Practice Test

1) Demand for a commodity refers to

2) Contraction of demand is the result of

3) All but one of the following are assumed to remain the same while drawing an individual's demand curve for a commodity .Which one is it ?

4) In economics, demand refers to

5) Demand is a

6) The consumer demand those goods which gave

7) Example of substitutes can be

8) Example of complements can be

9) The law of demand refers to relationship between

10) The law of demand assumes that the following is constant

11) When price of z rises it causes an increase in demand for goods X then X & Z are

12) When price of z rises then the quantity in demand of goods X reduces. what is the relationship between X & Z

13) Market demand is derived from individual demand curve by

14) When price of a good changes,it brings about

15) When price of a related good or income or taste changes,it brings about

16) Rise in demand at original price is called

17) Decrease in demand is due to

18) The minus sign in elasticity of demand indicates

19) What is elasticity of demand in case of necessities & luxuries ?

20) In the case of essential demand is infinity ,it is called

21) In case of essential goods the elasticity of demand is

22) What is it called when elasticity of demand is one ? What shape will the demand curve take ?

23) When price & outlay moves in the same direction, it is case of

24) When the price & outlay move in opposite direction it is case of

25) The formula of arc elasticity demand is

26) If there is no change in quantity demanded to any charge in price then elasticity of demand is & shape of demand curve is

27) If income of a household rises by 30% & demand falls by 10% then value of income elasticity of demand is

28) If income of a household rises by 35% & demand falls by 10% then value of income elasticity of demand is

29) If price of burger rises by 20% & demand falls by 25% then demand for burger is

30) When demand is elastic then percentage change in demand to a change in price is

31) What is the relationship between two goods when cross elasticity is positive & when it is negative ?

32) Calculate cross elasticity when quantity demanded of a ink pen rises by 30 % as price of ink falls by 10 %

33) Calculate elasticity when price of ball pen falls by 10 % then demanded of a ink falls by 10 %

34) A declines in the price of X by Rs.2 causes an increase of 10 units in demand which goes up to 60 units. The new price is Rs.18 .Calculate elasticity of demand

35) As the prices of a commodity rises from Rs.10 to Rs.12 ,its demand falls from 100 units to 50 units .calculate elasticity of demand

36) As a consumers' income rises from Rs.3,000 to Rs.3,600 , demand rises from 25 units to 30 units .calculate elasticity of demand

37) Cross elasticity of demand denotes a change in demand for one good due to change in whose aspects of the other good

38) In a straight line downward sloping demand curve ,the elasticity of demand becomes greater as price

39) Which goods has income elasticity greater than one & which has less than zero

40) In diagrammatic method the value of point elasticity of demand on price axis is

41) Law of demand does not hold in case of

42) When the no.of uses of the purchase goods is less price elasticity of demand is

43) When more substitutes are available elasticity of demand is

44) When elasticity of demand is measured in terms of its substitutes & complements ,it is called

45) What kind of goods has elastic demand

46) Demand theories gives what kind of explanation of law of demand

47) Name the economists who developed marginal utility theory & indifference curve theory

48) What kind of satisfaction is utility which a consumer derives when he is willing to spend money on a stock of commodity which has the capacity to satisfy his wants ?

49) MU is calculated as

50) When there is no consumption , what value TU & MU takes ?

51) In marginal utility rationality means

52) Cardinally means utility can be

53) Law of diminishing marginal utility states that the consumer buys more units of a commodity

54) Ordinarily means utility can be

55) Higher the consumer surplus implies state of economy

56) The slope of indifference curve called

57) Slope of budget line is

58) If the consumer prefers A to B & B to C , then he prefers A to C. It is called property of

59) A series of indifferent curve is called

60) Convexity means slope is

61) Convex indifferent curve is explained by

62) Budget line is called

63) Constraints in which budget line is made are

64) Consumer's equilibrium occurs when

65) Consumer's equilibrium condition is written as

66) For the consumer's equilibrium to be stable, the requirement is

67) What shows all possible combinations of two goods that can be bought by the consumer ?

68) When MU is zero , TU is

69) Assumption of constant marginal utility of money means importance of money to the consumers

70) When indifferent curve is straight downward sloping line, the two goods are

71) If MRS was increasing ,what shape will indifference curve take ?

72) L-shaped indifference curve exist in case two goods are

73) At the point of consumer's equilibrium indifference curve & budget curve are

74) Which assumptions implies the consumer aims at utility maximization ?

75) Which assumptions states that if the consumer prefers A to B then he will not prefer B to A in another time period ?

76) Consumer surplus is more in case of

77) In economics supply means

78) When state of technology improves supply will

79) When govt. imposes taxes supply will

80) When govt. grants subsidies, supply will

81) Which law states direct relationship between price & quantity supply of a commodity ?

82) If the producer expects an increase in price of goods in the near future ,then current supply will

83) When price of good X changes ,it brings about what kind of change in supply ?

84) Elasticity of supply for a positively sloping supply curve that starts from price axis is

85) When prices rises, quantity supplied

86) Change in factor other than the price of good cause

87) The percentage change in quantity supplied due to percentage change in price is called

88) In case of perfectly elastic supply the supply curve is

89) In the case of a straight line demand curve meeting the two axes, the price -elasticity of demand at the mid-point of the line would be ;

90) The law of Demand ,assuming other things to remain constant ,establish the relationship between :

91) Identify the faster which generally keeps the price -elasticity of demand for a good low

92) Identify the co-efficient of price -elasticity of demand when the % increase quantity of a good demanded is smaller than the % fall in its price :

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

94) If the demand for goods is inelastic , an increase in its prices will cause the total expenditure of the consumer of the good to

95) If regardless of changes in its price ,the quantity demanded of a good remain unchanged , then the demand curve for goods will be:

96) The law of Demand is

97) All the following are determinants of demand except ?

98) A movement along the demand curve for soft drinks is the best described as :

99) If the price of pepsi decreases relative to the price of Coke & 7-UP,the demand for :

100) If a good is a luxury ,Its income elasticity of demand is

101) The price of hot dogs increases by 22% and the quantity of hot dogs demanded falls by 25%. This indicates that demand for hot dogs is :

102) If the quantity demanded of beef increases by 5% when the price of chicken increases by 20%. The cross -price elasticity of demand between beef & chicken is

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

104) The price elasticity of demand for hamburger is

105) The price elasticity of demand is defined as the responsiveness of

106) Suppose the price of movies seen at a theater rise from Rs.120 per person to Rs.200 per person .The theater manager observes that the rise in price causes attendance at a given movie to fall from 300 persons to 200 persons .What is the price elasticity of demand for movies ?

107) Suppose a department store has a sale on its silverware.If the price of a plate-setting is reduced from Rs.300 to Rs.200 & the quantity demanded increases from 3000 plates to 5000 .What is the price elasticity of demand for silverware ?

108) A discount store has a special offer on CD's .It reduces their from Rs.150 to Rs.100 .Suppose the store manager observes that the quantity demanded increases from 700 CD's to 1,300 CD's .What is the price elasticity of demand for CD's ?

109) If the local pizzeria raises the price of a medium pizza from Rs.60 to Rs.100 & the quantity demanded falls from 700 pizza a night to 100 pizzas a night .What is the price elasticity of demand for pizza ?

110) If electricity demand is inelastic ,& electric rates increase ,which of the following is likely to occur ?

111) Suppose the demand for a meals at a medium-priced restaurant is elastic.If the management of the restaurant is considering raising prices ,it can expect a relatively

112) Point elasticity is useful for which of the following situations

113) A decrease in the price will result in an increase in total revenue if

114) An increase in the price will result in an increase in total revenue if

115) Demand for a good will tend to be more elastic if it exhibits which of the following characteristics ?

116) Suppose a consumer 's income increases from Rs.30,000 to Rs.36,000 .As a result , the consumer increases her purchase of compact discs(CD's) from 25 CD's to 30CD's .What is the consumer's income elasticity of demand for CD's ?

117) Total utility is maximum when

118) Which one is not an assumption of the theory of demand based on analysis of difference curves?

119) The consumer is in equilibrium at a point where the budget line

120) An indifference curve slopes down towards right since more of one commodity and less of another result in

121) Which of the following statements is incorrect ?

122) The second glass of lemonade gives lesser satisfaction to a thirsty boy .This is a clear case of

123) The consumer is in equilibrium when the following condition is satisfied

124) In the case of giffen goods,the demand curve will be

125) By the consumer surplus economists mean

126) When economists speak of the utility of a certain good , they are referring to

127) A vertical supply curve parallel to Y axis implies that the elasticity of supply is

128) The supply of a good refers to

129) An increase in the supply of a good is caused by

130) Elasticity of supply refers to the degree of responsiveness of a good to changes in its

131) A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is

132) Contraction of supply is the result of