Alfred Marshall's Law of Diminishing Marginal Utility
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Questions and Answers

What subject is the textbook welcoming students to in the preface?

  • Mathematics
  • Economics (correct)
  • Geography
  • History

    • Who is mentioned as the Chief Production Officer in the text?

  • Dr. Sudhakar Ramkrishna Kute
  • Mrs. Kavita Vilas Pol
  • Shri Liladhar Atram (correct)
  • Shri Vivek Uttam Gosavi

    • According to the information provided, who are the members of the Economics Study Group?

  • Shri Ravikiran Jadhav and Mrs. Usha Bhaskar Kale
  • Shri Subhash Rajdhar Patil and Mrs. Shobha Subhash Nagare (correct)
  • Dr. Sudhakar Ramkrishna Kute and Shri Liladhar Atram
  • Shri Raghunath Narayan Patil and Mrs. Swati Milind Wagh

    • What is stated as the most important goal of education in the textbook?

    <p>'Constructivism'</p> Signup and view all the answers

    Which city is mentioned as the location of the Maharashtra State Textbook Bureau?

    <p>Mumbai</p> Signup and view all the answers

    Who is listed as the Publisher in the provided content?

    <p>Shri Vivek Uttam Gosavi</p> Signup and view all the answers

    What is the formula to explain the relationship between total utility and marginal utility?

    <p>TU = Σ MU</p> Signup and view all the answers

    What does the X-axis measure in the context of the graph presented?

    <p>Units of the commodity consumed</p> Signup and view all the answers

    What does Fig. 2.7 illustrate about the shape of the total utility curve?

    <p>It slopes upwards</p> Signup and view all the answers

    When does total utility reach its maximum and remain constant?

    <p>At a particular stage</p> Signup and view all the answers

    What does the marginal utility curve show in terms of levels?

    <p>Zero and negative levels</p> Signup and view all the answers

    According to Table 2.1, what is the relationship between total utility and marginal utility of the very first unit consumed?

    <p>They are equal</p> Signup and view all the answers

    What is the Law of Diminishing Marginal Utility?

    <p>The marginal utility of a good decreases with consumption.</p> Signup and view all the answers

    Which scenario does not adhere to the Law of Diminishing Marginal Utility?

    <p>A miser becoming happier with every additional rupee earned.</p> Signup and view all the answers

    What happens to marginal utility as consumption increases in hobbies like collecting stamps and coins?

    <p>Marginal utility keeps increasing.</p> Signup and view all the answers

    Why does the scenario of a miser experiencing increased satisfaction violate the assumption of rationality?

    <p>Because the miser should not derive more satisfaction from additional wealth.</p> Signup and view all the answers

    What is an exception to the Law of Diminishing Marginal Utility according to the text?

    <p>Increasing marginal utility in hobbies like stamp collection.</p> Signup and view all the answers

    How does the level of intoxication change for a drunkard as they consume more liquor according to the text?

    <p>It increases with every additional unit consumed.</p> Signup and view all the answers

    What is the role of financial intermediaries in India's Capital Market?

    <p>Act as a link between the investor and the market</p> Signup and view all the answers

    What does insider trading involve in the context of the Indian Capital Market?

    <p>Buying or selling securities with non-public information for personal benefit</p> Signup and view all the answers

    What is the primary objective of price manipulation in the Indian Capital Market?

    <p>To raise share prices for personal gains</p> Signup and view all the answers

    Which entities are involved in mobilizing long term savings within India's Capital Market?

    <p>Merchant banks, mutual funds, leasing companies</p> Signup and view all the answers

    What effect do illegal practices like insider trading and price manipulation have on India's Capital Market?

    <p>Disrupt smooth functioning of the market</p> Signup and view all the answers

    How do financial intermediaries contribute to the efficiency of India's Capital Market?

    <p>By facilitating transactions between investors and securities markets</p> Signup and view all the answers

    What is the main function of the Reserve Bank of India (RBI) according to the text?

    <p>Issuing currency notes of all denominations</p> Signup and view all the answers

    Which city in India serves as the main active money market centre?

    <p>Mumbai</p> Signup and view all the answers

    According to Dr. M.H. de Kock, what is the central bank considered as?

    <p>The apex of the monetary and banking structure of the country</p> Signup and view all the answers

    What is the minimum gold and foreign exchange reserve required to be maintained by RBI as per the 'Minimum Reserve System' of 1957?

    <p><code>115 crores in gold and </code>85 crores in foreign currency and government securities</p> Signup and view all the answers

    What kind of banks does RBI serve as a banker, agent, and advisor to according to the text?

    <p>Both Central and State Governments</p> Signup and view all the answers

    What type of financial intermediaries are considered unregulated according to the text?

    <p>Unregulated non-bank financial intermediaries</p> Signup and view all the answers

    Study Notes

    Maharashtra State Textbook Bureau

    • The textbook bureau is responsible for publishing textbooks for Std.XII, which includes micro and macro approaches to the study of economics.

    Formulae for Total Utility and Marginal Utility

    • TU = Σ MU or TU = MU1 + MU2 + MU3 ………..+ MUn
    • MUn = TUn – TU(n–1)

    Total Utility Curve and Marginal Utility Curve

    • The total utility curve slopes upwards, while the marginal utility curve slopes downwards.
    • The marginal utility curve shows zero and negative levels of marginal utility.
    • The total utility curve shows maximum and constant total utility levels.

    Relationship between Total Utility and Marginal Utility

    • Marginal utility derived from various units of a commodity and its total utility are interrelated.
    • At a particular stage, total utility reaches its maximum and remains constant, while marginal utility becomes zero, which is called the point of satiety.

    Law of Diminishing Marginal Utility

    • The law assumes an experience of a single want that is completely satiable at a given point in time.
    • As the consumption of a commodity increases, the marginal utility of each additional unit decreases.

    Exceptions to the Law of Diminishing Marginal Utility

    • Hobbies: Every additional increase in the stock gives more pleasure, increasing marginal utility.
    • Miser: Every additional rupee gives more satisfaction, increasing marginal utility.
    • Addictions: The level of intoxication increases with every additional unit of liquor consumed.

    Money Market in India

    • The money market in India is located in Mumbai, Delhi, and Kolkata, with Mumbai being the only active centre.
    • The structure of the money market in India includes the Reserve Bank of India, commercial banks, and other financial institutions.

    Central Bank and its Functions

    • The Reserve Bank of India (RBI) is the central bank of India, controlling credit and regulating the banking system.
    • The RBI has the sole right to issue currency notes of all denominations, except one rupee note and coins.
    • The RBI acts as a banker, agent, and advisor to the Government, transacting the business of both the Central and State Governments.
    • The RBI collects and compiles statistical information related to banking and other financial sectors of the economy.

    Capital Market in India

    • The capital market in India consists of financial intermediaries, including merchant banks, mutual funds, leasing companies, venture capital companies, and others.
    • The capital market mobilizes long-term savings, meeting the financial objectives of both the investor and the borrower.
    • Insider trading and price manipulation are illegal practices that can affect the smooth functioning of the capital market.

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    Description

    Test your knowledge on Alfred Marshall's Law of Diminishing Marginal Utility with questions related to single wants, negative utility, and the concept of diminishing marginal utility. Explore exceptions to this law with a detailed explanation of Table 2.2.

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