# Theory of Consumer Behaviour, Class 11 Economics | SwaVid Theory of Consumer Behaviour, NCERT Class 11 Economics: notes with key ideas, definitions, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-11/economics/chapter/theory-of-consumer-behaviour Source: https://www.swavid.com/cbse/class-11/economics/chapter/theory-of-consumer-behaviour # Theory of Consumer Behaviour ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 11 Economics on SwaVid ### Utility and marginal utility ### Budget set and budget line ### Indifference curves and preferences ### Consumer equilibrium ### Demand curve and law of demand ### Price elasticity of demand ### Next chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 11 › Economics › Theory of Consumer Behaviour Notes written by SwaVid from the NCERT textbook. Class 11 Economics, Chapter 2. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter explains how a rational consumer allocates income across goods to achieve maximum satisfaction. It covers budget constraints, utility analysis, indifference curves, consumer equilibrium, demand functions, and price elasticity of demand. Source: NCERT Introductory Microeconomics (Reprint 2026-27) , Chapter 2, Theory of Consumer Behaviour Utility is the want-satisfying power of a commodity, measured cardinally in utils. Total utility increases at a diminishing rate as marginal utility falls, reflecting the law of diminishing marginal utility. The budget set contains all bundles of two goods that cost less than or equal to consumer income at given prices. The budget line represents bundles costing exactly the income, with slope equal to -(p₁ / p₂). An indifference curve joins consumption bundles yielding equal satisfaction. Indifference curves are downward sloping and convex to the origin because of a diminishing marginal rate of substitution. Optimal choice occurs where the budget line is tangent to the highest attainable indifference curve. At this point, the marginal rate of substitution equals the price ratio: MRS = p₁ / p₂. A demand function relates the quantity demanded of a good to its price, income, and other factors. The law of demand states that quantity demanded falls as price rises, holding other determinants constant. Price elasticity of demand measures the percentage change in quantity demanded relative to the percentage change in price. It is commonly measured using the percentage method. Try each question first. Then tap it to see the answer. Budget line equation: p₁x₁ + p₂x₂ = M, so 4x₁ + 2x₂ = 20 Horizontal intercept occurs where x₂ = 0: x₁ = M / p₁ = 20 / 4 = 5 units Equation: 4x₁ + 2x₂ = 20; horizontal intercept: 5 units Δp = 8 - 10 = -₹2, Δq = 60 - 40 = 20 units eD = -(Δq / Δp) × (p / q) = -(20 / -2) × (10 / 40) = 10 × 0.25 = 2.5 2.5 MU₄ = TU₄ - TU₃ MU₄ = 38 - 30 = 8 utils 8 utils Production and Costs . Market Equilibrium . The 13 chapters of Class 11 Economics . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. Production and Costs. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - Ch 2 NCERT book - 80 marks, theory paper - 3 quick checks - Treating elasticity of demand as positive without noting the negative sign convention . Price elasticity of demand is typically negative due to the inverse price-quantity relationship. NCERT defines eD with a minus sign or takes the absolute value to report it as a positive number. - Confusing a shift of the budget line with a rotation . A change in income shifts the budget line parallelly. A change in the price of only one good rotates the budget line around the intercept of the other good. - Mixing up the budget set and the budget line . The budget set includes all bundles where p₁x₁ + p₂x₂ ≤ M. The budget line includes only bundles where expenditure exactly equals income, p₁x₁ + p₂x₂ = M. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 11](https://www.swavid.com/cbse/class-11) - [Economics](https://www.swavid.com/cbse/class-11/economics/chapters) - [Start free →](https://www.swavid.com/signup) - [All 13 chapters](https://www.swavid.com/cbse/class-11/economics/chapters) - [NCERT Introductory Microeconomics (Reprint 2026-27)](https://ncert.nic.in/textbook.php) - [Open notes](https://www.swavid.com/cbse/class-11/economics/chapter/production-and-costs) - [Open notes](https://www.swavid.com/cbse/class-11/economics/chapter/market-equilibrium) - [Class 11 Economics](https://www.swavid.com/cbse/class-11/economics/chapters) - [Start free →](https://www.swavid.com/signup)