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Tamil Nadu Board 11th Standard Economics - Unit 2 : Book Back Answers and Solutions

This post covers the book back answers and solutions for Unit 2– Economics from the Tamil Nadu State Board 11th Standard textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

By going through this material, you’ll gain a strong understanding of Economics Unit 3 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

1 Mark Questions: Choose the correct answer, Fill in the blanks, Identify the correct statement, Match the following
2 Mark Questions: Answer briefly
3, 4, and 5 Mark Questions: Answer in detail

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 11 students! Prepare well and aim for top scores. Thank you!

Unit 2:Consumption Analysis

I. Multiple Choice questions.

1. Pick the odd one out

a. Luxuries

b. Comforts

c. Necessaries

d. Agricultural goods

Answer key:

d. Agricultural goods

2. Choice is always constrained or limited by the - --- of our resources.

a. Scarcity

b. Supply

c. Demand

d. Abundance

Answer key:

a. Scarcity

3. The chief exponent of the Cardinal utility approach was

a. J.R.Hicks

b. R.G.D.Allen

c. Marshall

d. Stigler

Answer key:

c. Marshall

4. Marginal Utility is measured by using the formula of

a. TUn-TUn-1

b. TUn-TUn+1

c. TUn+TUn+1

d. TUn-TUn+1

Answer key:

a. TUn-TUn-1

5. When marginal utility reaches zero, the total utility will be

a. Minimum

b. Maximum

c. Zero

d. Negative

Answer key:

b. Maximum

6. Gossen’s first law is known as.

a. Law of equi-marginal utility.

b. Law of diminishing marginal utility

c. Law of demand.

d. Law of Diminishing returns.

Answer key:

b. Law of diminishing marginal utility

7. The basis for the law of demand is related to

a. Law of diminishing marginal utility

b. Law of supply

c. Law of equi-marginal utility.

d. Gossen’s Law.

Answer key:

a. Law of diminishing marginal utility

8. The concept of consumer’s surplus is associated with

a. Adam Smith

b. Marshall

c. Robbins

d. Ricardo

Answer key:

b. Marshall

9. Given potential price is Rs.250 and the actual price is Rs.200. Find the consumer surplus.

a. 375

b. 175

c. 200

d. 50

Answer key:

d. 50

10. Indifference curve approach is based on

a. Ordinal approach

b. Cardinal approach

c. Subjective approach

d. Psychological approach

Answer key:

a. Ordinal approach

11. The concept of elasticity of demand was introduced by

a. Ferguson

b. Keynes

c. Adam Smith

d. Marshall

Answer key:

d. Marshall

12. Increase in demand is caused by

a. Increase in tax

b. Higher subsidy

c. Increase in interest rate

d. decline in population

Answer key:

b. Higher subsidy

13. The movement on or along the given demand curve is known as

a. Extension and contraction of demand.

b. shifts in the demand.

c. increase and decrease in demand.

d. all the above

Answer key:

a. Extension and contraction of demand.

14. In case of relatively more elastic demand the shape of the curve is

a. Horizontal

b. Vertical

c. Steeper

d. Flatter

Answer key:

15. A consumer is in equilibrium when marginal utilities from two goods are

a. Minimum

b. Inverse

c. Equal

d. Increasing

Answer key:

d. Increasing

16. Indifference curve was first introduced by

a. Hicks

b. Allen

c. Keynes

d. Edgeworth

Answer key:

c. Keynes

17. Elasticity of demand is equal to one indicates

a. Unitary Elastic Demand

b. Perfectly Elastic Demand

c. Perfectly Inelastic Demand

d. Relatively Elastic Demand

Answer key:

d. Relatively Elastic Demand

18. The locus of the points which gives same level of satisfaction is associated with

a. Indifference Curves

b. Cardinal Analysis

c. Law of Demand

d. Law of Supply

Answer key:

a. Indifference Curves

19. Ordinal Utility can be measured by

a. Ranking

b. Numbering

c. Wording

d. None of these

Answer key:

a. Ranking

20. The indifference curve are

a. vertical

b. horizontal

c. positive sloped

d. Negatively sloped

Answer key:

d. Negatively sloped

II. Answer the following questions in one or two sentences.

21. Define Utility.

Utility is the want-satisfying power of a commodity or a service.

22. Mention the classifications of wants.

1. Necessaries : food

2. Comforts : TV, Fan

3. Luxuries : Diamonds and Cars.

23. Name the basic approaches to consumer behaviour.

1. Cardinal Approach

2. Ordinal Approach

24. What are the degrees of price elasticity of Demand?

Ep = ∞

Ep =0

Ep>1

Ep<1

Ep =1

25. State the meaning of indifference curves.

An Indifference Curve is the locus of all combinations of any two goods which give equal satisfaction to the consumer.

26. Write the formula of consumers surplus.

Consumer’s surplus = Potential price – Actual price

27. What are Giffen goods? Why?

· Rice and Ragi

· When the price of an inferior good falls, the poor will buy less and vice versa.

III. Answer the following questions in one paragraph.

28. Describe the feature of human wants.

1. Wants are unlimited

2. Wants become habits

3. Wants are Alternative

4. Wants are Competitive

5. Wants are complementary

6. Wants are recurring

29. Mention the relationship between marginal utility and total utility.

MARGINAL UTILITY	TOTAL UTILITY
It declines	It increases
It reaches zero	It reaches maximum
It becomes negative	It declines

30. Explain the concept of consumer’s equilibrium with a diagram.

Meaning ; Consumer will attain equilibrium when he gets maximum satisfaction from his expenditure on different goods is highest.

E is the point of equilibrium as budget line AB is tangent on indifference curve IC2 the upper IC which implies maximum possible level of satisfaction.

At equilibrium point, MRSx,y = Px/Py.

31 & 33. Explain the theory of “consumer’s surplus” .

“The excess of price which a person would be willing to pay rather than go without the thing, over that which he actually does pay, is the economic measure of this surplus of satisfaction.

It may be called consumer's surplus.

where, TU = Total Utility, P = Price and Q= Quantity of the commodity

32. Distinguish between extension and contraction of demand

33.What are the properties of indifference curves?

4. Indifference Curves are convex to the origin

IV. Answer the following questions in about a page.

34. Explain the law of demand and its exceptions.

Definition

According to Alfred Marshall, The Law of Demand said as “the quantity demanded increases

with a fall in price and diminishes with a rise in price”.

Assumptions of Law of Demand

1. The income of the consumer remains constant.

2. The taste, habit and preference of the consumer remain the same.

3. The prices of other related goods should not change

DEMAND SCHEDULE

Price	Demand
3	1
2	2
1	3

Explanation

1. Quantity demanded and Y axis represents the price of the commodity.

2. DD is the demand curve, which has a negative slope.

A fall in price brings about a contraction of demand and a rise in price results in an extension of demand. Therefore the demand curve slopes upwards from left to right.

Exception to the Law of Demand

1. Giffen Paradox

2. Veblan Effect

3. Speculation

4. Ignorance

35. Elucidate the law of diminishing marginal utility with diagram.

Definition

Marshall states the law as, “the additional benefit which a person derives from a given increase

of his stock of a thing, diminishes with every increase in the stock that he already has”.

Assumption

1. Utility can be measured by cardinal number (Eg:1,2, 3..)

2. The marginal utility of money remains constant.

Units of Apple	TU	MU
1	20	20
2	30	10
3	30	0
4	25	-5

Explanation

1. Suppose a consumer wants to consume 4 apples one after another.

2. The utility from the first apple is 20. But the utility from the second apple will be less than that of the first (say 10), the third less than that of the second (say 0) and so on.

3. Finally, the utility from the third apple becomes zero and the utilities from fourth apples are negative.

36. What are the methods of measuring Elasticity of demand?

Methods of measuring Elasticity of Demand:

1.The Percentage Method 2. Total Outlay Method 3. Point or Geometrical Elasticity

1. The Percentage Method

It is also known as ratio method, when we measure the ratio as:

2. Total Outlay Method

This examines the change in total outlay of the consumer or total revenue of the firm

3. Point or Geometrical Elasticity

L - Lower segment of the demand curve

U- Upper segment of t e demand curve

37. Explain the law of Equi-marginal utility.

Meaning

· The law of equi-marginal utility states that the consumer will distribute his money

· income between the goods in such a way that the utility derived from the last rupee spend on each good is equal.

· . In other words, consumer is in equilibrium position when marginal utility of money expenditure on each goods is the same.

Equi-marginal =

Assumption

1. The consumer is rational in the sense that he wants to get

maximum satisfaction.

2. The utility of each commodity is measurable in cardinal numbers.

Explanation

1. X axis represents the amount of money spent and Y axis represents the marginal

utilities of Apple and Orange respectively.

2. If the consumer spends .6 on Apple and .5 on Orange, the marginal utilities of

both are equal i.e.,AA1=BB1 (4=4).

3. Hence, he gets maximum utility.