Students of class 12 Economics should refer to MCQ Questions Class 12 Economics Theory of Consumer Behaviour with answers provided here which is an important chapter in Class 12 Economics NCERT textbook. These MCQ for Class 12 Economics with Answers have been prepared based on the latest CBSE and NCERT syllabus and examination guidelines for Class 12 Economics. The following MCQs can help you to practice and get better marks in the upcoming class 12 Economics examination

Chapter 2 Theory of Consumer Behaviour MCQ with Answers Class 12 Economics

MCQ Questions Class 12 Economics Theory of Consumer Behaviour provided below have been prepared by expert teachers of grade 12. These objective questions with solutions are expected to come in the upcoming Standard 12 examinations. Learn the below provided MCQ questions to get better marks in examinations.

Question. How is law of demand expressed functionally?
(a) DX = f (PX), ceteris paribus
(b) DX = f (PZ), ceteris paribus
(c) DX = f (Y), ceteris paribus
(d) DX = f (T), ceteris paribus

Question. Giffen good is:
(a) An inferior good
(b) One with high negative income elasticity of demand
(c) Consumed by low-paid workers
(d) All of the above

Question. Veblan good is:
(a) Good of status
(b) Consumed by very high income group
(c) Like diamonds
(d) All of the above

Question. When same units are demanded at a higher price, it shows:
(a) Increase in demand
(b) Expansion in demand
(c) Decrease in demand
(d) Contraction in demand

Question. Ed = 1 in case of:
(a) Luxuries
(b) Normal goods
(c) Necessities
(d) Essentials

Question. When there is fall in the price of complementary good and rise in the price of substitute good, it shows:
(a) Increase in demand
(b) Expansion in demand
(c) Decrease in demand
(d) Contraction in demand

Question. When demand curve is downward sloping, its slope is:
(a) Negative
(b) Positive
(c) Constant
(d) Zero

Question. Factor which affects market demand but not individual demand can be:
(a) Number of consumers in the market
(b) Age and sex composition of population
(c) Distribution of income
(d) All of the above

Question. Law of demand does not hold in case of:
(a) Emergency
(b) Expectation of price rise
(c) Conspicuous goods
(d) All of the above

Question. In Marginal utility theory, utility is:
(a) An ordinal concept
(b) A cardinal concept
(c) Both ordinal and cardinal concept
(d) None of the above

Question. As the consumer has more units of a commodity, his total utility from the commodity:
(a) Increases less than in proportion, reaches a maximum and then falls
(b) Increases less than in proportion and then falls
(c) Increases more than in proportion and then reaches a maximum
(d) Falls, becomes zero and then negative

Question. If with the rise in price of good Y, demand for good X rises, the two goods are: 
(a) Substitutes
(b) Complements
(c) Not related
(d) Jointly demanded

Question. Expansion of demand is shown by:
(a) Upward movement on the demand curve
(b) Downward movement on the demand curve
(c) Rightward shift of the demand curve
(d) Leftward shift of the demand curve

Question. Income effect states that as price of a good falls, demand rises because there is rise in:
(a) Money income
(b) Real income
(c) Relative price of other goods
(d) Marginal utility

Question. Substitution effect states that as price of a good falls, demand rises because there is rise in:
(a) Money income
(b) Real income
(c) Relative price of other goods
(d) Marginal utility

Question. When income of the consumer falls the impact on price-demand curve of an inferior good is:
(a) Shifts to the right
(b) Shifts to the left
(c) There is upward movement along the curve
(d) There is downward movement along the curve

Question. Price elasticity of demand on a linear demand curve at the x-axis is equal to:
(a) Zero
(b) One
(c) Infinity
(d) 0 < Ed < 1

Question. Price elasticity of demand on a linear demand curve at the y-axis is equal to:
(a) Zero
(b) One
(c) Infinity
(d) 0 < Ed < 1

Question. Ed = _______
(a) ΔQ/ΔP. P/Q
(b) ΔP/ΔQ. Q/P
(c) ΔP/ΔQ. P/Q 
(d) ΔQ/ΔP. Q/P

Question. Demand is elastic when:
(a) Price level is high
(b) More substitutes are available
(c) Income of the consumer is less
(d) All of the above

Question. The absolute value of the coefficient of price elasticity of demand ranges from:
(a) Zero to infinity
(b) Minus infinity to plus infinity
(c) One to minus infinity
(d) One to infinity

Question. With rise in coffee price, the demand of tea:
(a) Remains stable 
(b) Falls
(c) Rises
(d) None of these

Question. Goods, which can alternatively be used, are called:
(a) Complementary Goods
(b) Substitutes
(c) Comforts
(d) None of these

Question. Utility can be measured by:
(a) Money
(b) Exchange of goods
(c) Weight of the good
(d) None of these

Question. Who propounded the ordinal utility theory’ ?
(a) Marshall
(b) Pigou
(c) Hicks and Allen
(d) Ricardo

Question. If the demand for a good changes by 60% due to 40% change in price, the elasticity of demand is :
(a) 0.5
(b) -1.5
(c) 1
(d) zero

Question. Marshall has given the law of Equimarginal utility related:
(a) Related to goods
(b) Related to money
(c) In relation to both
(d) None of these.

Question. Which of the following shows elasticity less than one ?
(a) Necessity Goods
(b) Comforts
(c) Luxuries
(d) All of these

Question. When change in the price of goods-X affects the demand of goods-Y, this demand is called:
(a) Price Demand
(b) Income Demand
(c) Cross Demand
(d) All of these

Question. Any statement about demand for a good is considered complete only when the following is/are mentioned in:
(a) Price of the good
(b) Quantity of the good
(c) Period of time
(d) All of these

Question. Which is the First Law of Gossen?
(a) Law of Demand
(b) Law of Diminishing Marginal Utility
(c) Law of Equi-marginal Utility
(d) Consumer’s Surplus

Question. When TU becomes maximum, MU is:
(a) Positive
(b) Negative
(c) Zero
(d) None of these

Question. Any statement about the demand of an object is considered complete when it is mentioned in the following:
(a) Price of good
(b) Demand of good
(c) Time period
(d) All of the above.

Question. Which of the following factor affects elasticity of demand ?
(a) Nature of Goods
(b) Price Level
(c) Income Level
(d) All of these

Question. With a rise in price the demand for ‘Giffin’ goods:
(a) decreases 
(b) increases
(c) remains constant
(d) becomes unstable

Question. For the maximum satisfaction of consumer:
(a) Marginal utility of a good should be equal to its price.
(b) Marginal utility of a good should be greater than its price.
(c) There is no relation between marginal utility and price.
(d) None of these

Question. In difference curve is:
(a) Convex to the origin
(b) Concave to the origin
(c) Both (a) and (b) true
(d) All of these false

Question. Elasticity of demand is a:
(a) Qualitative Statement
(b) Quantitative Statement
(c) Both (a) and (b)
(d) None of the above

Question. Who gave the cardinal concept of utility?
(a) Marshall
(b) Pigou
(c) Hicks
(d) Samuelson

Question. Which element is essential for demand ?
(a) Desire to consume
(b) Availability of adequate resources
(c) Willingness to consume
(d) All of these

Question. Ed = ∞ in case of:
(a) Luxuries
(b) Normal goods
(c) Necessities
(d) Perfect competition

Question. Ed = 0 in case of:
(a) Luxuries
(b) Normal goods
(c) Necessities
(d) Essentials

Question. Price elasticity of demand of a horizontal demand curve is called:
(a) Perfectly elastic
(b) Perfectly inelastic
(c) Elastic
(d) Inelastic

Question. Price elasticity of demand of a vertical demand curve is called:
(a) Perfectly elastic
(b) Elastic
(c) Inelastic
(d) Perfectly inelastic

Question. When percentage change in quantity demanded is more than the percentage change in price than demand curve is:
(a) Flatter
(b) Steeper
(c) Rectangular hyperbola
(d) Horizontal

Question. When percentage change is quantity demanded is less than the percentage change in price demand curve is:
(a) Flatter
(b) Steeper
(c) Rectangular
(d) Horizontal

Question. If Marginal Rate of Substitution is constant throughout, the Indifference curve will be:
(a) Parallel to the x-axis.
(b) Downward sloping concave.
(c) Downward sloping convex.
(d) Downward sloping straight line.

Question. A consumer consumes only two goods. If price of one of the goods falls, the indifference curve:
(a) Shifts upwards
(b) Shifts downwards
(c) Can shift both upwards or downwards
(d) Does not shift

Question. When marginal utility is zero, total utility is: 
(a) Zero
(b) Minimum
(c) Maximum
(d) Negative

Question. In Marginal utility theory, marginal utility of money:
(a) Rises
(b) Constant
(c) Falls
(d) Rises and then falls

(HOTS) Questions.

Question. Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
Ans. No, the preferences of my friend are not monotonic since bundle (6, 6) should be monotonically preferred to bundle (5, 6).

Question. When a consumer is below the budget line, what does it mean?
Ans. It means that consumer is not spending his entire income.

Question. If the quantity of a commodity demanded remains unchanged as its price changes then what will be the value of price elasticity of demand?
Ans. Since change in quantity demanded (DQ) is zero, the value of elasticity of demand will be zero.

Question. What is the relation between good X and good Y in each case, if with fall in the price of X demand for good Y (i) rises and (ii) falls? Give reasons.
Ans. (i) If with fall in price of X (say, sugar) demand for good Y (say, tea) rises. Then goods X and Y are complements.
       (ii) If with fall in price of X (say, tea) demand for good Y (say, coffee) falls, then X and Y are substitutes.

Question. What do you mean by an ‘inferior good’? Give some examples.
Ans. An inferior good is one whose consumption falls with rise in income of the consumers and vice versa. For xample, low quality food items like ink coarse cereals. There is inverse relationship between income and demand.

Question. What do you mean by ‘monotonic preferences’?
Ans. Monotonic preferences:
       A consumer’s preferences are monotonic if and only if between any two bundles, the consumer prefers the bundle which has more of at least one of the goods and no less of the  other good as compared to the other bundles.

We hope the above multiple choice questions for Class 12 Economics for Chapter 2 Theory of Consumer Behaviour provided above with answers based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS are really useful for you. Theory of Consumer Behaviour is an important chapter in Class 12 as it provides very strong understanding about this topic. Students should go through the answers provided for the MCQs after they have themselves solved the questions. All MCQs have been provided with four options for the students to solve. These questions are really useful for benefit of class 12 students. Please go through these and let us know if you have any feedback in the comments section.