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

What is ‘effective demand’? How will you derive the autonomous expenditure multiplier when price of final goods and the rate of interest are given?

Define fixed exchange rate. How is the exchange rate determined in a flexible exchange rate system?

Distinguish between decrease in demand and decrease in quantity demanded.

Define revenue receipts in a government budget. Explain how government budget can be used to bring in price stability in the economy.

Examine the effect of (a) fall in the own price of good X and (b) rise in tax rate on good X, on the supply curve. Use diagrams.

Explain the law of variable proportions with the help of total product curve. Use diagram.

When does a demand curve take the shape of a rectangular hyperbola?

Calculate ‘National Income’ and ‘Private Income’ from the following data:

		(Rs. crores)
1	Net current transfers to the rest of the world.	10
2	Private final consumption expenditure.	600
3	National debt interest.	15
4	Net exports.	(-)20
5	Current transfers from government.	5
6	Net domestic product at factor cost accruing to government.	25
7	Government final consumption expenditure.	100
8	Net indirect tax.	30
9	Net domestic capital formation Net factor income from abroad.	70
10	Net factor income from abroad.	10

A consumer consumes only two goods X and Y whose prices are ₹ 4 and ₹ 5 per unit respectively. If the consumer chooses a combination of the two goods with marginal utility of X equal to 5 and that of Y equal to 4, is the consumer in equilibrium? Give reasons. What will a rational consumer do in this situation? Use utility analysis.

Distinguish between movement along the supply curve and shift in the supply curve with the help of a suitable diagram.