8 Most VSAQ’s of Theories of Consumer Behaviour Chapter in Inter 1st Year Economics (TS/AP)
2 Marks
VSAQ-1 : Define Utility.
Utility refers to the level of satisfaction or benefit that a consumer derives from consuming a particular good or service. It is a measure of the satisfaction, happiness, or usefulness that an individual experiences as a result of their consumption choices. Utility can be both subjective and psychological, as it varies from person to person and is influenced by individual preferences and needs. In economics, utility is a fundamental concept used to analyze consumer behavior and choices.
VSAQ-2 : Explain Cardinal Utility. (OR) Write a note on cardinal utility. (OR) What is the meaning of cardinal utility? (OR) Cardinal utility.
Cardinal utility assigns numerical values (utils) to the satisfaction a consumer derives from goods. It allows for comparing and ranking preferences based on these numerical values. However, it’s a theoretical concept and not widely used in practice, with ordinal utility being a more common approach.
VSAQ-3 : Explain Ordinal Utility. (OR) What is the meaning of ‘Ordinal utility’? (OR) Ordinal utility.
Ordinal utility ranks consumer preferences without assigning specific numerical values. It focuses on the relative order of preferences, making it a simpler and more practical concept compared to cardinal utility.
VSAQ-4 : What is price Line/Budget Line? (OR) Budget Line. (OR) Price Line/Budget Line
A price line, also known as a budget line, represents all the possible combinations of two commodities that a consumer can purchase with their given income and the prevailing prices of the goods. It illustrates the trade-off between the quantities of two goods that a consumer can afford to buy while staying within their budget constraints. The budget line serves as a visual representation of the consumer’s purchasing power and helps in making choices based on income and prices.
VSAQ-5 : Explain law of Diminishing Marginal Utility.
The law of diminishing marginal utility states that as you consume more of a product, the additional satisfaction you get from each extra unit decreases, assuming other factors remain the same. This concept is important in understanding consumer choices and resource allocation.
VSAQ-6 : Explain Marginal Rate of Substitution.
The marginal rate of substitution (MRS) represents the rate at which a consumer is willing to exchange or substitute one commodity (X) for another (Y) while keeping their total satisfaction or utility constant. It quantifies the consumer’s willingness to trade between the two goods. The MRS is expressed as the change in the quantity of Y (DY) divided by the change in the quantity of X (DX), i.e., DY/DX.
VSAQ-7 : Draw the indifference map.
An indifference map is a graphical representation of multiple indifference curves, each showing different levels of satisfaction. These curves help depict consumer preferences by illustrating combinations of goods that provide equal satisfaction. Higher curves represent greater satisfaction.
VSAQ-8 : Write, in brief, about properties of in difference curves. (OR) Discuss the properties of indifference curve. (OR) write about the properties of indifference curves.
Indifference curves have four key properties: negative slope, convex shape, non-intersecting, and higher curves indicate greater satisfaction.