Question # 1

If supply of a commodity changes by more than 10% due to 10% change in its price, then elasticity of supply will be

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Equal to unity

More than unity

Less than unity

Infinite

When price of a commodity decreases but its demand does not change, this situation is called

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Constant demand

Fall of demand

Rise of demand

Extension of demand

If demand curve is parallel to x-axis, then elasticity of demand is

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Infinite

Zero

Equal to unity

More than unity

If supply curve is horizontal (parallel to x-axis) then elasticity of supply is

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Zero

Infinite

Equal to unity

More than unity

Exceptions, or limitations of law of demand have been stated by

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Professor Marshall

Professor Adam Smith

Professor Benham

Professor Robbins

Finance minister in order to increase the public revenue, imposes tax on the commodities whose demand is less elastic

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At low rate

At high rate

Some times decreases the tax rate and some times increases the tax rate

Does not change tax rate

When there is a very small change in demand and price of a commodity, it is called

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Point elasticity

Arc elasticity

Cross elasticity

Income elasticity

If demand changes by more than 10% due to 10% change in price, then elasticity of demand is called

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Equal to unity

More than unity

Less than unity

Infinite

According to law of demand, when price of a commodity decreases, then demand curve

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Moves from left to right upward

Moves from left to right downward

Moves vertically

Moves horizontally

The demand curve slopes

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upwards

Horizontal

vertical

downward to the right

At equilibrium price, demand and supply

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Increase

Become equal

Decrease

are different

What functional relationship is present between demand and price

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positive

inverse

increasing

none of these

The goods which are jointly demanded are called:

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Substitute goods

Complimentary goods

Alternative goods

None of these

If the ratio of change in demand is less than the ratio of change in price, elasticity of demand will be

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More than unity

Less than unity

Equal to unity

Zero

If demand does not change, then due to fall of supply

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Equilibrium price increases

Equilibrium price decreases

Equilibrium quantity increases

Stock means the quantity of a commodity

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Which is offered for sale in the market

Which is sold in the market

Total production is called stock

Which the seller keeps in his possession without selling

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Principles of Economics Icom Part 1 English Medium Chapter 3 Online Test MCQs With Answers

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