Quiz on Theory of Demand and Supply

#1. Which of the following statements about price elasticity of supply is correct?

#2. How would that budget line be affected if the price of both goods fell?

#3. Supply is a ___________ concept.

#4. The demand curve of a normal good has shifted to the right. Which of the four events would have caused the shift?

#5. Point elasticity is useful for which of the following situations?

#6. Which of the following pairs of goods is an example of substitutes?

#7. A Movement along the demand curve tor soft drinks is best described as

#8. An example of goods that exhibit direct price-demand relationship is

#9. 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:

#10. At higher prices people demand more of certain goods not for their worth but for their prestige value – This is called

#11. 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?

#12. A decrease in the demand for cameras, other things remaining the same will

#13. If electricity demand is inelastic, and electricity charges increase, which of the following is likely to occur?

#14. 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

#15. The supply curve shifts to the right because of———————

#16. The cross elasticity between Bread and DVDs is:

#17. 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?

#18. ‘No matter what the price of coffee is, Arjun always spend a total of exactly 100 per week on coffee.’ The statement implies that:

#19. If price of computers increases by 10% and supply increases by 25%. The elasticity of supply is :

#20. An indifference curve slopes down towards right since more of one commodity and less of another result in:

#21. 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)

#22. The quantity supplied of a good or service is the amount that

#23. The supply curve for highly perishable commodities during very short period is generally ——

#24. Which of the following statements is incorrect?

#25. Which one is not an assumption of the theory of demand based on analysis of indifference curves?

#26. A decrease in price will result in an increase in total revenue if,

#27. lf regardless of changes in its price, the quantity demanded of a good remains unchanged, then the demand curve for the good will be:

#28. Suppose the income elasticity of education in private school in India is 3.6. What does this indicate:

#29. A vertical supply curve parallel to Y axis implies that the elasticity of supply is :

#30. The cross elasticity between personal computers and soft wares is:

#31. Demand is the

#32. 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)

#33. Identity the factor which generally keeps the price elasticity of demand tor a good low

#34. In the case of a Giffen good, the demand curve will usually be

#35. Suppose the price of Pepsi increases, we will expect the demand curve of Coca Cola to:

#36. An increase in the number of sellers of bikes will increase the

#37. If the quantity supplied is exactly equal to the relative change in price then the elasticity of supply is

#38. 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)

#39. 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;

#40. 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)

#41. 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:

#42. With a fall in the price of a commodity:

#43. Elasticity of supply refers to the degree of responsiveness of supply of a good to changes in its:

#44. Which of the following is a property of an indifference curve?

#45. 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)

#46. The elasticity of supply is defined as the

#47. 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)

#48. lf a good is a luxury, its income elasticity of demand is:

#49. When income increases the money spent on necessaries of life may not increase in the same proportion, This means

#50. The effect on consumer surplus of a fall in price from E to F is (Q117)

#51. Supply is the

#52. 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.

#53. The Law of Demand, assuming other things to remain constant, establishes the relationship Detween:

#54. When supply curve moves to right, it means

#55. By consumer surplus, economists mean

#56. When the numerical value of cross elasticity between two goods is very high,it means

#57. 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

#58. When economists speak of the utility of a certain good, they are referring to

#59. Demand tor a commodity refers to:

#60. The supply function is given as Q= -100 + 10P. Find the elasticity using point method, when price is Rs 15

#61. In the book market, the supply of books will decrease if any of the following occurs except

#62. In Economics, when demand for a commodity increases with a fall in its price it is known as:

#63. Comforts lie between

#64. A good which cannot be consumed more than once is known as

#65. Which of the following is an incorrect statement?

#66. The successive units of stamps collected by a little boy give him greater and greater satisfaction. This is a clear case of

#67. Contraction of demand is the result of :

#68. The luxury goods like jewellery and fancy articles will have

#69. In the case of an inferor good, the income elasticity of demand is:

#70. 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.

#71. 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

#72. Elasticity of supply is greater than one when

#73. If the demand is more than supply, then the pressure on price will be

#74. Which of the following statements is correct?

#75. Elasticity of supply is measured by dividing the percentage change in quantity supplied of a good by ———

#76. With an increase in the price of diamond, the quantity demanded also increases. This is because it is a:

#77. 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?

#78. Demand for a good will tend to be more inelastic if it exhibits which of the following characteristics?

#79. An increase in the demand for computers, other things remaining same, will:

#80. Demand for a good will tend to be more elastic if it exhibits which of the following characteristics?

#81. When total demand for a commodity whose price has fallen increases, it is due to:

#82. In a very short period, the supply

#83. Given the following four possibilities, which one will result in an increase in total expenditure of the consumer?

#84. 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.

#85. The cross elasticity between Rye bread and Whole Wheat bread is expected to be:

#86. 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:

#87. The price of tomatoes increases and people buy tomato puree. You infer that tomato puree and tomatoes are

#88. 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?

#89. 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)

#90. If roller- coaster ride is a function of amusement park visit, then, if the price of amusement park entry falls

#91. For a normal good with a downward sloping demand curve:

#92. The diagram given below shows (Q109)

#93. Contraction of supply is the result of :

#94. A point below the budget line of a consumer

#95. Chicken and fish are substitutes. If the price of chicken increases, the demand for fish will

#96. All of the following are determinants of demand except

#97. 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

#98. Conspicuous goods are also known as

#99. 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?

#100. If the price of orange Juice increases, the demand for apple Juice will _____________

#101. 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 ———————

#102. Which of the following alternatives would be true if the event presented in the following diagram occurs? (Q110)

#103. When price rises from F to E, the increase in revenue earned by the seller is (Q118)

#104. The quantity purchased remains constant irrespective of the change in income. This is known as

#105. A relative price is

#106. An increase in price will result in an increase in total revenue if :

#107. Given the following four possibilities, which one results in an increase in total consumer expenditure?

#108. Elasticity of supply is zero means

#109. Suppose potatoes have (-).0.4 as income elasticity. We can say from the data given that:

#110. When supply curve moves to the left, it means

#111. An increase in the supply of a good is caused by :

#112. If the price of Pepsi decreases relative to the price of Coke and 7-UP, the demand for

#113. 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

#114. Which of the following statements is correct?

#115. Total utility is maximum when :

#116. A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is :

#117. What will happen in the rice market if buyers are expecting higher rice prices in the near future?

#118. If the supply of bottled water decreases, other things remaining the same, the equilibrium price ————— —————— and the equilibrium quantity —————————