INDIAN SCHOOL MUSCAT
DEPARTMENT OF COMMERCE, ECONOMICS AND HUMANITIES
WORKSHEET-2
CLASS XII – MICRO ECONOMICS
Date of issue:----------------------Reference: Introductory Micro economics
I.
a.
b.
c.
d.
e.
f.
g.
II.
Answer in one sentence each
Define utility
Define marginal utility.
What does cardinal measurement mean?
State law of diminishing marginal utility.
State the meaning of consumer equilibrium.
What does rationality of consumer indicate?
State the law of Equi-Marginal Utility.
Answer in around 60 words.
a.
b.
c.
d.
e.
What are the major assumptions of utility analysis?
Explain the relationship between total utility and marginal utility with the help of a diagram.
How many units of a commodity will a consumer consume in order to maximize her satisfaction?
How does a consumer reach equilibrium position when she is buying only one commodity?
Laxmi purchases 5 units of ice-cream at a price of Rs20/- per unit and gets maximum satisfaction
and is at equilibrium. If its price decreases to Rs.15 per unit, should she purchase more units or
less units in order to be at equilibrium? Explain.
f. Calculate Total utility from the following table.
Units:
1
2
3
4
5
6
7
Marginal Utility:
40
35
28
15
8
0
-5
III.
Answer in around 75 words.
a. Consider the following schedule. How many units of the commodity will the consumer consume
in order to maximize her satisfaction and to be at equilibrium if market price of the good is Rs.5/per unit.
How will she adjust her consumption if the market price increases to Rs.7 per unit? Explain the
reason.
Units:
1
2
3
4
5
6
7
8
Total Utility: 11
21
30
38
45
51
56
60
b. Giving a numerical example and diagram of your own explain the relationship between total
utility and marginal utility
c. State the whether the following statements are true or false. Give reasons for your answer.
1. The sum of total utility gives marginal utility.
2. When marginal utility coincides with X axis, total utility becomes constant.
3. When marginal utility is constant and positive, total utility reaches maximum and constant.
4. Consumer is at equilibrium when she consumes that many units of the good at which
marginal utility is zero, if the good is available at free of cost.
5. The slope of the total utility curve is marginal utility.
6. When total utility is rising marginal utility must be falling.
7. Consumer gets maximum satisfaction when total utility reaches maximum.