Economics

Elasticity of Demand and Supply

Concept of elasticity of demand was introduced by:

a. Alfred Marshal

c. R. G. D Allen

d. J.R. Hicks

A line demand curve has as:

a. Varying elasticity throughout

b. Constant elasticity throughout

c. Zero elasticity throughout

d. Positive elasticity throughout

If demand curve is flatter, the value of elasticity is:

a. less than one

b. unitary elastic

c. greater than one

d. near to infinity

If the value of elasticity is less than one, then demand curve is:

a. flatter

b. steeper

c. vertical

d. horizontal

According to modern economists, the slope of demand curve is its:

a. varying elasticity

b. absolute elasticity

c. zero elasticity

d. both (a) and (c)

If demand curve is horizontal and the value of elasticity is infinity. Then:

a. Relatively elastic demand

b. Relatively inelastic demand

c. Perfect elasticity demand

d. Perfect inelasticity demand

The elasticity of demand for cigarettes by a non-smoker is:

a. Unitary price elastic

b. Relatively price inelastic

c. Perfect price elastic

d. Perfectly price inelastic

Benedict purchases product Y for which his income elasticity of demand is negative. Apparently product Y is:

a. A necessity

b. A substitute

c. An inferior good

d. A luxury good

Market demand curve is:

a. Vertical summation of individual demand curves

b. Upward summation of individual demand curves

c. Downward summation of individual demand curves

d. Horizontal summation of individual demand curves

At the midpoint on a straight-lined demand curve, demand is

a. Elastic

b. Inelastic

c. Unit elastic

d. Zero

The income elasticity of demand:

a) Is positive only

b) Is negative only

c) Must lie between -1 and +1

d) Can be positive, negative, or zero

When Q = f(P), the elasticity coefficient is measured by:

a) AQ/AP/P/Q

b) AP/AQ * Q/P

c) ΔQ/ΔΡ * P/Q

d) PAQ/Q/P

In the case of luxury goods, the income elasticity of demand will be:

a. Less than unity

b. Unity

c. More than unity

d. All the above

In case of complementary goods, cross elasticity of demand is:

a. Positive

b. Negative

c. Zero

d. Infinity

In case of perfect substitute’s goods, cross elasticity of demand is:

a. Positive

b. Negative

c. Infinity

d. Zero

In case of un-related goods, cross elasticity of demand are:

a. Negative

b. Positive

c. Infinity

d. Zero

A perfectly elastic supply curve will be:

a. Parallel to Y axis

b. Parallel to X axis

c. U shaped

d. Downward sloping

Supply curve passing through any point on Y axis (Price) will have elasticity:

a. Less than 1

b. More than 1

C. Just One

d. Zero

A supply curve passing through the origin will have elasticity:

a. Less than 1

b. More than 1

c. Just One

d. Zero

Which of the following is not a type of elasticity in economics:

a. Income elasticity

b. Price elasticity

c. Utility elasticity

d. Cross elasticity

Point elasticity concept was propounded by:

a. R.G. Lipsey

b. R. G. D. Allen

c. Alfred Marshall

d. J. R. Hicks

Income elasticity is positive, but less than unity in the case of:

a. Necessity

b. Luxury

c. Inferior

d. Substitutes

In case of substitutes cross elasticity of demand is:

a. Zero

b. Negative

c. Positive

d. Infinity

Arc elasticity concept was propounded by:

a. R.G. D. Allen.

b. R.G. Lipsey

c. R. G. D. Allen

d. Alfred Marshall

e. All of them

The Giffen paradox is an exception to:

a. Law of demand

b. Law of Supply

c. Law of Diminishing Marginal Utility

The ‘Revenue Method of elasticity was introduced by:

a. Joan Robinson

b. Alfred Marshall

c. Prof. R.G. D. Allen.

d. R.G. Lipsey

If a good is a necessity, demand for the good would tend to be:

a. Elastic

b. Horizontal

c. Unit elastic

d. Inelastic

The elasticity of demand for luxuries tends to be:

a. . Greater than one

b. Less than one

c. Equal to one

d: Equal to zero

Demand is elastic if elasticity is:

a. Less than one

b. Equal to one

c. Equal to zero

d. Greater than one

A more elastic supply curve means that the incidence falls more on the:

a. Consumer

b. Supplier

C. Both (a) and (b)230

d. None of the above

Demand is inelastic if elasticity is:

a. Less than one

b. Equal to one

c. Greater than one

d. Equal to zero

Demand is unit elastic if elasticity is:

a. Less than one

b. Greater than one

c. Equal to one

d. Equal to zero

A perfectly elastic demand curve

will be:

a. Vertical

b. Horizontal

c. Downward sloping to the right

d. Upward sloping to the right

The finance minister levied tax with on less elastic goods to increase government income.

a. Less rate

b. More rate

c. Both (a) and (b)

d. Don’t change tax rate

Which of the following is not a method of measurement of price elasticity of demand in economics

a. Total Outlay

b. Total savings

c. Point method

d. Arc method

As per total outlay method, demand is said to be elastic if as result of change in price total outlay:

a. Increases

b. Decrease

c. Remain same

d. None

If the demand of a commodity is less elastic than an entrepreneur will make its price to increases its profiles:

a. Increase

b. Decrease

c. Both (a) and (b)

d. None of the above

A less elastic supply curve means the incidence falls more on the:

a. Consumer

b. Supplier

c. Both (a) and (b)

d. None of the above

Demand and Supply

The phrase “supply and demand’ was first used by:

a. Antoine Augustine Cournot

b. James Denham-Steuart

c. Alfred Marshall

d. Fleeming Jenkin

Antoine Augustine Cournot first developed a mathematical model of supply and demand in his book “Researches on Mathematical Principles of the Theory of Wealth” in:

a. 1828

b. 1838

c. 1848

d. None of the above

What is relationship between Demand and Price?

a. Positive

b. Negative

c. Both (a) and (b)

d. None of the above

The law of demand refers to:

a. Price-supply relationship

b. Price-cost relationship

c. Price-demand relationship

d. Price-income relationship

The standard form of demand function is:

a. Q = a – bp

b. Q = b + ap

c. X= a – bp

d. Y=b+ ap

The high the price, the lower the quantity demanded. This relationship sometimes called the:

a. Law of positive-sloping demand

b. Law of negative-sloping demand

c. Law of constant-sloping demand

d. Law of increasing-sloping demand

Why demand curve slope downward:

a. income effect

b. substitute effect

c. price effect

d. both (a) and (b)

The Hicksian demand curve includes:

a. Just substitute effect

b. Just income effect

c. Price effect

d. Both (a) and (b)

Hicksian demand curve is also known as:

a. Compensated demand curve

b. Uncompensated demand curve

c. Cost indifference curve

d. all of the above

In case of a normal good, Marshallian Demand curve is always flatter than the:

a. Hicksian demand curve

b. Slutsky demand curve

c. Samuelson demand curve

d. Both (a) and (b)

In case inferior and Giffen good, Hicksian demand curves cannot be upward-sloping for:

a. Normal goods

b. Giffen goods

c. Both (a) and (c)

d. None of the above

Ordinary demand curve is based upon:

a. Price effect &amp; substitution effect

b. Substitution effect &amp; Income effect

c. Only substitution effect

d. Only Income effect

The uncompensated demand curve is more sensitive to changes in the price. So demand curve is:

a. Perfectly elastic

b. Perfectly inelastic

c. More elastic

d. Less elastic

The compensated demand curve is less sensitive to the changes in price, as a result demand curve is:

a. Perfectly elastic

b. Perfectly inelastic

c. More elastic

d. Less elastic

In case of Giffen goods, demand curve is:

a. Positively sloped

b. Negative sloped

c. Horizontal

d. Vertical

If there is a price ceiling, there will be:

a. Surplus

b. Shortage

c. Equilibrium

d. None of the above

If there is a price floor, there will be:

a. Surplus

b. Shortage

c. Equilibrium

d. None of the above

The agricultural price support program is an example of

a. A price ceiling

b. A price floor

C. Equilibrium pricing

d. All of the above

If demand curve is very inelastic relative to supply curve, the burden of the tax falls mostly on:

b. Sellers

c. Both of them

d. None of them

If Demand curve is very elastic relative to supply curve, it falls mostly on:

a. Sellers

c. Both of them

d. None of them

A typical demand curve cannot be:

a. Convex to the origin

b. Concave to the origin

c. A straight line

d. Rising upwards to the right

Where demand is equal to supply (D-S). This phenomena is also known as:

a. Hicksian Cross

b. Walrasian Cross

c. Marshallian Cross

d. Both (a) and (c)

In Economics when demand for a commodity increases with a fall in its price it is known as:

a. Contraction of demand 84

b. Expansion of demand

c. No change in demand

d. None of the above

The demand side can be represented by a:

a. Market demand curve

b. Market supply curve

c. Both of them

d. None of them

The Marshallian model (demand-supply) is a

a. Stable equilibrium

b. Dynamic equilibrium

d. Both (a) and (b)

When price rises and quantity demand is large quantity supply (Qd&gt;Qs), the exceed demand is:

a. Negative

b. Positive

c. Equal

d. Both (a) and (b)

In both Marshallian d Walrasian demand-supply model are:

a. Static stability

b. Dynamic stability

d. Neutral stability

The Marshallian demand curve downward sloping. While Walrasian demand curve is:

a. Horizontal áxis

b. Vertical axis

c. Upward sloping

d. Downward sloping

The Marshallian supply curve upward sloping. While Walrasian Supply curve is:

a. Downward sloping

b. Horizontal axis

c. Upward sloping

d. Vertical axis

The fluctuations in price and output are called:

a. Marshallian fluctuation

b. Hicksian fluctuation

c. Keynesian fluctuation

d. Cobweb fluctuation

According to Lester O. Bumas, vertical supply function associated with:

a. Land

b. Capital

c. Labor

d. All of them

According to classical economist, the market is equilibrium. When there is”:

a. Imperfect competition in the market

b. Perfect competition in the market

c. Monopoly and free market economy

d. None of the above

Alfred Marshall broke conceptual periods time into:

a. Two period

b. Three period

c. Four period

d. Five period

Change in demand occurs due to the change in:

a. Income

b. Prices of related goods

c. Taste and preference

d. All of these

Good A is a normal good. The demand curve for good A:

a. Backward X-axis

b. Backward Y-axis

c. Slopes downward

d. Slopes upward

What is the shape of the marginal revenue curve derived from a linear downward sloping demand curve?

a. Downward sloping, with a constant slope

b. upward sloping, with a constant slope

c. Horizontal, with a constant slope

d. U-shaped, with a constant slope

When negative network externalities are present:

a. The demand curve is more elastic than otherwise

b. The demand curve is less elastic than otherwise

c. The demand curve shifts to the right

d. The demand curve shifts to the left

The equilibrium price is often called:

a. Market clearing price

b. Market price

c. Both of them

d. None of them

A tax that is levied on producer’s shifts the supply curve:

a. Upward

b. Downward

c. Remain constant

d. Both (a) and (b)

A tax that is levied on consumer’s shifts the demand curve:

a. Upward

b. Downward

c. Remain constant

d. Both (a) and (b)

Specific quantity to be purchased against a ‘specific price of the commodity is called:

a. Demand

b. Quantity demand

c. Movement along demand curve

d. Shift in demand

In case of normal goods, demand curve shows:

a. A negative slope

b. A positive slope

c. Zero slope

d. None of these

Law of demand must fail in case of:

a. Normal goods

b. Giffen goods

c. Inferior goods

d. None of these

In case of Giffen’s paradox, the slope of demand curve is:

a. Negative

b. Positive

c. Parallel to X-axis

d. Parallel to Y-axis

As a result of rise in consumer’s income,  demand curve for coarse grain(inferior good):

a. Becomes a horizontal straight Line

b. Becomes a vertical straight line

c. Shifts to the right

d. Shifts to the left

Which of the following shifting factor of demand curve?

b. Expected Future Prices (EFP)

c. Expected Income of Consumers (EYP)

d. All of the above

If two goods are complementary then rise in the price of one results in:

a. Rise in demand for the other

b. Fall in demand for the other

c. Rise in demand for both

d. None of these

Demand curve is upward sloping for:

a. Normal goods

b. Inferior goods

c. Giffen goods

d. None of these movement along the demand curve occurs due to change in:

a. Own price of the commodity

b. Determinants of demand, other than own price of the commodity

c. Both (a) and (b)

d. None of these shift in demand curve means:

Shift in Demand Curve means;

a. Fall in demand due to rise in own price of the

b. Rise in demand due to fall in  own price of the good

c. Change in demand due to factors other than own price of the commodity

d. None of these

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