Micro

Consumer Behaviour

Medium

Arun spends 200 rupees on good X irrespective of its price whereas Varun buys 10 units of Good X irrespective of its price. The respective values of the price elasticity of demand for Good X for both the consumers is

0 and 1 respectively.

1 and 0 respectively.

0 for both the consumers.

less than 1 for Arun and More than 1 for Varun.

✅ Correct Option: 2

Option 1 -> Arun has elasticity 0 (perfectly inelastic) and Varun has elasticity 1 (unitary elastic) - This is incorrect as it reverses the actual elasticities.

Option 2 -> Arun has elasticity 1 (unitary elastic) and Varun has elasticity 0 (perfectly inelastic) - This correctly identifies their demand behaviors.

Option 3 -> Both have elasticity 0 (perfectly inelastic) - This ignores that Arun's spending pattern shows unitary elasticity.

Option 4 -> Arun has elasticity less than 1 and Varun has elasticity more than 1 - This contradicts their actual demand patterns.

Hence, Option 2: 1 and 0 respectively -> Arun spends a constant amount (₹200) regardless of price, meaning when price increases, he buys proportionally fewer units, and vice versa. This represents unitary elastic demand (elasticity = 1). Varun buys a fixed quantity (10 units) regardless of price changes, meaning quantity demanded never changes. This represents perfectly inelastic demand (elasticity = 0). Therefore, their elasticities are 1 and 0 respectively. -> correct

2025: 3 June Shift 2

Arrange the following statements showing the change in budget set due to change in income.

(A) The equation of the budget line is $P_1 X_1 + P_2 X_2 = M'$ .

(B) Consumer's income increases from $M$ to $M'$ , but the price of goods remains constant.

(D) Consumers can buy more of the goods at the prevailing market prices.

Choose the correct answer from the options given below:

2025: 13 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Analysis assumes that level of utility can be expressed in numbers.	(I) Cardinal Utility
(B) Change in total utility due to consumption of one additional unit of a commodity	(II) Law of Diminishing Marginal Utility.
(C) Marginal utility from consuming each additional unit of a commodity declines as its consumption increases.	(III) Marginal Utility
(D) The amount of mangoes that the consumer has to forego in order to get an additional banana, her total utility level being the same.	(IV) Marginal rate of substitution

Choose the correct answer from the options given below:

2025: 13 May Shift 2

Which among the following are the features of the indifference curve?

(A) Indifference curve slopes downwards from left to right.

(B) Higher indifference curve gives greater level of utility.

(D) Two indifference curves never intersect each other.

Choose the correct answer from the options given below:

2025: 27 May Shift 2

Which of the following statements are correct:

(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 bundle.

(B) The tendency for the MRS to fall with increase in quantity of goods is known as the Law of Diminishing Marginal Rate of Substitution.

(D) The budget set is the collection of all bundles that the consumer can buy with their income at the prevailing market prices.

Choose the correct answer from the options given below:

2025: 16 May Shift 1

Two goods X and Y are such a combination that, when the price of good Y increases, the demand for good X increases,

How are goods X and Y related?

2025: 27 May Shift 2

If the price of a commodity increases by 20%, its demand drops by 20%. Then how it will affect the expenditure?

Arun spends 200 rupees on good X irrespective of its price whereas Varun buys 10 units of Good X irrespective of its price. The respective values of the price elasticity of demand for Good X for both the consumers is

Solution

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