2. When Q = f (P), the elasticity coefficient is measured by:
Correct : C. ∆Q/∆P * P/Q
3. Income elasticity of demand for inferior goods is:
Correct : A. Negative
4. In the case of luxury goods, the income elasticity of demand will be:
Correct : C. More than unity
5. Income elasticity is positive, but less than unity in the case of:
Correct : A. Necessity
6. The change in demand is due to the change in :
Correct : B. Own price
7. Supply curve represents -------- relationship between quantity and price
Correct : A. Direct
8. A market:
Correct : B. Does not necessarily refers to a meeting place between buyer and sellers
9. The market equilibrium for a commodity is determined by:
Correct : C. Balancing of the forces of demand and supply
10. In drawing an individual demand curve for a commodity, all but which of the following
are kept constant:
Correct : C. Price of the commodity under consideration
11. A fall in the price of the commodity holding everything else constant results in:
Correct : C. Increase in quantity demanded
12. When an individual’s income rises, when everything else remains the same, his demand
for normal goods:
Correct : A. Rises
13. When an individual’s income falls, when everything else remains the same, his demand
for inferior goods:
Correct : A. Increases
14. When the price of the substitute commodity of X falls, the demand for X:
Correct : B. Falls
15. When both the price of a substitute and the price of complement of X rises, the demand
for X:
Correct : D. All of the above is possible
16. If the supply curve of the commodity is having a positive slope, a rise in the price of the
commodity, results in:
Correct : B. Increase in quantity supplied
17. From the position of stable equilibrium, the market supply of a commodity decreases,
while the market demand remains unchanged, then:
Correct : D. Equilibrium price rises, but equilibrium quantity falls
18. If the percentage increase in the quantity demanded of a commodity is smaller than the
percentage fall in its price, the coefficient of price elasticity:
Correct : C. Smaller than one
19. A fall in the price of the commodity whose demand curve is a rectangular hyperbola
causes total expenditure on the commodity:
Correct : C. Remains unchanged
20. If the quantity demanded remains unchanged as the price of the commodity falls, the
coefficient of price elasticity of demand is
Correct : D. Zero
21. An increase in the price of the commodity when demand is inelastic causes the total
expenditure of consumers of the commodity to:
Correct : C. Remains unchanged
22. A negative income elasticity of demand for a commodity indicates that as income falls,
the amount of the commodity purchased:
Correct : A. Rises
23. If the income elasticity of demand is greater than one, then the commodity is:
Correct : A. Necessity
24. If the amount of the commodity purchased remains unchanged when the price of another
commodity changes, the cross elasticity of demand between them will be:
Correct : C. Zero
25. If the income elasticity of demand for a commodity is found to be 0.4, then the
commodity concerned is
Correct : B. Necessity
26. Elasticity of supply for a positively sloped straight line supply curve that intersects the
price axis is:
Correct : C. Greater than one
27. If a positively sloped linear supply curve crosses the quantity axis, the elasticity of supply is:
Correct : A. Inelastic
28. If a positively sloped linear supply curve passes through the origin, the elasticity of
supply is:
Correct : C. Unitary elastic
29. The horizontal supply curve parallel to quantity axis represents:
Correct : C. Perfectly elastic supply
30. A fall in income of the consumer, other things being equal, causes:
Correct : A. Increase in demand
31. Which of the following causes an increase in supply:
Correct : D. All of the above
32. Which of the following Elasticities measure movement along a curve, rather than a shift
in the curve:
Correct : A. Price elasticity of demand
33. Cross elasticity of demand in the case of substitutes:
Correct : C. Positive
34. A movement down the given demand curve shows:
Correct : C. Extension in demand
35. Which of the following results in an increase in an increase in demand:
Correct : D. None of the above
36. Change in quantity supplied of a product can result from:
Correct : A. Changes in own price
37. An increase in supply means:
Correct : D. Rightward shift in supply curve
38. At prices above the equilibrium price:
Correct : A. Quantity supplied exceeds quantity demanded
39. An increase in market supply, demand remaining the same causes:
Correct : C. Decrease in equilibrium price and increase in equilibrium quantity
40. An increase in market demand, supply remaining the same results in:
Correct : D. Both equilibrium price and quantity rises
41. A fall in the market demand, supply remaining the same results in:
Correct : D. Both equilibrium price and quantity falls
42. Which one of the following elasticities takes the average of prices and quantities:
Correct : B. Arc elasticity of demand
43. As a result of a fall in the price total expenditure on the commodity decreases, the
coefficient of elasticity will be:
Correct : C. Less than one
44. If a small change in price leads to infinitely large change in quantity demanded, then the
demand is:
Correct : B. Perfectly inelastic
45. When demand curve is rectangular hyperbola, the value of price elasticity of demand will be:
Correct : B. One
46. On a linear demand curve, the coefficient of price elasticity is unity, then the value of MR
will be: