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ECONOMICS 1ST REVISION (DEMAND)-2

The document is a set of economics questions for a foundation class, covering topics such as elasticity of demand, consumer equilibrium, and indifference curves. It includes multiple-choice questions aimed at assessing understanding of economic principles. The questions are designed for a 1-hour examination with a total of 30 marks.

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BRISTI SAHA
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17 views

ECONOMICS 1ST REVISION (DEMAND)-2

The document is a set of economics questions for a foundation class, covering topics such as elasticity of demand, consumer equilibrium, and indifference curves. It includes multiple-choice questions aimed at assessing understanding of economic principles. The questions are designed for a 1-hour examination with a total of 30 marks.

Uploaded by

BRISTI SAHA
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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MEPL CLASSES

FOUNDATION
ECONOMICS
Website- www.meplclasses.com
Mail Id:- [email protected]
Main Centre- 59 Jatindra Mohan Avenue Shobhabazar Kolkata-700005
(Time allowed: 1 Hour) (Marks: 30 Marks)

1. If the price of coffee falls by 8% and the demand for Tea decline by 2%. The C.P.E of
demand for tea is: a) 0.45 b) 0.25 c) 0.44 d) -0.30.

2. Which of the following is not a type of Elasticity in economics? a) Income Elasticity b)


Price Elasticity c) Utility Elasticity d) Cross Elasticity.

3. Elasticity of demand is a _____ statement. a) Qualitative b) Quantitative c) both d)


none.

4. When price rises, real income falls, ceteris paribus. This is known as: - a) income effect
b) price effect c) substitution effect d) both (a)&(b).

5. At consumer’s equilibrium, consumer surplus is: a) 0 b) 1 c) infinity d)>1

6. Identify the elasticity – price rises and T.E also rises. a) >1 b) <1 c) =0 d) =1

7. If I.C is ‘L’ shaped it indicates goods are: a) Perfect substitutes b) Perfect compliments
c) Not related d) both (a)&(b).

8. For luxury goods income elasticity is: a)>1 b) <1 c) =0 d) =1.

CA, CS DIVYA AGARWAL


9. Suppose the price of movies seen at a theatre rises from Rs.120 per person to Rs.200
per a) Person. The theatre manager observes that the rise in price leads to a fall in
attendance at a given movie from 300 to 200 persons, what is then price elasticity of
demand for movies? a) .5 b) .8 c) 1.0 d) 1.2.(Use ARC elasticity)

10. Movement along the same demand curve shows: a) Expansion of demand b)
Expansion of supply c) Expansion & contraction of demand d) Increase & decrease of
demand.

11. For a commodity with a unitary elastic demand curve if the price of the commodity
rises, then the consumers total expenditure on this commodity would be: a) Increase d)
Decrease c) Remains constant d) Either increase or decrease.

12. Demand of a commodity depends upon: a) Price b) Income c) Price of related good d)
All the above.

13. What is the original price of a commodity when price elasticity is 0.71 and demand?
Changes from 20units to 15 units and the new price is Rs.10. a) Rs.15.4 b) Rs.18 c) Rs.20
c) Rs.8.

14. Demand for electricity power is inelastic because a) It is available at a very high price
b) It is essential for life c) It has many uses d) It has no substitutes.

15. Total utility is maximum when: a) Marginal utility is maximum b) Marginal utility is
zero c) Average utility is maximum d) Average utility is zero.

16. An indifference curve is always: a) Concave to the origin b) Convex to the origin c) L-
shaped d) A vertical straight line.

CA, CS DIVYA AGARWAL


17. At equilibrium the slope of the indifference curve is: a) Equal to the slope of budget
line b) Greater than the slop of budget line c) Smaller than the slope of budget line d)
none.

18. Indifference curves are: a) Concave b) Convex to the origin c) neither ‘a’ or ‘b’ d)
None.

19. A consumer buys two commodities X and Y, he would be in equilibrium when, a)


MU X MU Y MU X MU X MU Y PX
= b) =MU M c) = d) =MU M
PX PY MU Y PX PX PY

20. The substitution effect of fall in the price of the commodity will lead to: a) Upward
movement in indifference curve b) Downward movement in indifference curve c)
Movement from lower I.C to a higher one d) None.

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

22. 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.

23. In the case of an inferior good, the income elasticity of demand is: a) Positive, b)
Zero, c) Negative, d) Infinite.

24. 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.
CA, CS DIVYA AGARWAL

25. Suppose the price of Pepsi increases, we will expect the demand curve of Coca Cola
to: a) Shift toward left, b) Shift toward right, c) Initially shift towards left and then to
right, d) Remain at the same level.

26. All the following are determinants of demand except: a) Tastes and Preferences, b)
Quantity supplied, c) Income, d) Price of related goods.

27. 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.

28. 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 decrease.

29. 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.

30. 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.
CA, CS DIVYA AGARWAL

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