The chapter "Theory of Consumer Behaviour" in CBSE Class 12 Business Studies delves into understanding how consumers make decisions to allocate their resources among various goods and services. This chapter explores the factors influencing consumer choices, the concept of utility, and how consumers achieve equilibrium.
Introduction to CBSE Class 12 Business Studies Chapter "Theory of Consumer Behaviour - Introductory Microeconomics"
This chapter covers various essential topics related to consumer behaviour, including:
- Consumer’s Budget: The budget set represents the combination of goods a consumer can afford given their income and the prices of goods.
- Budget Line: The budget line is a graphical representation of all possible combinations of two goods that a consumer can purchase with a given income at current prices. It slopes downwards due to the trade-off between the two goods.
- Changes in Budget Line: Shifts in the budget line occur due to changes in income or prices of goods.
- Consumer Preferences: This section explains how consumers rank different bundles of goods based on satisfaction levels, introducing the concept of monotonic preferences.
- Utility: Utility measures the satisfaction derived from consuming goods. Marginal utility is the additional satisfaction from consuming one more unit of a good.
- Consumer Equilibrium: Consumer equilibrium is achieved when the consumer maximizes their utility given their budget constraint.
Assignments for CBSE Class 12 Business Studies Chapter “Theory of Consumer Behaviour – Introductory Microeconomics”
- Short Questions:
- Define budget set.
- What is a budget line and why does it slope downwards?
- Explain the concept of marginal utility.
- Long Questions:
- Discuss the factors that can cause a shift in the budget line.
- Explain the concept of consumer equilibrium with the help of the utility approach.
- Case Study Analysis:
- Analyze a consumer’s choice between two goods given a change in income and prices, illustrating the impact on their budget line.
- Research Project:
- Investigate how consumer preferences change with variations in income levels and how this affects their purchasing decisions.
- Debate Preparation:
- Prepare for a debate on the relevance of the utility concept in real-life consumer decision-making.
Conclusion
The chapter “Theory of Consumer Behaviour – Introductory Microeconomics” provides students with a foundational understanding of how consumers make choices. This knowledge is crucial for analyzing market behavior and making informed business decisions.
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Questions and Answers for CBSE Class 12 Business Studies Chapter "Theory of Consumer Behaviour - Introductory Microeconomics"
Q1: What is a budget set?
- ANS: A budget set is the collection of all possible combinations of goods and services that a consumer can afford given their income and the prices of goods.
Q2: What is a budget line?
- ANS: A budget line is a graphical representation of all possible combinations of two goods that a consumer can buy with their given income at current prices.
Q3: Why does the budget line slope downwards?
- ANS: The budget line slopes downwards because an increase in the quantity of one good can only be achieved by reducing the quantity of the other good, given the limited income.
Q4: Define marginal utility.
- ANS: Marginal utility is the additional satisfaction or utility that a consumer derives from consuming one more unit of a good or service.
Q5: What is consumer equilibrium?
- ANS: Consumer equilibrium is the point where a consumer maximizes their utility given their budget constraint, usually where the marginal utility per unit of expenditure is equal for all goods.
Q6: How does an increase in income affect the budget line?
- ANS: An increase in income shifts the budget line to the right, allowing the consumer to afford more of both goods.
Q7: Explain monotonic preferences.
- ANS: Monotonic preferences imply that a consumer always prefers more of at least one good without reducing the amount of any other good.
Q8: What happens to the budget line if the price of one good decreases?
- ANS: If the price of one good decreases, the budget line pivots outwards, allowing the consumer to buy more of that good for the same amount of income.
