MODERN SCHOOL, NOIDA

ASSIGNMENT
CLASS 12TH
ECONOMICS

ONE MARKS QUESTIONS

1.What causes a downward movement along a demand curve?

2.Give one point of difference between normal good and giffen good.
3. Define indifference set.
4. Give one point of difference between cardinal and ordinal utility.
5.What does a point on the budget line indicate in terms of prices?
6. Define monotonic preferences.

THREE MARKS QUESTIONS

1. A consumer buys a good. How much quantity of the good, he will buy to be in equilibrium, if price of that
good is zero? Also comment upon the marginal utility at equilibrium point.
2. What is the relation between good X and good Y, if with rise in the price of good X, demand for good Y rises?
Give an example.
3. Explain the law of demand with the help of a demand schedule.
4. Differentiate between convex preferences and monotonic preferences.
5.Explain any three properties of indifference curve.
6. A consumer buys two goods X & Y. Income of the consumer and price of Y good remaining unchanged,
Price of X falls
a) What would be its impact on his budget line?
b) How this will affect, consumer budget set ?
c) How will he react to this change ?

FOUR MARKS QUESTIONS

1.Distinguish between change in demand and change in quantity demanded.

2.Expalin any three causes of decrease in demand.
3. On 16th December 2014, the following news was printed in the Economic Times:
Petrol and diesel prices were cut by Rs. 2 per litre each as international oil prices slumped to a five year low
Use diagram and economic theory to analyse the impact on the demand for cars in india.
4.Explain the concept of marginal rate of substitution by giving an example. What happens to MRS
when consumer moves downward along the indifference curve. Give reason for your answer.
5.Expalin the properties of budget line.
6.What does the following indicate?
a)movement along the same indifference curve.
b)movement from lower indifference curve to higher indifference curve.

SIX MARKS QUESTIONS

1.Mr. X consumes two commodities A & B whose prices are Rs. 6 & Rs. 8 per unit respectively. Does the Mr. X
strikes his equilibrium when he is getting marginal utility of A equal to 7 and that of B also equal to 7.
2. Give true or false giving reasons:
a. If quantity demanded of good X rises with the fall in household's income, it is a normal good.
b. If demand of CNG rises due to rise in the price of petrol , they are substitutes.
c. When the price of the commodity falls its demand increases.
d. Demand for a commodity may rise even at constant price.
e. Individual demand is related to micro, market demand is related to macro.
f. In case of normal goods income effect is negative.
g. in case of inferior goods law of demand fails.
h. Demand curve of salt shifts when its price falls.
i. When price of commodity X rises , its demand decreases.
j. Veblan goods are exceptions to law of demand.

3. How will the following affect the demand curve for a commodity? Use Diagram.
a. Rise in the price of complement.
b. Rise in the price of the substitute.
c. Increase in income.
d. Expectation of a future fall in price of the commodity.
e. Fall in price o the commodity.
f. Taste in favour of the commodity.

4. State true or false

a) The rate at which the consumer can substitute Good-X for Good-Y tends to declare as we move
downward along the price line.
b) Increase in income of the consumer is the only cause that leads to a parallel shift to budget line
to the right.
c) When MRSXY< PX/PY, the consumer reaches the point of equilibrium only when the consumption
of X increases and of Y decreases.
d) A situation when PX/PY > MUX/MUY is better than when PX/PY = MUX/MUY.

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

6.The price of X is Rs. 2 and that of Y is Rs. 5 and the income of the consumer is Rs. 30. Find the consumers
equilibrium from the following data:-
Units consumed MU of x ( in utils) MU of y ( in Utils)
1 20 45
2 14 40
3 12 25
4 10 10
5 4 5
6 0 0
7 -2 -10