Question # 1

One of the following is not an exception the law of demand.

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Very high price products

Very low price products

Ignorance of consumers

Non of the above

A seller can increase his sales revenue by charging a lower price, if the demand has

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e < 1

e = 1

e > 1

e = 0

If elasticity of demand is very low it shows that the commodity is

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a necessity

a luxury

has little importance in total budget

a and c above

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

Income elasticity of demand for normal good is always

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1

more than one

negative

positive

The demand of a commodity having many substitutes is

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more elastic

less elastic

zero elastic

infinite elastic

When price elasticity of demand for normal goods in calculated, the value is always

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positive

negative

constant

greater than one

This is the assumption of law of demand

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price of the commodity should not change

Quantity demanded should not change

Price of substitutes should not change

Demand curve must be linear

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

If demand has unit price elasticity, a change in price causes

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increase in total revenue

decrease in total revenue

no change in total revenue

indeterminate

Normally a demand curve will have the shape

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horizontal

vertical

downward sloping

upward sloping

The demand curve is negatively sloped due to

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Income effect

Substitution effect

Price effect

All the three

Market demand curve is a summation of all individual demand curves as

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Vertical

horizontal

mathematical

local

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

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 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

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

Price elastic of demand measures

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change in price caused by changes in demand

the rate of change of sales

the responsiveness of demand to price changes

the value of sales at a given price

A horizontal demand curve has a price elasticity of

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zero

infinity

1

variable

When the price of a product falls and as a concequence the demand for the product increase. it will be.

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Rise of demands

Fall of demand

Extension of demand

Contraction on demand

If demand is unitary elastic, a 25% increase in price will result in

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25% change in total revenue

no change in quantity demanded

1% decrease in quantity demanded

25% decrease in quantity demanded

The elasticity of demand of durable goods is

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less than unity

greater than unity

equal to unity

zero

Demand is a function of

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price

quantity

supply

none

One of the following will not cause a rise and fall on demand.

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Change in income

Change in weather

Discovery of a substitute

Distribution of income remaining the same

Which one is not determinant of demand

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tastes

income

method of production

price

Irrespecitve of price, Somia always spends Rs. 100 a week on ice cream, we conculde that

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elasticity of demand is 0

elasticity of demand is 1

elasticity of demand id infinite

law of demand has been violated

The law demand will not be valid in case of.

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Very high price products

Normal goods

Price effect

Income effects

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