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Theory of Consumer Behaviour
Suppose there was a 4 % decrease in the price of a good, and as a resu...

Suppose there was a 4 % decrease in the | Class 12 Micro Economics Chapter Theory of Consumer Behaviour, Theory of Consumer Behaviour NCERT Solutions

Welcome to the NCERT Solutions for Class 12 Micro Economics - Chapter Theory of Consumer Behaviour. This page offers a step-by-step solution to the specific question from Exercise 1, Question 26: . With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.

Question 26:

Suppose there was a 4 % decrease in the price of a good, and as a result, the expenditure on the good increased by 2 %. What can you say about the elasticity of demand?

Answer:

Percentage decrease in price = 4%
Increase in expenditure = 2%
∆E = ∆P{ q(1 ed )}
Since the price has decreased, the expenditure on the good will increase. This implies that the percentage of change in demand has increased more than the percentage decrease in price. The numerator is more than the denominator. This means that elasticity is more than
1. We can say that the small change in price has led to a bigger change in demand, and as a result, the demand is elastic.

Other Questions of Chapter Theory of Consumer Behaviour

How does the budget line change if the price of good 2 decreases by a rupee
but the price of good 1 and the consumer’s income remain unchanged?

If a consumer has monotonic preferences, can she be indifferent between the
bundles (10, 8) and (8, 6)?

Suppose the price elasticity of demand for a good is – 0.2. How will the expenditure on the good be affected if there is a 10 % increase in the price of the good?

Consider a market where there are just two consumers and suppose their demands for the good are given as follows:

Calculate the market demand for the good.

p	d1	d2
1	9	24
2	8	20
3	7	18
4	6	16
5	5	14
6	4	12

Suppose there are 20 consumers for a good and they have identical demand functions:

d(p)=10–3pd(p)=10–3p for any price less than or equal to 103103 and d1(p)=0d1(p)=0 at any price greater than 103.

Suppose a consumer’s preferences are monotonic. What can you say about her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

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?

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?

Suppose the price elasticity of demand for a good is – 0.2. If there is a 5 % increase in the price of the good, by what percentage will the demand for the good go down?

Suppose there are two consumers in the market for a good and their demand functions are as follows:

d1(p) = 20 – p for any price less than or equal to 20, and d1(p) = 0 at any price greater than 20.

d2(p) = 30 – 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.

Find out the market demand function.

Popular questions of class 12 Micro Economics

The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm’s supply curve is 0.5. Find the initial and final output levels of the firm.

A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?

How does the imposition of a unit tax affect the supply curve of a firm?

What is the supply curve of a firm in the long run?

Distinguish between a centrally planned economy and a market economy.

How will a change in the price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.

What is the total product of input?

List the three different ways in which oligopoly firms may have.

Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?

What is the relation between market price and average revenue of a price-taking firm?

Recently Viewed Questions of Class 12 Micro Economics

What are the total fixed cost, total variable cost and total cost of a firm? How are they related?

What is the ‘price line’?

What does the price elasticity of supply mean? How do we measure it?

What is a production possibility frontier?

Distinguish between microeconomics and macroeconomics.

What do you understand by normative economic analysis?

What do you understand by positive economic analysis?

What do you mean by the production possibilities of an economy?

What do the short-run marginal cost, average variable cost and short-run average cost curves look like?

What are the average fixed cost, average variable cost and average cost of a firm? How are they related?

Study Tips for Answering NCERT Questions:

NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:

Read the question carefully and focus on the core concept being asked.
Reference examples and data from the chapter when answering questions about Theory of Consumer Behaviour.
Review previous year question papers to get an idea of how such questions may be framed in exams.
Practice answering questions within the time limit to improve your speed and accuracy.
Discuss your answers with your teachers or peers to get feedback and improve your understanding.

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