Theory Of Demand And Supply

100 Questions | Total Attempts: 724

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Supply And Demand Quizzes & Trivia

Questions and Answers
  • 1. 
    Demand for a commodity refers to :
    • A. 

      Desire for the commodity.

    • B. 

      Need for the commodity.

    • C. 

      Quantity demanded of that commodity.

    • D. 

      Quantity of the commodity demanded at a certain price during any particular period of time.

  • 2. 
    Contraction of demand is the result of :   
    • A. 

      Decrease in the number of consumers.

    • B. 

      Increase in the price of the good concerned.

    • C. 

      Increase in the prices of other goods.

    • D. 

      Decrease in the income of purchasers

  • 3. 
    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?
    • A. 

      The preference of the individual.

    • B. 

      His monetary income.

    • C. 

      Price.

    • D. 

      Price of related goods.

  • 4. 
    Which of the following pairs of goods is an example of substitutes?
    • A. 

      Tea and sugar.

    • B. 

      Tea and coffee.

    • C. 

      Pen and ink.

    • D. 

      Shirt and trousers.

  • 5. 
    In the case of a straight line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be :
    • A. 

      0

    • B. 

      1

    • C. 

      1.5

    • D. 

      2

  • 6. 
    The Law of Demand, assuming other things to remain constant, establishes the relationship between :
    • A. 

      Income of the consumer and the quantity of a good demanded by him.

    • B. 

      Price of a good and the quantity demanded.

    • C. 

      Price of a good and the demand for its substitute.

    • D. 

      Quantity demanded of a good and the relative prices of its complementary goods.

  • 7. 
    Identify the factor which generally keeps the price-elasticity of demand for a good low :
    • A. 

      Variety of uses for that good.

    • B. 

      Its low price.

    • C. 

      Close substitutes for that good.

    • D. 

      High proportion of the consumer's income spent on it.

  • 8. 
    Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a good demanded is smaller than the percentage fall in its price :
    • A. 

      Equal to one.

    • B. 

      Greater than one.

    • C. 

      Smaller than one.

    • D. 

      Zero.

  • 9. 
    In the case of an inferior good, income elasticity oi demand is :
    • A. 

      Positive.

    • B. 

      Zero.

    • C. 

      Negative.

    • D. 

      Infinite.

  • 10. 
    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 :
    • A. 

      Remain the same.

    • B. 

      Increase.

    • C. 

      Decrease.

    • D. 

      Any of these.

  • 11. 
    If regardless of changes in its price, the quantity demanded of a good remains unchanged, then the demand curve for the good will be :
    • A. 

      Horizontal.

    • B. 

      Vertical.

    • C. 

      Positively sloped.

    • D. 

      Negatively sloped.

  • 12. 
    The law of demand is :
    • A. 

      A quantitative statement.

    • B. 

      A qualitative statement.

    • C. 

      Both a quantitative and a qualitative statement.

    • D. 

      Neither a quantitative nor a qualitative statement.

  • 13. 
    All of the following are determinants of demand except:
    • A. 

      Tastes and preferences.

    • B. 

      Quantity supplied.

    • C. 

      Income.

    • D. 

      Price of related goods.

  • 14. 
    A movement along the demand curve for soft drinks is best described as :
    • A. 

      An increase in demand.

    • B. 

      A decrease in demand.

    • C. 

      A change in quantity demanded.

    • D. 

      A change in demand.

  • 15. 
    If the price of Pepsi decreases relative to the price of Coke and 7-UP, the demand for :  
    • A. 

      Coke will decrease.

    • B. 

      7-Up will decrease.

    • C. 

      Coke and 7-UP will increase.

    • D. 

      Coke and 7-Up will decrease.

  • 16. 
    If a good is a luxury, its income elasticity of demand is :
    • A. 

      Positive and less than 1.

    • B. 

      Negative but greater than -1.

    • C. 

      Positive and greater than 1.

    • D. 

      Zero.

  • 17. 
    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 :
    • A. 

      Elastic.

    • B. 

      Inelastic.

    • C. 

      Unitarily elastic.

    • D. 

      Perfectly elastic.

  • 18. 
    If the quantity demanded of beef increases by 5% when the price of chicken increases by 20%, the cross-price elasticity of demand between beef and chicken is
    • A. 

      -0.25

    • B. 

      0.25

    • C. 

      -4

    • D. 

      4

  • 19. 
    Given the following four possibilities, which one results in an increase in total consumer expenditures?
    • A. 

      Demand is unitary elastic and price falls.

    • B. 

      Demand is elastic and price rises.

    • C. 

      Demand is inelastic and price falls.

    • D. 

      Demand is inelastic and prices rises.

  • 20. 
    The price elasticity of demand for hamburger is      
    • A. 

      The change in the quantity demanded of hamburger when hamburger increases by 30 paise per rupee.

    • B. 

      The percentage increase in the quantity demanded of hamburger when the price of hamburger falls by 1 per cent per rupee.

    • C. 

      The increase in the demand for hamburger when the price of hamburger falls by 10 per cent per rupee.

    • D. 

      The decrease in the quantity demanded of hamburger when the price of hamburger falls by 1 per cent per rupee.

  • 21. 
    The price elasticity of demand is defined as the responsiveness of :
    • A. 

      Price to a change in quantity demanded.

    • B. 

      Quantity demanded to a change in price.

    • C. 

      Price to a change in income.

    • D. 

      Quantity demanded to a change in income.

  • 22. 
    Suppose the price of movies seen at a theater rises from Rs. 120 per person to Rs. 200 per person. The theater manager observes that the rise in price causes attendance at a given movie to fall from 300 persons to 200 persons. What is the price elasticity of demand for movies?
    • A. 

      .5

    • B. 

      .8

    • C. 

      1.0

    • D. 

      1.2

  • 23. 
    Suppose a department store has a sale on its silverware. If the price of a plate-setting is reduced from Rs. 300 to Rs. 200 and the quantity demanded increases from 3,000 plate- settings to 5,000 plate-settings, what is the price elasticity of demand for silverware?
    • A. 

      .8

    • B. 

      1.0

    • C. 

      1.25

    • D. 

      1.50

  • 24. 
    A discount store has a special offer on CDs. It reduces their price from Rs.150 to Rs. 100. Suppose the store manager observes that the quantity demanded increases from 700 CDs to 1,300 CDs. What is the price elasticity of demand for CDs?
    • A. 

      .8

    • B. 

      1.0

    • C. 

      1.25

    • D. 

      1.50

  • 25. 
    If the local pizzeria raises the price of a medium pizza from Rs.60 to Rs. 100 and quantity ] demanded falls from 700 pizzas a night to 100 pizzas a night, the price elasticity of demand
    • A. 

      .67

    • B. 

      1.5

    • C. 

      2.0

    • D. 

      3.0

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