1. A.

Introduction: -
Indifference Curve means representing all the of goods that give the same
satisfaction to the consumer. Since all the combinations give the same amount of
satisfaction, the consumer prefers them equally. This is because the customer
consumes a variety of goods for long period of time and realises that one good can
be replaced with another good with compromising and satisfaction level. Finally
when these combinations of the customer substitutes are plotted on graph the
outcome on the graph is called as Indifference Curve
Ans 2.

Price of Good rs Quantity demanded

4 25
5 20

Solution:-

P=4
Q=25
P1=5
Q1=20

Therefore change in Price of goods is:- change is represented by C

C P=P1-P
C P= 5-4
C P=1

Similarly, a change in quantity demanded is:- change is represented by C

C Q=Q1-Q
C Q= 20-25
 C Q= -5

In the above calculation a change in demand shows a negative sign, which is ignored.
This is because price and demand are inversely related which can yield a negative
value of demand .

Price elasticity of demand of goods is:-

Ep= CQ/CP X P/Q
Ep=5/1 X 4/25
Ep=0.8

The price elasticity of demand of good is 0.8 which is less than one.
Therefore, in such case, the demand for good is relatively inelastic.

3 b.

Quantity consumed Total Utility

1 20
2 35
3 47
4 55
5 60

Marginal Utility:-
We get marginal utility as the utility derived from marginal or additional unit of
commodity consumed by an individual.

Marginal utility = change in total utility/change in quantity

Or
Marginal utility: =Tun- Tun-1
We calculate the Marginal utility for above example:

For 1 =TU1-TU1-1 = 20-0=20

For 2 = 35-20=15
For 3=47-35=12
For4=55-47=8
For5=60-55=5

Quantity consumed Total Utility Marginal utility

1 20 20
2 35 15
3 47 12
4 55 8
5 60 5

Average Utility for quantity is

Average=Total Quantity/ Quantity consumed

For 1: -20/1=20
For 2: -35/2=17.5
For 3: - 47/3=15.6
For 4: -55/5=13.75
For 5: -60/5=12

Therefore: -

Quantity consumed Total Utility Marginal utility Average Utility

1 20 20 20
2 35 15 17.5
3 47 12 15.6
4 55 8 13.75
5 60 5 12