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Consider a market where there are just two consumers and suppose their demands for the good are given as follows: Calculate the market demand for the good.

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Important Questions on Theory of Consumer Behaviour

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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
What do you mean by complements? Give examples of two goods which are complements of each other.
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Suppose the price elasticity of demand for a good is –0.2. If there is a 5 % increase in the price of the good, by what percentage will the demand for the good go down?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Consider the demand curve D(p) = 10 – 3p. What is the elasticity at price 5/3?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5, respectively. The consumer’s income is Rs 20. (i) Write down the equation of the budget line.
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5, respectively. The consumer’s income is Rs 20. (ii) How much of good 1 can the consumer consume if she spends her entire income on that good?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Suppose the price elasticity of demand for a good is –0.2. How will the expenditure on the good be affected if there is a 10 % increase in the price of the good?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Why is the budget line downward sloping?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Suppose there are 20 consumers for a good and they have identical demand functions: d(p) = 10 – 3p for any price less than or equal to 10/3 and d1(p) = 0 at any price greater than 10/3. What is the market demand function?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5, respectively. The consumer’s income is Rs 20. (iv) What is the slope of the budget line?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
What do you mean by substitutes? Give examples of two goods which are substitutes of each other.
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
What do you mean by the budget set of a consumer?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5, respectively. The consumer’s income is Rs 20. (iii) How much of good 2 can she consume if she spends her entire income on that good?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity.
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
If a consumer has monotonic preferences, can she be indifferent between the bundles (10, 8) and (8, 6)?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
What do you mean by ‘monotonic preferences’?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her entire income. The prices of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer’s income?
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Economics>Microeconomics>Theory of Consumer Behaviour>Consumer and Market Demand
Explain price elasticity of demand.