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Theory of consumer behaviour — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsTheory of consumer behaviour4 Marks
Question
Explain the difference between (i) inferior goods and normal goods and (ii) cardinal utility and ordinal utility. Give example in each case.
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Answer

  1. Any good whose demand falls with rise in income is called an Inferior good.
Example: Suppose with rise in income a consumer buys less of X and instead buys more of Y then good X is inferior for that consumer.
Normal good is one whose demand rises with rise in income. Suppose with rise in income consumer buys more of X, then X is a normal good for that consumer.
  1. When utility can be expressed in exact units it is called Ordinal Utility.

Suppose a consumer says that he gets 2 units of utility from consumption of a good than it is Cardinal Utility. When utility is expressed in rank it is called Ordinal Utility. When a consumer says he gets less satisfaction from second unit as compared to the first unit, it is expression in terms of ordinal utility.

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