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