2. Theory of Consumer Behavior - Exercise

 Exercise - Theory of Consumer Behavior

Very Short Answer Questions                                                             2 Marks

1. Define utility.
2. Define cardinal utility approach.
3. Define ordinal utility approach.
4. Differentiate between cardinal utility approach and ordinal utility approach.
5. What is total utility?
6. What is marginal utility?
7. Define average utility.
8. State the law of diminishing marginal utility.
9. What are the assumptions of law of diminishing marginal utility?
10. Define law of substitution.
11. What are the limitations of law of substitution?
12. Define consumer surplus.
13. What are the importance of law of substitution?

Short Answer Questions                                                                      5 Marks

1. Define total utility and marginal utility with table and diagram.
2. Discuss the nature of marginal utility curve.
3. Explain the law of diminishing marginal utility only by the help of a figure.
4. What are the assumptions of law of diminishing marginal utility?
5. What are the exceptions or limitations of the law of diminishing marginal utility (MU)?
6. Explain law of substitution only by the help of a figure.
7. What are the limitations of law of substitution?
8. Explain the law of consumer surplus only by the help of a figure.
9. What is the importance of consumer's surplus?

Long Answer Questions                                                                      10 Marks

1. Explain the total utility and marginal utility. Explain the relationship between them.
2. What is law of diminishing marginal utility? Explain it with the help of a table and diagram.
3. Explain the law of diminishing marginal utility. What are its limitations?
4. Explain the law of diminishing marginal utility. What are the importance of this law?
5. Explain the law of substitution with the help of table and diagram.
6. State and explain the law of equi-marginal utility. What are its assumptions?
7. State and explain the law of substitution. What are its exceptions?
8. Explain the law of consumer's surplus. What are tis limitations?
9. Explain the concept of consumer's surplus. What are its points of importance or uses?