REVISIONEXERCISE

Multiple Choice Questions (MCOs)

1. If there is sno change in demand for commodity'X", even after rise in its price, then its
(a) Pertectly Elastic
(c) Less Elastic
(b) Perfectly Inelastic
(d) Highly Elastic
dernand is.
2. The elasticity of demand for a product will not be higher:
(a) When it is considered a necessity by its buyers.
(b) When more substitutes for the product are available.
(c) When it has several uses.
(d) When it is an expensive commodity.
3. Demand for a go0d is less elastic when:
(a) Percentage change in price> Percentage change in quantity demanded
(b) Percentage change in quantity demanded > Percentage change in price
(c) Percentage change in price = Percentage change in quantity demanded
(d) Demand remains same even with change in price
4. Which of the following will have elastic demand?
(a) Matchbox (b) NCERT Textbooks
(c) Medicines (d) Air Conditioners
5. If the price elasticity of demand for a commodity isless than unity, a decrease in price would resuitin:
(a) Proportionately less increase in the quantity demanded.
(b) Proportionately more increase in the quantity demanded.
(c) Increase in total expenditure on the product.
(d) None of these
6. Which one of the following statements is incorrect:
(a) Higher numerical value of elasticity indicates larger effect of a price change on the quantity
(b) Elasticity of demand can vary only between -1 and +1. demanded.
(c) The demand curves for all commodities which have unitary elastic demand willbe
rectangular hyperboa
(d) Elasticity of demand establishes a quantitative relationship between quantity demanded of a commooly
and its price, while other factors remain constant.
7. The following diagram represents elastic demand for commodity X.
(in
)PriceD

X
Demand (in units)
(a) Less (b) Highly (c) Unitary (d) Perfectly
 Elasticityof Demand 4.31

percentage inncrease in the quantity demanded of a commodity is less than the percentage fall
8. Ifthe then elasticity of demand is:
in its price, (b) = 1
(a) >1 (c) < 1 (d) = 0
Price elasticity of. demand is best defined as:
in the tastes of consumers at different prices.
(a) Change
Change in demnand when income of the consumer increases.
(b) The rate of response of demand toa change in price.
The rate of response of demand to change in price of related goods.
following influence price elasticity of demand?
10. Which of the the commodity
(a) Nature of (b) Income Level
substitutes
(c) Availability of (d) All of these
..Anegativesign with coefficient of price elasticity of demand denotes:
(a) Direct relation between price and quantity demanded
Ib) Inverse relation between price and quantity demanded
ic) No relation between price and quantity demanded
(d) None of these
42 A5% fall in the price of Xleads toa 10% rise in itsdemand. In case of Good Y, a 2% rise in price leads
to a 6% fall in its demand. In the given case, is more elastic.
(a) X (b) Y
(c) Both X and Y are equally elastic (d) Both X and Y are inelastic
13. In case of ,there is an infinite demand at a particular price and demand becomes zero
with a slight rise in price.
(a) Perfectly inelastic demand (b) Highly elastic demand
(c) Less elastic demand (d) Perfectly elastic demand
14. If a good takes up significant share of consumers' budget, it will be:
(a) Less elastic (b) Highly elastic
(c) Unitary elastic (d) Perfectly elastic
15. If there is no change in quantity demanded to any charge in price, then demand is
and demand curve is a
(a) perfectly elastic, horizontal straight line
(b) perfectBy elastic, vertical straight line
(c) perfectly inelastic, horizontal straight line
(d) perfectly inelastic, vertical straight line
16. If the demand for a good is made bya rich consumer, its demand is generaly:
(a) Less elastic (b) Highly elastic (c) Unitary elastic (d) Perfectly elastic
price
Airmiscurrently selling 10,000 units of its product per month. Thefirm plans to reduce the retail
Trom ? 1to ? 0.90. From the previous experience, the firm knows that the price elasticity of demnand for
ne product is () 1.5. ASsuming no other changes, the firm can now expect the sales of:
(a) 8,500 units (b) 10,500 units (c) 11,000 units. (d) 11,500 units
restaurant
ne demand for meals at a medium-priced restaurant is elastic. If the management of the
IS considering raising prices, it can expect a relatively:
(a) Proportionately large fall in quantity demanded
(b) No change in quantity demanded
(C) Proportionately small fallin quantity demanded
(d) Infinite change in quantity demanded
4.32 Introductory MicroecoNomics
19. With increase in price of burgers by 22%, its demand falls by 25%. This indicates that
burgers is:
(a) Elastic (b) Inelastic (c) Unitary elastic (d) Perfectly elastic
dernand log
Demand?
20. Which of the following diagram correctly depicts the situation of Less Elastic
Y
(in)
Price
(in
)Price DD D (in)
Price D
(in
)Price
P
P
-DD
P
D
P
’X Q.
Q Q
Quantity dermanded (in nitet
Quantity demanded (in units) Quantity demanded (in units) Quantity demanded (in units)
(a) (b) (c) (d)

21. Among the following demand curves, which one is more elastic?
Y

(in
)Price
E

H G

Ol Quantity demanded
(in units)

(a) F (b) E (c) G (d) H

22. If a commodity has large number of substitutes,then its demandcurve will be:

(in
?)Price

X
Ol Quantity demanded
(in units) lnosioos
(a) P (b) Q (c) Both (a) and (b) (d) Neither (a) nor (b)
23. Price Elasticity of Demand of agood is ()3. It shows that:
(a) When price falls by 1%,demand rises by3% (b) When price rises by 1%, demand falls by 3%
(c) Either (a) or (b) (d) Neither (a) nor (b) public.
24. The Indian Government imposed heavy taxes on commodity to reduce its consumption by the
Such heavy taxes will decrease the demand of the commodity only when:
(a) E=0 (b) Eq>1
(c) Eg<1 (d) E=1
14.(b):
Ans. 1. (b); 2. (a); 3. (a); 4. (d); 5. (a); 6. (b); 7. (b); 8. (c); 9.(c); 10. (d); 11. (b); 12. (b);13.(d);
(c); 24.(b)
15. (d); 16. (a); 17. (d); 18. (a); 19. (a); 20. ((c); 21.(b); 22. (a);223.