Economics unit 2

Which of the following will cause a decrease in quantity demanded while leaving demand

unchanged?

• An increase in the price of a complementary good

• An increase in income when the good is inferior

• A decrease in the price of a substitute good

• An increase in the price of the good

If consumer income declines, then the demand for

• normal goods will increase.

• inferior goods will increase.

• substitute goods will increase.

• complementary goods will increase.

Which of the following will not decrease the demand for a commodity?

• The price of a substitute decreases

• The price of a complementary good increases

• The commodity’s price increases

• Income falls and the good is normal

At the higher end of a demand curve (high price, low quantity), the PED is

• 1

• greater than 1

• less than 1

• 0

The demand schedules for products like eggs, bread, etc tend to be:

• Perfectly elastic

• Relatively elastic

• Unitary elastic

• Relatively inelastic

Which of the following statements is not true?

• PED is greater for necessary goods than for luxury goods.

• PED is lower for a shorter time period.

• PED for gold is relatively high.

• PED for FMCG goods is relatively high.

A demand curve which is parallel to the y-axis is:

• Perfectly Elastic

• Perfectly Inelastic

• Relative Elastic

• Unitary Elastic

If the coefficient of PED is less than 1 but greater than 0, the demand is:

• Perfectly elastic

• Unitary elastic

• Relatively inelastic

• Relatively elastic

Which of the following events illustrates the law of demand: Other things remaining the same,

a rise in the price of a good will ________.

• decrease the quantity demanded of that good

• increase the demand for a substitute of that good

• decrease the demand for the good

• increase the demand for a complement of that good

In the market for jeans, which of the following events increases the demand for a pair of jeans?

• rise in the wage rate paid to garment workers

• rise in the price of a denim skirt (a substitute for jeans)

• fall in the price of denim cloth (an input material used in the production of jeans)

• new technology, which reduces the time it takes to make a pair of jeans