing

(b) T.U is decreasing

(c) T.U is max

(d) Both b and c

Answer

Answer: (c) T.U is max


 

Answer the following with reference to the given schedule

Units of apples Total Utility Marginal Utility
0

1

2

3

4

5

6

0

10

16

20

22

22

19

10

6

4

2

0

-3




13. After consuming how many apples is M.U equal to zero

(a) 3

(b) 4

(c) 5

(d) 6

Answer

Answer: (c) 5


 

14.After consuming the 6th unit, why does the M.U become negative

(a) Because he has crossed his point of Satiety

(b) Because his taste changed

(c) because the size of the mango increased

(d) none of the above

Answer

Answer: (a) Because he has crossed his point of Satiety


 

15. M.U is positive but decreases when T.U

(a) increases at an increasing rate

(b) Decreases

(c) is 0

(d) Increases at a diminishing rate

Answer

Answer: (d) Increases at a diminishing rate





16.T.U is negative when

(a) M.U is 0

(b) M.U is negative

(c) T.U = M.U

(d) The statement is false

Answer

Answer: (d) The statement is false


 

17. Which one of these is NOT true about TU and MU

(a) TU in increases as long as MU is positive

(b) TU is maximum when MU is negative

(c) TU is maximum when MU is zero

(d) TU decreases when MU becomes negative

Answer

Answer: (b) TU is maximum when MU is negative


 

Theory of Consumer Behaviour Class 12 MCQ

Law of Diminishing Marginal Utility

18. The Law of Diminishing Marginal Utility states that as amount consumed of a commodity ______, other things being constant, marginal utility _____

(a) increases, Decreases

(b) Increases, Increases

(c) decreases, decreases

(d) decreases, increases

Answer

Answer: (a) increases, Decreases


 

19.Which one of the following are assumptions about the Law of Diminishing Marginal Utility

(a) All units of a commodity must be identical

(b) The utility is measurable

(c) There should be no change in taste of consumer

(d) All of the above

Answer

Answer: (d) All of the above





20. Which of these are exceptions to the Law of Diminishing Marginal Utility

(a) Desire for Money

(b) Food

(c) Water

(d) All of the above

Answer

Answer: (a) Desire for Money


 

Theory of Consumer Behaviour Class 12 MCQ

Consumer’s Equilibrium through Cardinal Utility

21. Consumer’s Equilibrium is attained when

(a) Marginal Utility of a Good is Maximum

(b) Marginal Utility of a Good is equal to Price of the good

(c) Marginal Utility of a good is less than Price of the good

(d) Consumer buys only one good

Answer

Answer: (b) Marginal Utility of a Good is equal to Price of the good


 

22. Given below is the Marginal Utility obtained by a consumer on purchasing the given number of units. If the price of the jacket is 650, at what quantity of shirts does the consumer obtain Equilibrium

Units Of jacket Marginal Utility in rupees
1

2

3

4

5

 750

700

650

600

550

(a) 2

(b) 3

(c) 4

(d) 5

Answer

Answer: (b) 3


 

23. If MUx > Px , a utility maximizing consumer will purchase _____ of the commodity

(a) more

(b) Less

(c) Same

(d) none of the above

Answer

Answer: (a) more


 

Equi-Marginal Utility

24. The utility maximizing consumer must allocate his income among various commodities in such a way that the last unit of money spent on each commodity gives him the same Marginal Utility. Name this Law

(a)  Law of Equi-Marginal utility

(b) Consumer Equilibrium Law

(c) Law of Diminishing Marginal Utility

(d) Law of Equilibrium Satisfaction

Answer

Answer: (a)  Law of Equi-Marginal utility





Indifference Curve Analysis

25. The indifference curve approach was fully developed by

(a) Adam Smith

(b) Alfred Marshall

(c)  JR Hicks and RGD Allen

(d) Paul Samuelson

Answer

Answer: (c)  JR Hicks and RGD Allen


 

26. ________ means that that Utility that a consumer gets from a commodity can be measured in absolute terms.

(a) Ordinal utility

(b) Indifference utility

(c) Cardinal Utility

(d) Scale of preference

Answer

Answer: (c) Cardinal Utility


 

27. A combination of how many goods are studied under Indifference Curve Analysis

(a) 1

(b) 2

(c) 3

(d) 4

Answer

Answer: (b) 2





28. ___________ refers to a tabular representation of various combinations of two goods that would give equal amount of satisfaction to the consumer

(a) Indifference Map

(b) Indifference Schedule

(c) Consumer equilibrium Curve

(d) indifference Curve

Answer

Answer: (b) Indifference Schedule


 

29. An indifference Curve is also known as

(a)  ISO-Utility Curve

(b) Utility Curve

(c) Budget Line

(d) MRS curve

Answer

Answer: (a)  ISO-Utility Curve


 

30. Which one of the following is not an assumption of Indifference Curve Analysis

(a) Subjectivity

(b) Rationality

(c) Transitivity of Choice

(d) Ordinal Utility

Answer

Answer:(a) Subjectivity


 

31. ___________ is the rate at which the consumer is willing to substitute one good for another without changing the level of consumption

(a) Marginal Opportunity Cost

(b) Marginal Utility

(c) Budget Allocation

(d) Marginal Rate of Substitution

Answer

Answer: (d) Marginal Rate of Substitution





32. Which one of the following is NOT a property of Indifference Curves

(a) An Indifference Curve slopes down from left to right

(b) Indifference Curves Intersect each other

(c) IC is convex to origin

(d) Higher IC yields higher satisfaction

Answer

Answer: (b) Indifference Curves Intersect each other


 

33. A high indifference curve shows a ______ level of satisfaction

(a) lower

(b) equal

(c) Higher

(d) none of the above

Answer

Answer: (c) Higher


 

34. Indifference Curves portray a combination of 2 goods which give the consumer ________

(a) no satisfaction

(b) equal satisfaction

(c) dissatisfaction

(d) utility

Answer

Answer: (b) equal satisfaction


 

35. Two indifference curves can never intersect each other since

(a) two indifference curves represent different amount of satisfaction

(b) a consumer’s satisfaction on consumption cannot be equal on two separate curves

(c) both of the above

(d) none of the above

Answer

Answer: (c) both of the above


 

36. ________ shows various combinations of 2 commodities which can be purchased with a given budget at given prices of 2 commodities

(a) Marginal Rate of Substitution

(b) Budget Line

(c) Indifference Curve

(d) Budget Curve

Answer

Answer: (b) Budget Line





37. In the given Budget Line, if the price of Clothes is 80 rupees and that of food is 40, at any point, what is the total budget of the consumer

(a) 400

(b) 300

(c) 200

(d) 100

Answer

Answer: (a) 400


 

38. The budget line is

(a) positively sloped

(b) Parallel to Y axis

(c) has a slope equal to the negative price ratio of the two commodities

(d) none of the above

Answer

Answer: (c) has a slope equal to the negative price ratio of the two commodities


 

Theory of Consumer Behaviour Class 12 MCQ

Consumer’s Equilibrium through Indifference Curve Approach

39. Which of the following is a condition for consumers equilibrium

(a) MRS = Price Ratio of the 2 goods

(b) MRS of two goods should be equal to Px/Py

(c) MRS should be decreasing at equilibrium

(d) All of the Above

Answer

Answer: (d) All of the Above


 

40.A consumer attains Equilibrium when

(a) He maximizes his total utility

(b) He buys goods within his budget

(c) He maximizes his utility, given his income and price of commodities

(d) None of the Above

Answer

Answer: (c) He maximizes his utility, given his income and price of commodities





41. An indifference curve above the budget line ________

(a) gives higher satisfaction to the consumer

(b) is unattainable to the consumer

(c) involves a higher combination of goods as compared to the lower curves

(d) All of the above

Answer

Answer: (d) All of the above


 

Economics Class 12 ISC MCQs – Term 1