Free Printable THEORY OF DEMAND

1.

Demand for a commodity refers to:

a)

(a) Desire for the commodity

b)

(b) Need for the commodity

c)

(c) Quantity demanded of that commodity

d)

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

2.

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 prices has lead to a fall in attendance at a given movie from 300 persons to 200 persons. What is the price elasticity of demand for the movie?

a)

(a) 0.5

b)

(b) 0.8

c)

(c) 1.00

d)

(d) None of these.

3.

In case of an inferior good, the income elasticity of demand is:

a)

(a) Positive

b)

(b) Zero

c)

(c) Negative

d)

(d) Infinite

4.

For what type of good does demand fall with a rise in income levels of households?

a)

(a) Inferior goods

b)

(b) Substitutes

c)

(c) Luxuries

d)

(d) Necessities

5.

In case of Inferior goods like bajra, a fall in its price tends to:

a)

(a) Make the demand remain constant

b)

(b) Reduce the demand

c)

(c) Increase the demand

d)

(d) Increase the demand in an abnormal way

6.

Movement along the same demand curve shows:

a)

(a) Expansion of demand

b)

(b) Expansion of supply

c)

(c) Expansion and contraction of demand

d)

(d) Increase and decrease of demand

7.

The price of hot – dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:

a)

(a) Elastic

b)

(b) Inelastic

c)

(c) Unitary elastic

d)

(d) Perfectly elastic

8.

The quantity demanded does not respond to price change and so the elasticity is:

a)

(a) Zero

b)

(b) One

c)

(c) Infinite

d)

(d) None

9.

Which factor generally keeps the price – elasticity of demand for a good low:

a)

(a) Variety of uses for that good

b)

(b) Its low price

c)

(c) Close substitutes for that good

d)

(d) High proportion of the consumer’s income spent on it.

10.

An increase in demand can result from:

a)

(a) A decline in the market price

b)

(b) An increase in income

c)

(c) A reduction in the price of

d)

(d) An increase in the price of complements

11.

What is the value of elasticity of demand if the demand for the good is perfectly elastic?

a)

(a) 0

b)

(b) 1

c)

(c) Infinity

d)

(d) Less than 0

12.

What is the original price of a commodity when price elasticity is 0.71 and demand changes from 20 units to 15units and the new price is 10 ?

a)

(a) 15.4

b)

(b) 18

c)

(c) 20

d)

(d) 8

13.

If the price of any complement goods rises:

a)

(a) Demand curve shifts to left

b)

(b) Demand curve shifts to right

c)

(c) Demand curve moves downwards

d)

(d) Demand curve moves upward

14.

If demand is parallel to X axis, what will be the nature of elasticity?

a)

(a) Perfectly elastic

b)

(b) Inelastic

c)

(c) Elastic

d)

(d) Highly elastic

15.

Giffen Paradox is an exception of

a)

(a) Demand

b)

(b) Supply

c)

(c) Production

d)

(d) Utility

16.

Law of demand is a

a)

(a) Quantitative Statement

b)

(b) Qualitative Statement

c)

(c) Both (a) and (b)

d)

(d) Hypothetical

17.

The demand of which type of goods do not decrease with increase in its price

a)

(a) Comforts

b)

(b) Luxury

c)

(c) Necessities

d)

(d) Capital goods

18.

Expansion & contraction of demand curve occurs due to

a)

(a) Change in the price of commodity

b)

(b) Change in price of substitute or complementary goods

c)

(c) Change in income

d)

(d) None

19.

Demand of a commodity depends upon:

a)

(a) Price

b)

(b) Income

c)

(c) Price of related good

d)

(d) All of the above.

20.

The quantity demanded does not respond to price change and so the elasticity is:

a)

(a) Zero

b)

(b) One

c)

(c) Infinite

d)

(d) None

21.

Other things remaining constant, if the price of the inferior goods decreases then what will be the effect?

a)

(a) Demand increase

b)

(b) Demand Decrease

c)

(c) Quantity demanded increases

d)

(d) Quantity demanded decreases

22.

Cross elasticity of perfect substitutes is:

a)

(a) Zero

b)

(b) Negative

c)

(c) One

d)

(d) Infinity

23.

A consumer spends ₹ 80 on purchasing a commodity when its price is ₹1 per unit and spends ₹ 96 when the price is ₹ 2 per unit. Calculate the price elasticity of demand.

a)

(a) 0.2

b)

(b) 0.3

c)

(c) 0.4

d)

(d) 0.5

24.

If the price is decreased from ₹ 10 to ₹ 8 of a commodity but the quantity demanded remains the same price elasticity is ---------.

a)

(a) 1

b)

(b) 0

c)

(c) ∞

d)

(a) (d) None

25.

Demand for electricity power is elastic because ---------.

a)

(a) It is available at a very high price.

b)

(b) It is essential for life.

c)

(c) It has many uses.

d)

(d) It has many substitutes.

26.

The commodity whose demand is associated with the name of Sir Robert Giffen?

a)

(a) Necessary good.

b)

(b) Luxury good.

c)

(c) Inferior good.

d)

(d) Ordinary good.

27.

1. In expansion and contraction of demand –---------------.

a)

(a) Demand curve remains unchanged.

b)

(b) demand curve changes.

c)

(c) Slope of the demand curve changes.

d)

(d) Both (a) & (c)

28.

Certain goods for which Quantity demanded decreases when Income Increases are called ----------.

a)

(a) Superior goods

b)

(b) Inferior goods

c)

(c) Prestige goods

d)

(d) Conspicuous goods

29.

When price falls by 5% and demand increases by 6%, then elasticity of demand is ----------.

a)

(a) Elastic

b)

(b) Inelastic

c)

(c) Unitary elastic

d)

(d) Zero

30.

Contraction of demand result due to ---------

a)

(a) increase in price of goods

b)

(b) decrease in no. of producers

c)

(c) decrease in output of sellers

d)

(d) decrease in price of good

31.

Bricks for houses is an example of which kind of demand?

a)

(a) Composite

b)

(b) Competitive

c)

(c) Joint

d)

(d) Derived.

32.

Normal goods have ---------------.

a)

(a) Zero income elasticity

b)

(b) Negative income elasticity

c)

(c) Positive income elasticity

d)

(d) Infinite income elasticity

33.

In which of the following cases the demand for goods tends to be less elastic?

a)

(a) Good is necessary

b)

(b) Time period is shorter

c)

(c) Number of close substitutes is less

d)

(d) All of the above.

34.

Which of the following elasticity of demand measures a movement along the demand curve rather than a shift in the curve?

a)

(a) Income elasticity of demand

b)

(b) Price elasticity of demand

c)

(c) Substitution elasticity of demand

d)

(d) None of these.

35.

If the price elasticity of demand is zero, the shape of the curve will be:

a)

(a) Horizontal

b)

(b) Vertical

c)

(c) Sloping downwards

d)

(d) None of these

36.

If a 20% fall in price of a commodity brings about a 40% increase in its demand, then the demand for the commodity will be termed as:

a)

(a) Inelastic

b)

(b) Elastic

c)

(c) Highly elastic

d)

(d) Perfectly elastic

37.

Expansion and contraction in demand are caused by:

a)

(a) Change in income of buyer

b)

(b) Change in taste and preference of buyer

c)

(c) Change in price of the commodity

d)

(d) Change in price of related goods.

38.

A fall in price of normal goods leads to:

Shift in demand curve

a)

Shift in demand curve

b)

(b) Fall in demand

c)

(c) A rise in consumer’s real income

d)

(d) A fall in consumer’s real income

39.

Original price of a commodity is ₹ 500 and quantity demanded of that is 20 kgs. If the price rises to ₹ 750 and the quantity demanded reduces to 15 kgs. The price elasticity of demand will be:

a)

(a) 0.25

b)

(b) 0.50

c)

(c) 1.00

d)

(d) 1.50

40.

The demand for factors of production is ---------------.

(a) Fundamental demand (b) Derived demand (c) Market demand (d) Joint demand.

a)

(a) Fundamental demand

b)

(b) Derived demand

c)

(c) Market demand

d)

(d) Joint demand.

41.

Which statement is true about the law of demand?

a)

(a) Income rises, demand rises

b)

(b) Price rises, demand rises

c)

(c) Price falls, demand falls

d)

(d) Price falls, demand rises

42.

Which of the following is not a determinant of demand?

a)

(a) Consumer’s tastes and preferences

b)

(b) Quality supplied of a commodity

c)

(c) Income of the consumers

d)

(d) Price of related goods

43.

A demand curve parallel to the Y-axis implies:

a)

(a) Ep = 0

b)

(b) Ep = 1

c)

(c) Ep< 1

d)

(d) Ep> 1

44.

Changes in the quantity demanded in response to changes in the price of same commodity is called:

a)

(a) Change in demand

b)

(b) change in quantity demanded

c)

(c) income demand

d)

(d) cross demand

45.

Other things being equal, a fall in the price of the complementary goodwill cause the ____ of the other to rise.

a)

(a) Price

b)

(b) supply

c)

(c) Demand

d)

(d) utility

THEORY OF DEMAND

Total questions: 45

Worksheet time: 48mins

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