Quiz on Theory of Demand and Supply
#1. In the case of an inferor good, the income elasticity of demand is:
#2. Elasticity of supply is zero means
#3. If the price of orange Juice increases, the demand for apple Juice will _____________
#4. Suppose the demand for meals at a medium- priced restaurant is elastic. If the management of the restaurant is considering raising prices, it can expect a relatively:
#5. By consumer surplus, economists mean
#6. Which of the following is a property of an indifference curve?
#7. Given the following four possibilities, which one will result in an increase in total expenditure of the consumer?
#8. In a very short period, the supply
#9. When income increases the money spent on necessaries of life may not increase in the same proportion, This means
#10. The price of hot dogs increases by 22% and the quantity of hot dogs demanded falls by 25%. This indicates that demand for hot dogs is
#11. Which of the following statements about price elasticity of supply is correct?
#12. When economists speak of the utility of a certain good, they are referring to
#13. With an increase in the price of diamond, the quantity demanded also increases. This is because it is a:
#14. All but one of the following are assumed to remain the same while drawing an individual’s demand curve for a commodity. Which one is it?
#15. Suppose the income elasticity of education in private school in India is 3.6. What does this indicate:
#16. When price rises from F to E, the increase in revenue earned by the seller is (Q118)
#17. Suppose the price of Pepsi increases, we will expect the demand curve of Coca Cola to:
#18. An increase in the supply of a good is caused by :
#19. If roller- coaster ride is a function of amusement park visit, then, if the price of amusement park entry falls
#20. The following diagram shows the relationship between price of Good X and quantity demanded of Good Y. What we infer from the diagram is ; (Q108)
#21. The average income of residents of two cities A and B and the corresponding change in demand for two goods is given in the following table. Which of the following statements is true? (Q114)
#22. The demand curve of a normal good has shifted to the right. Which of the four events would have caused the shift?
#23. The cross elasticity between Bread and DVDs is:
#24. The supply function is given as Q= -100 + 10P. Find the elasticity using point method, when price is Rs 15
#25. Total utility is maximum when :
#26. Suppose a consumer’s income increases from Rs 30,000 to Rs ` 36,000. As a result, the consumer increases her purchases of compact discs (CDs) from 25 CDs to 30 CDs. What is the consumer’s income elasticity of demand for CDs? (Use Arc Elasticity Method)
#27. Contraction of demand is the result of :
#28. Given the following four possibilities, which one results in an increase in total consumer expenditure?
#29. Which of the following statements is incorrect?
#30. lf a good is a luxury, its income elasticity of demand is:
#31. Elasticity of supply is measured by dividing the percentage change in quantity supplied of a good by ———
#32. A decrease in price will result in an increase in total revenue if,
#33. An increase in the demand for computers, other things remaining same, will:
#34. Point elasticity is useful for which of the following situations?
#35. When total demand for a commodity whose price has fallen increases, it is due to:
#36. Which of the following statements is correct?
#37. Potato chips and popcorn are substitutes. A rise in the price of potato chips will —————— the demand for popcorn and the quantity of popcorn sold will ———————
#38. Demand for a good will tend to be more inelastic if it exhibits which of the following characteristics?
#39. The figure below shows the budget constraint of a consumer with an income of Rs. 900/- to spend on two commodities, namely ice cream and chocolates. The prices of these two commodities respectively are:
#40. What will happen in the rice market if buyers are expecting higher rice prices in the near future?
#41. During a recession, economies experience increased unemployment and a reduced level of income. How would a recession likely to affect the market demand for new cars?
#42. If a short run supply curve is plotted for the following table which presents price and quantity of fighter aircrafts, what will be its shape? Price in millions of $ 124 140 150 160 175 Number of Aircrafts 28 28 28 28 28 (Q113)
#43. Which of the following statements is correct?
#44. Elasticity of supply is greater than one when
#45. If the price of Pepsi decreases relative to the price of Coke and 7-UP, the demand for
#46. A point below the budget line of a consumer
#47. A vertical supply curve parallel to Y axis implies that the elasticity of supply is :
#48. In the case of a Giffen good, the demand curve will usually be
#49. The successive units of stamps collected by a little boy give him greater and greater satisfaction. This is a clear case of
#50. The elasticity of supply is defined as the
#51. If the supply of bottled water decreases, other things remaining the same, the equilibrium price ————— —————— and the equilibrium quantity —————————
#52. The luxury goods like jewellery and fancy articles will have
#53. The Law of Demand, assuming other things to remain constant, establishes the relationship Detween:
#54. A relative price is
#55. ldentity the coeflicient of price-elasticity of demand when the percentage increase in the quantity of a good demanded is smaller than the percentage tall in is price:
#56. Which one is not an assumption of the theory of demand based on analysis of indifference curves?
#57. In the case of a straight line demand curve meeting the two axes, the price-elasticity of demand at the midpoint of the line would be
#58. The supply curve shifts to the right because of———————
#59. The diagram given below shows (Q109)
#60. An increase in price will result in an increase in total revenue if :
#61. Which of the following statements about inferior goods is/are false? I. Inferior goods are those that we will never buy, no matter how cheap they are. II. Inferior goods are those that we buy more of, if we become poorer. III. Inferior goods are those that we buy more of, if we become richer.
#62. An increase in the number of sellers of bikes will increase the
#63. A decrease in the demand for cameras, other things remaining the same will
#64. When supply curve moves to the left, it means
#65. A Movement along the demand curve tor soft drinks is best described as
#66. The cross elasticity between personal computers and soft wares is:
#67. An indifference curve slopes down towards right since more of one commodity and less of another result in:
#68. If the price of air-conditioner increases from Rs 30,000 to Rs 30,010 and resultant change in demand is negligible, we use the measure of __________ to measure elasticity.
#69. With a fall in the price of a commodity:
#70. Suppose that workers in a steel plant managed to force a significant increase in their wage package. How would the new wage contract be likely to affect the market supply of steel, other things remaining the same?
#71. If the local pizzeria raises the price of a medium pizza from 60 to 100 and quantity demanded fals from 700 pizzas a night to 100 pizzas a night, the price elasticity of demand for pizzas is :[Use Arc Elasticity Method)
#72. When supply curve moves to right, it means
#73. Demand is the
#74. Suppose a department store has a sale on its silverware. If the prioe of a plate-seting is reduced from Rs 300 to Rs 200 and the quantity demanded increases from 3,000 plate-settings to 5,000 plate-setings what is the price elasticity of demand for silverware? (Use Arc Elasticity Method)
#75. As income increases, the consumer will go in for superior goods and consequently the demand for inferior goods will fall. This means inferior goods have
#76. If the organizers of an upcoming cricket match decide to increase the ticket price in order to raise its revenues, what they have learned from past experience is;
#77. For a normal good with a downward sloping demand curve:
#78. Demand tor a commodity refers to:
#79. lf regardless of changes in its price, the quantity demanded of a good remains unchanged, then the demand curve for the good will be:
#80. The quantity supplied of a good or service is the amount that
#81. If the quantity demanded of mutton increases by 5% when the price of chicken increases by 20%, the cross- price elasticity of demand between mutton and chicken is
#82. When the numerical value of cross elasticity between two goods is very high,it means
#83. The quantity purchased remains constant irrespective of the change in income. This is known as
#84. Contraction of supply is the result of :
#85. In the book market, the supply of books will decrease if any of the following occurs except
#86. If price of computers increases by 10% and supply increases by 25%. The elasticity of supply is :
#87. If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the Consumers of the good to
#88. Identity the factor which generally keeps the price elasticity of demand tor a good low
#89. A firm learns that the own price elasticity of a product it manufactures is 3.5. What would be the correct action for this firm to take if it wishes to raise its total revenue?
#90. Demand for a good will tend to be more elastic if it exhibits which of the following characteristics?
#91. If the quantity supplied is exactly equal to the relative change in price then the elasticity of supply is
#92. All of the following are determinants of demand except
#93. Suppose the price of movies seen at a theatre rises from Rs 120 per person to Rs 200 per person. The theatre manager observes that the rise in price causes atendanoe at a given movie to fall from 300 persons to 200 persons. What is the price elasicity of demand for movies? (Use Arc Elasticity Method)
#94. Chicken and fish are substitutes. If the price of chicken increases, the demand for fish will
#95. Data on production of vegetables for the past two years showed that, despite stable prices, there is a substantial decline in output of cabbage leading to lower supply into the market. Which of the following can possibly be the reason?
#96. Which of the following is an incorrect statement?
#97. An example of goods that exhibit direct price-demand relationship is
#98. In Economics, when demand for a commodity increases with a fall in its price it is known as:
#99. A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is :
#100. Elasticity of supply refers to the degree of responsiveness of supply of a good to changes in its:
#101. The cross elasticity between Rye bread and Whole Wheat bread is expected to be:
#102. Comforts lie between
#103. The price of a commodity decreases from Rs 6 to Rs 4 and the quantity demanded of the good increases from 10 units to 15 units, find the coefficient of price elasticity.
#104. The price of tomatoes increases and people buy tomato puree. You infer that tomato puree and tomatoes are
#105. Which of the following alternatives would be true if the event presented in the following diagram occurs? (Q110)
#106. ‘No matter what the price of coffee is, Arjun always spend a total of exactly 100 per week on coffee.’ The statement implies that:
#107. A good which cannot be consumed more than once is known as
#108. The effect on consumer surplus of a fall in price from E to F is (Q117)
#109. Supply is a ___________ concept.
#110. Supply is the
#111. Suppose potatoes have (-).0.4 as income elasticity. We can say from the data given that:
#112. If the demand is more than supply, then the pressure on price will be
#113. How would that budget line be affected if the price of both goods fell?
#114. The supply curve for highly perishable commodities during very short period is generally ——
#115. Conspicuous goods are also known as
#116. Which of the following pairs of goods is an example of substitutes?
#117. At higher prices people demand more of certain goods not for their worth but for their prestige value – This is called
#118. If electricity demand is inelastic, and electricity charges increase, which of the following is likely to occur?
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