Posted by Anjali Kaur on Aug 18, 2020

# Worksheet on The Theory of Consumer Behavior

This worksheet is related to the below-mentioned topics on consumer behavior, make sure you have revised each of them before attempting the worksheet:

Revised them thoroughly? Then solve the worksheet on the above topics.

## Worksheet on the theory of consumer behavior

Q1. Who is a consumer?

Q2. What is utility?

Q3. What is a budget constraint or budget set?

Q4. What bundles a consumer can purchase?

Q5. Name the approaches to study consumer behavior.

Q6. What is cardinal utility approach?

Q7. What is ordinal utility approach?

Q8. What is total utility at zero level of consumption?

Q9. Derive MU  from TU schedule given below:

Q 10. Discuss the characteristics of utility.

Q 11. An individual’s MU schedule is given below. Derive TU from it.

Q 12. A consumer, Mr. Aman is in a state of equilibrium consuming two goods X and Y, with given prices Px and Py.

(a) What will happen if  MUx/Px> MUy/Py?

(b) What will happen if Py falls?

Q 13. A consumer consumes only two goods X and Y. Marginal utilities of X and Y are 4 and 3 respectively. The price of X and the price of Y is Rs 3 per unit. Is the consumer in equilibrium? What will be the further reaction of the consumer? Give reasons.

Q 14. A consumer consumes only 2 goods X and Y. The marginal utilities of X and Y are 3. Prices of X and Y are Rs 2 and Rs 1 respectively. Is the consumer in equilibrium? What will be the further reaction of the consumer? Give reasons.

Q 15. Explain consumer equilibrium using indifference curve analysis.

Q 16. What is consumer Budget?

Q 17. What are monotonic preferences?

Q 18. Explain Budget constraint. With diagram.

Q 19. Derive the slope of budget line.

Q 20. What leads to change in the budget line.

Q 21. Explain Indifference curve analysis with its properties.

Q 22. A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s 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?

Q 23. Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her entire income. The prices of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer’s income?

Q 24. Explain why the budget line is downward sloping?

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