Detailed notes
Utility is satisfaction; marginal utility is the change from one additional unit. Under marginal utility analysis, equilibrium requires equal marginal utility per rupee across goods (with the budget used). Indifference-curve analysis uses preferences, a budget line and a tangency condition. Demand relates price and quantity demanded, other things equal. Price changes cause movement along the curve; income, tastes and related-good prices can shift it. Measure elasticity by percentage-change or total-expenditure method.
Worked interpretation
At income ₹100, goods X and Y cost ₹10 each. If MUx=40 and MUy=20, MUx/Px=4 while MUy/Py=2; shift expenditure toward X. Consumer equilibrium requires equal marginal utility per rupee for goods purchased, subject to the budget.
CBSE-style practice
- Price rises ₹10→₹12 and quantity falls 100→80. Midpoint elasticity=(−20/90)/(2/11)≈−1.22; demand is elastic over this interval. Under the total-expenditure method, price and expenditure moving in opposite directions indicates elastic demand.
- Draw a labelled graph or table where it clarifies your reasoning.
- State one limitation or assumption.
Quick revision
Define the term precisely, show formula substitutions when relevant, and distinguish a change in the variable from a change in its determinants.