Question # 1

A horizontal demand curve has a price elasticity of

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zero

infinity

1

variable

Price of a product falls by 10% and its demand rises by 30%. The elasticity of demand is

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10%

30%

3

1/3

The demand curve is negatively sloped due to

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Income effect

Substitution effect

Price effect

All the three

When demand is perfectly inelastic, an increase in price will result in

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decrease in total revenue

increase in total revenue

no change in total revenue

decrease in quantity demanded

Which one can cause a change in demand

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change in income

change in supply

change in tastes

a and c of above

The following are causes of shift in demand EXCEPT the one

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change in income

change in price

change in fashion

change in prices of substitutes

If price elasticity of demand is very low, the commodity is

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necessity

luxury

substitute

not available

Cross elasticity of Suzuki and Honda cars will be

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Positive

negative

zero

infinite

Law of demand shows relation between

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income and price of commodity

price and quantity of a commodity

income and quantity demanded

quantity demanded and quantity supplied

Which one is the assumption of law of demand?

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price of the commodity should not change

quantity demand should not change

income of the consumer should not change

none of the above

Price and demand are positively correlated in case of

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necessities

comforts

Giffen goods

Luxuries

The demand curve slopes downward from left to right because of:

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Income effect

Substitution effect

Entry of new buyers

All of the above

If demand is inelastic, a change in the price

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will change the quantity in same direction

will change total revenue in same direction

will change total revenue in the opposite direction

will not change quantity

If quantity demanded is completely unresponsive to changes in price, demand is

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inelastic

unit elastic

elastic

perfectly inelastic

Which of the following is a demand function?

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Q + 4P = 20

Q = 35 + 3P

Q - 2P - 15 =0

5P - Q = 4

Income elasticity of demand for normal good is always

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1

more than one

negative

positive

The demand of a will expand when:

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Other things do not remain constant.

Price of the products changes.

Value of money falls.

None of the three

The demand of a commodity having many substitutes is

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more elastic

less elastic

zero elastic

infinite elastic

When the demand of a product rises due to factors except price it will be.

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Extension of demands

Rise of demand

Contraction of demand

Extension of demand

This is an assumption of law of demand

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price of the commodity does not change

quantity should not change

supply should not change

income of consumer should not change

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