Sail E0 Webinar

11th Grade > Economics - 1

THE DEMAND CURVE MCQs

Total Questions : 30 | Page 1 of 3 pages
Question 1. The value of elasticity of demand ranges from
  1.    Zero to one 
  2.    One to infinity 
  3.    Zero to infinity 
  4.    None of these 
 Discuss Question
Answer: Option C. -> Zero to infinity 
:
C
The value of elasticity of demand ranges from zero to infinity.
Question 2. Which of the following would increase aggregate demand?
  1.    Increased saving
  2.    Increasing import spending
  3.    Increased taxation revenue
  4.    Increased investment
 Discuss Question
Answer: Option D. -> Increased investment
:
D
Aggregate demand increases with increase in investment.
Question 3. An individual demand curve slopes downward to the right because of the:
  1.    Working of the law of diminishing marginal utility
  2.    Substitution effect of decrease in price
  3.    Income effect of fall in price
  4.    All of the above
 Discuss Question
Answer: Option D. -> All of the above
:
D
All three are reasons why an individual demand curves slopes downward to the right.
Question 4. For a normal good with a downward sloping demand curve:
  1.    The price elasticity of demand is negative; the income elasticity of demand is negative.
  2.    The price elasticity of demand is positive; the income elasticity of demand is negative.
  3.    The price elasticity of demand is negative; the income elasticity of demand is positive.
  4.    The price elasticity of demand is positive; the income elasticity of demand is positive.
 Discuss Question
Answer: Option C. -> The price elasticity of demand is negative; the income elasticity of demand is positive.
:
C
The price elasticity of demand is negative; the income elasticity of demand is positive.
Question 5. Average income increases from INR 20,000 p.m. to INR 22,000 p.m. Quantity demanded per month increases from 5000 to 6000 units. Which of the following is correct?
  1.    Demand is price inelastic
  2.    The good is inferior
  3.    Income elasticity is -2
  4.    The product has a positive income elasticity of demand
 Discuss Question
Answer: Option D. -> The product has a positive income elasticity of demand
:
D
The percentage change in demand is +20%; the percentage change in income is +10%. This means the product is normal because demand rises with more income and has an income elasticity of +2.
Question 6. Which of the following pairs represent substitute goods?
  1.    Car and petrol
  2.    Juice and cold drink
  3.    Bread and butter
  4.    All of these
 Discuss Question
Answer: Option B. -> Juice and cold drink
:
B
Juice and cold drink are substituted goods, as one could be substituted for the other.
Question 7. The price decreases from INR 2,000 to INR 1,800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?
  1.    The price elasticity of demand is -2
  2.    The good is inferior
  3.    Income elasticity is + 0.5
  4.    Income elasticity is + 2
 Discuss Question
Answer: Option A. -> The price elasticity of demand is -2
:
A
A.The percentage change in demand is +20%; the percentage change in price is -10% so the price elasticity of demand is -2.
Question 8. Demand for which of the following goods does not change with a change in income of the consumer?
  1.    Normal goods
  2.    Necessity goods
  3.    Inferior goods
  4.    None of the above
 Discuss Question
Answer: Option B. -> Necessity goods
:
B
Demand for necessary goods is inelastic.
Question 9. Which of the following statements about price elasticity of demand is INCORRECT?
  1.    When the percentage decrease in the price of a good is greater than the percentage increase in its quantity demanded, the elasticity of demand for it is more than 1.
  2.    When the percentage increase in the price of a good is greater than the percentage decrease in its quantity demanded, the elasticity of demand for it is less than 1.
  3.    When the percentage decrease in the price of a good is greater than the percentage increase in its quantity demanded, the elasticity of demand for it is less than 1.
  4.    When the percentage decrease in the price of a good is the same as the percentage increase in its quantity demanded, the elasticity of demand for it is equal to 1.
 Discuss Question
Answer: Option B. -> When the percentage increase in the price of a good is greater than the percentage decrease in its quantity demanded, the elasticity of demand for it is less than 1.
:
B
eD=%changeinq%changeinp
You can see that option B is incorrect.
Question 10. Individual demand refers to the quantity of the commodity that a consumer is able and willing to buy at each possible price during a given period of time.
  1.    True
  2.    False
 Discuss Question
Answer: Option A. -> True
:
A
The given statement is true. Demand is the relationship betweenprice and quantity demanded.

Latest Videos

Latest Test Papers