Class 11th Important Questions with Answers for Chapter 2 Consumer Equilibrium

 1. What is consumer equilibrium?

   Consumer equilibrium refers to the point where a consumer maximizes their satisfaction (utility) by allocating their limited budget among various goods and services.

2. How is consumer equilibrium achieved?

   Consumer equilibrium is achieved when the marginal utility per dollar spent is the same for all goods and services in the consumer's consumption bundle.

3. What is the significance of the marginal utility theory in consumer equilibrium?

   The marginal utility theory helps explain how consumers make choices by comparing the additional satisfaction gained from consuming one more unit of a good with the price they pay for it.

4. What is marginal utility?

   Marginal utility is the additional satisfaction or benefit obtained from consuming one more unit of a good while keeping other consumption constant.

5. Why does the law of diminishing marginal utility occur?

   The law of diminishing marginal utility states that as a consumer consumes more of a specific good, the additional satisfaction gained from each successive unit decreases because the consumer's needs are partially satisfied.

6. How does the budget constraint affect consumer equilibrium?

   The budget constraint represents the limit on a consumer's spending, affecting their choices in allocating money among different goods to achieve the highest possible utility.

7. What is the relationship between marginal utility and consumer demand?

   Marginal utility influences consumer demand by guiding their preferences for goods – consumers are willing to pay higher prices for goods with higher marginal utility.

8. Explain the concept of optimal consumption bundle.

   The optimal consumption bundle is a combination of goods that maximizes a consumer's total utility, considering their budget constraint and the principle of equalizing marginal utility per dollar spent.

9. Why is marginal utility per dollar spent important in consumer equilibrium?

   Marginal utility per dollar spent helps consumers determine the best allocation of their budget by comparing the "bang for the buck" across different goods.

10. What happens if a consumer is not in equilibrium?

    If a consumer is not in equilibrium, they can increase their overall satisfaction by reallocating their spending to reach a point where marginal utility per dollar is the same for all goods.