Economics · Class 12 Commerce
Ch 2Utility Analysis — Class 12 Economics, concept-first.
Utility Analysis forms the starting point of microeconomics in the Std XII Economics course, because it explains why a consumer is willing to pay for a good in the first place. In everyday speech "utility" simply means usefulness, but in Economics the word has a sharper, technical meaning.
Key concepts
Hover a concept to preview it and jump to its most relevant Q&A.
Total Utility and Marginal Utility
Total Utility (TU) is the sum of satisfaction from a given quantity of a good; Marginal Utility (MU) is the extra satisfaction from one more unit, MU = ΔTU/ΔQ.
Most relevant Q&A
- When Total Utility (TU) is at its maximum, Marginal Utility (MU) is: (a) Positive (b) Zero (c) Negative (d) InfiniteFree
- Define Marginal Utility and state its formula.Preview
- Distinguish between Total Utility and Marginal Utility.Free
- From the following Marginal Utility (MU) data, calculate the Total Utility (TU) at each unit: | Units | 1 | 2 | 3 | 4 | |---|---|---|---|---…Preview
- Give economic terms: Additional utility derived by a consumer from an additional unit consumed.Preview
In previous exams
How often this chapter’s concepts have been examined — real appearance data, never estimated.
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Meaning and Features of Utility
Utility Analysis forms the starting point of microeconomics in the Std XII Economics course, because it explains why a consumer is willing to pay for a good in the first place.
Total Utility and Marginal Utility
Once utility is accepted as (approximately) measurable in utils, the Std XII Economics syllabus introduces two closely related but distinct measures of it: Total Utility and Marginal Utility.
The Law of Diminishing Marginal Utility
The Law of Diminishing Marginal Utility (DMU) is the most fundamental law in the whole of Utility Analysis, and it is the psychological foundation on which the Law of Demand itself rests.
The Law of Equi-Marginal Utility (Consumer's Equilibrium)
While the Law of Diminishing Marginal Utility explains a consumer's behaviour with a single good, real consumers must divide a limited income across many goods.
The Cardinal Utility Approach: Assumptions and Limitations
Both laws covered in this chapter — Diminishing Marginal Utility and Equi-Marginal Utility — rest on one foundational assumption: that utility can be measured cardinally, i.e., in exact numerical unit…
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
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- Q1Give economic terms: Additional utility derived by a consumer from an additional unit consumed.Preview
- Q2Assertion (A): Marginal utility (MU) goes on diminishing. Reasoning (R): Total utility (TU) increases at a diminishing rate. (a) Assertion (…Preview
- Q3Explain any four features of utility.Preview
- Q4State with reasons whether you agree or disagree with the following statement. There are no exceptions to the law of diminishing marginal ut…Preview
- Q5MU of the commodity becomes negative when TU of a commodity is ______. (a) rising (b) constant (c) falling (d) zeroPreview
- Q6Explain any four exceptions of the law of Diminishing marginal utility.Preview
- Q7Observe the given table and answer the questions given below it: | Unity of a commodity | Total Utility (TU) units | Marginal Utility (MU) u…Preview
- Q8Blood bank is an example of ______. Place utility Knowledge utility Service utility Time utility (a) a, b, c (b) b, c, d (c) a, b, d (d) onl…Preview
- Q9Form utility : Furniture : : ______ : DoctorPreview
- Q10Distinguish Between: Total Utility and Marginal UtilityPreview
- Q11Explain any four features of utility.Preview
- Q12State and explain the assumptions of the law of diminishing marginal utility.Preview
- Q13Give an economic term: The capacity of a commodity to satisfy human wants.Preview
- Q14Find the odd word: Types of utility: Place utility, Form utility, Time utility, Commodity utilityPreview
- Q15Explain any four features of utility.Preview
- Q16State with reasons whether you agree or disagree with the following statement: The concept of total utility and marginal utility is the same…Preview
- Q17Give reasons or explain the following statement: Utility is ethically neutral.Preview
- Q18Explain the 'law of diminishing marginal utility'.Preview
- Q19State with reasons whether you agree or disagree with the following statement: There are many features of utility. (a) Agree (b) DisagreePreview
More questions
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- Q11Explain the Law of Diminishing Marginal Utility with the help of a schedule and diagram.Free
- Q12State and explain the Law of Equi-Marginal Utility with a suitable numerical illustration showing the consumer's equilibrium.Preview
- Q13Explain the assumptions of the Cardinal Utility Approach and examine its main limitations.Preview