DELHI PUBLIC SCHOOL GHAZIABAD
Session (2019-20)
Unit Cycle No. 2
Class XI
Subject- Economics
Answer Key
Set – A
Q 1 What is meant by budget set?
Answer Set of attainable combinations of two goods, given market price of the goods
and income of the buyer.
Q2 Given the market price of good, how does a consumer decide as how many units of
that good to buy?
(a) On the basis of utility derived from consumption.
(b) On the basis of price paid.
(c) On the basis of relation between quality and price paid.
(d) On the basis of relation between utility derived and price paid.
Answer (D )
Q3 Rani buys two goods apple and orange. The marginal utility of last apple is 80 utils
and that of last orange is 40 utils. The price of apple is ₹40 and that of orange is
₹20. This means that Rani is buying:
(a) More apple and less orange.
(b) More orange and less apple.
(c) Both at optimal level
(d) Same quantity of both.
Answer (D)
Q4 I
Answer Range 82-50=32 Coeff. Of range=30/132=.227
Q5 All attainable combinations of Good -X and Good -Y are below the budget line of
a consumer. True or false?
Answer true
Q6 If a consumer has monotonic preferences, can she be indifferent between the
bundles (10,8) and (8,6)?
Answer No, as 10,8 gives more no of goods than 8,6
Q7 __________is unduly affected by extreme values and it is not based on all the values
of the observation.
Answer Range
1
Q8 Define dispersion.
Answer Scattering of data from central value is known as dispersion. It
indicatesthathowvalueofdispersionis differentfromits averagevalue.
Q9 Write any three exceptions to law of demand.
Answer i)Giffen goods: Demand of an inferior commodity falls with a fall in its price,
and rises with a rise in its price. Change in price leads to change in the real income of the
consumer. Therefore when the real income of the consumer increases because of fall in the
price he substitutes an inferior commodity by the superior commodity and similarly when his
real income falls because of rise in the price, he begins to consume more of the inferior
commodity. The resultant demand curve will move upwards which is contrary to our
assumption of the downward slope of the demand curve.(income effect is highly negative and
price effect is positive.
ii)Emergencies: Emergencies like war ,famine etc negate the operation of the law of demand.
At such times households behave in an abnormal way. Households accentuate scarcities and
induce further price rise by making increased purchases even when at higher price.
iii)IGNORANCE:Consumers ignorance is another factor that at times, induces him to
purchase more of a commodity at a higher price. This is especially so when the consumer is
haunted by the phobia that a higher priced commodity is better in quality than a lowered price
one.
iv)conspicuous consumption. A few goods like diamonds etc are purchased by the rich and
wealthy sections of the society, because the prices of such goods are so high that they are
beyond the reach of the common man. More of these copmmodities are demanded when their
prices go up very high.On the other hand, with a fall in the price of such articles, their
demand falls, (VEBLEN GOODS). The law of demand does not operate here.
Q 10 Give any two points of difference between change in demand and change in quantity
demanded.
Basis Change in demand Change in quantity
demanded
Cause Change in factors other Change in price
than price
Demand curve Shift of demand curve Movement on the same
demand curve.
Q 11 A commodity showing high elasticity of demand often has many close substitutes in
the market. Do you agree? Give example to justify your answer.
Answer Yes agree with. Elasticity is high for the good with more substitute as this
make it possible for the consumer to move from one commodity to other. Example
of tea and coffee will be explained.
Q 12 Due to a 10 % fall in price of a commodity, its quantity demanded rises from 400
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units to 450 units. Calculate its price elasticity of demand. Comment on the
elasticity and draw shape of demand curve.
Answer 1.25 more elastic demand curve flatter the curve.
Q 13 IC is downward sloping
IC is convex to origin.
Q 14 Explain the effect of the following on demand for a good:
i. Increase in the price of substitute goods
ii. Fall in the income of buyer if he buys normal goods.
Answer Demand for given good will increase
Demand for normal goods will increase.
Q15
Q1=13.33 QD=20.67
Q3=34 coff of QD=0.4367
BONUS QUESTION:
He will buy more of X and Less of Y
DELHI PUBLIC SCHOOL GHAZIABAD
Session (2019-20)
Unit Cycle No. 2
Class XI
Subject- Economics
Answer Key
Set – B
3
Q 1 What is meant by monotonic preference?
Answer Situation where consumer can get more of one good without sacrificing any
unit of other good or he gets more of both the goods.
Q 2 If marginal rate of substitution is constant throughout, the indifference curve will
be (Choose the correct alternative)
a. Parallel to x-axis.
b. Downward sloping concave.
c Downward sloping concave.
d Downward sloping straight line.
Answer d Downward sloping straight line.
Q3 Define dispersion.
Answer Scattering of data from central value is known as dispersion. It
indicatesthathowvalueofdispersionis differentfromits averagevalue.
Q4 Give any one point of difference between absolute and relative measure of
dispersion.
Answer Absolute measures of dispersion: It is measured in the same units
of original data. It means, it is used only within a series and is measured in the
same unit as that of series. It includes Range, IQR, QD, MD and SD.
Relative measures of Dispersion: This measure is independent from units. it
is calculated as the percentage or the coefficient. It is used for comparing two or
more series where units of measures are different.
It includes coeff. of range, coeff. of QD, coff of MD, and coeff, of SD.
Q5 All unattainable combinations of Good -X and Good -Y are below the budget line of
a consumer. True or false?
Answer False
Q6 Define budget set.
Answer Set of attainable combinations of two goods, given market price of the goods
and income of the buyer.
Q7 __________is unduly affected by extreme values and it is not based on all the values
of the observation.
Answer Range
Q8
Answer (c) Increasing the consumption of commodity X
Q9 Explain giving example, how nature of the good effect elasticity of demand for the
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good.
Answer Necessity goods less elastic demand
Comforts unit elastic demand
Luxuries more elastic demand
Q 10 Taste and preferences.
Answer Income of buyer
Price of related goods
Q 11 Write any three exceptions to law of demand.
Answer i)Giffen goods: Demand of an inferior commodity falls with a fall in its price,
and rises with a rise in its price. Change in price leads to change in the real income of the
consumer. Therefore when the real income of the consumer increases because of fall in the
price he substitutes an inferior commodity by the superior commodity and similarly when his
real income falls because of rise in the price, he begins to consume more of the inferior
commodity. The resultant demand curve will move upwards which is contrary to our
assumption of the downward slope of the demand curve.(income effect is highly negative and
price effect is positive.
ii)Emergencies: Emergencies like war ,famine etc negate the operation of the law of demand.
At such times households behave in an abnormal way. Households accentuate scarcities and
induce further price rise by making increased purchases even when at higher price.
iii)IGNORANCE:Consumers ignorance is another factor that at times, induces him to
purchase more of a commodity at a higher price. This is especially so when the consumer is
haunted by the phobia that a higher priced commodity is better in quality than a lowered price
one.
iv)conspicuous consumption. A few goods like diamonds etc are purchased by the rich and
wealthy sections of the society, because the prices of such goods are so high that they are
beyond the reach of the common man. More of these copmmodities are demanded when their
prices go up very high.On the other hand, with a fall in the price of such articles, their
demand falls, (VEBLEN GOODS). The law of demand does not operate here.
Q 12 Suppose the price elasticity of demand for a good is -1. At a given price the consumer
buys 60 units of the goods. How many units will the consumer buy if the price fall by 10 %?
Comment on the elasticity of demand.
Answer ed= % change in qd/% change in price
-1=% change in qd/10
% change in qd= --10% 66 units rectangular hyperbola demand curve
Q 13 What do you understand by consumer’s equilibrium? Show consumer’s equilibrium
with the help of utility analysis when the consumer purchases only one commodity.
Answer CONSUMER EQILIBRIUM UNDER UTILITY ANALYSIS:
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Condition of equilibrium:
1. MU of product / MU of a Rupee.= Price
2. Law of DMU must apply.
Quantity Price Marginal
Utility
1 3 8
2 3 7
3 3 5
4 3 3
5 3 2
Q 14 Using demand curves explain the effect of the following on demand for a good:
1. Increase in the price of complementary goods
2. rise in the income of buyer if he buys inferior goods.
Answer 1 Fall in the demand for given good
2 Fall in the demand for inferior good
Q15 Q1=34.25 Q3=59.545
QD=12.647
Coff of QD= 0.134
BONUS QUESTION:
He will buy less of good x and more of y.
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