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Eco CH 2 U I Test 1

This document contains a 20 question multiple choice test on the concepts of demand and supply from economics. It includes questions about the definition of demand, price elasticity, income elasticity, movement along a demand curve, types of goods, and exceptions to demand behavior. The answer key at the end provides the correct response for each question.

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Rupali
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39 views3 pages

Eco CH 2 U I Test 1

This document contains a 20 question multiple choice test on the concepts of demand and supply from economics. It includes questions about the definition of demand, price elasticity, income elasticity, movement along a demand curve, types of goods, and exceptions to demand behavior. The answer key at the end provides the correct response for each question.

Uploaded by

Rupali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Subodh Professional Academy, Solapur 8668311424, 8999887135

BASUDE’S
SUBODH PROFESSIONAL ACADEMY
Test No. Subject: B. Economics Marks: 20 Time Allowed: 30Mins
Chapter 2: Theory of Demand & Supply (Unit I) Test 1
NAME:___________________________________________________________________________

Q1. Demand for a commodity refers to:


a. Desire for the commodity
b. Need for the commodity
c. Quantity demanded for that commodity
d. Quantity of that commodity demanded at a certain price during any particular period of time.

Q2. Suppose the price of movies seen at a theatre rises from ₹ 120 per person to ₹ 200 per person. The theatre manager
observed that the rise in the prices has lead to fall in attendance at a given movie from 300 persons to 200 persons. What
is the price elasticity of demand for the movie? (Arc elasticity)
a. 0.50 b. 0.80 c. 1.00 d. -0.50

Q3. In case of an inferior goods, income elasticity of demand is :


a. Positive b. Zero c. Negative d. Infinite

Q4. Movement along the same demand curve shows:


a. Expansion of demand b. Expansion of supply
c. Expansion & contraction of demand d. Increase of demand

Q5. For what type of goods does demand fall with a rise in income levels of households?
a. Inferior goods b. Substitutes goods c. Luxuries goods d. Necessities goods

Q6. In case of inferior goods like bajra , a fall in its price tends to :
a. Make the demand remain constant b. Reduce the demand
c. Increase the demand d. Change the demand in an abnormal way

Q7. The price of hot-dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot-
dogs is:
a. Elastic b. Inelastic c. Unitary elastic d. Perfectly elastic

Q8. The quantity demanded does not respond to price change & so elasticity is :
a. Zero b. One c. Infinite d. None

Q9. Which factor generally keeps the price-elasticity of demand for goods low:
a. Variety of uses for that goods b. Its low price
c. Close substitute for that goods d. High proportion of the consumer’s income spent on it

Q10. In case of straight line demand curve meeting the two axes, the price elasticity of demand at mid- point of the line
would be
a. 0 b. 1 c. 1.5 d. 2

Q11. An increase in demand can result from:


a. A increase in market price b. An increase in income
c. A reduction in price of substitutes d. An increase in the price of complements

Q12. Compute the income elasticity if demand increases by 5% & income by 1%


By CA Rupali Nogja Basude 1
Subodh Professional Academy, Solapur 8668311424, 8999887135
a. 5 b. 1/5 c. 0 d. None
Q13. For the commodity with a unitary elastic demand curve if the price of the commodity rises, then the consumer’s total
expenditure on this commodity would:
a. Increase b. Decrease c. Remain constant d. Either increase or decrease

Q14. What is the value of elasticity of demand if the demand for the goods is perfectly elastic?
a. 0 b. 1 c. Infinity d. Less than 0

Q15. What is original price of a commodity when price elasticity is 0.71 and demand changes from 20 units to 15 units
and the new price is ₹10?
a. ₹15.4 b. ₹18 c. ₹20 d. ₹8

Q16. If the price of any complement goods rises:


a. Demand curve shift to left b. Demand curve shift to right
c. Demand curve moves downwards d. Demand curve moves upwards

Q17. Cross elasticity of demand in monopoly market is:


a. Elastic b. Zero c. Infinite d. One

Q18. What is income elasticity of demand , when income increases by 20% and demand changes by 40%
a. ½ b. 2 c. 0.333 d. None

Q19. If the demand is parallel to x axis, what will be the nature of elasticity?
a. Perfectly elastic b. Inelastic c. Elastic d. Highly elastic

Q20. Giffen paradox is an exception of


a. Demand b. Supply c. Production d. Utility

By CA Rupali Nogja Basude 2


Subodh Professional Academy, Solapur 8668311424, 8999887135

ANSWER KEYS

CHAPTER 2 U I T1- B. ECO

1 D
2 B
3 C
4 C
5 A
6 B
7 A
8 A
9 B
10 B
11 B
12 A
13 C
14 C
15 A
16 A
17 B
18 B
19 A
20 A

By CA Rupali Nogja Basude 3

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