Question # 1

If the demand for a commodity is more elastic, then an entrepreneur in order to increase his profit

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Will increase its price

Will decrease its price

Will not change its price

None of these

If demand for a commodity changes due to change in price of its substitute, it is called

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Price elasticity

Point elasticity

Cross elasticity

Arc elasticity

The cause of extension and contraction of demand is

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Income

Price

Population

Technology

Id demand changes by less 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 supply, supply curve moves from left to right upward, this tendency is called

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Positive

Negative

Horizontal

Vertical

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

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Equilibrium price decreases

Equilibrium price increases

Equilibrium price does not change

Equilibrium quantity increases

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

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At low rate

At high rate

Some times decreases the rate and some times increases

Does not change Tax rate

If supply curve is vertical (parallel to y-axis), then elasticity of supply is

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Zero

Infinite

Equal to unity

More than unity

If supply decreases due to decrease in price, it is called

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Extension of supply

Contraction of supply

Rise of supply

Fall of supply

Which one of the following is not included in the assumptions of law of supply

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taste of consumer

cost of production

Methods of production

price of raw material

If demand rises more proportionately than that of supply, then

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Equilibrium price increases

Equilibrium price decreases

Equilibrium price does not change

Equilibrium quantity decreases

Elasticity of demand for durable goods is

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More elastic

Less elastic

Infinte

Zero

If 50% change in demand in reposne of 50% change in price then:

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Elasticity of demand = 1

Elasticity of demand < 1

Elasticity of demand > 1

Elasticity of demand = 0

Demand for a commodity means

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Desire to purchase

Power to purchase

Price of commodity

All the three

If due to a very slight decrease in price, demand goes on increasing, elasticity of demand will be

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More than unity

Less than unity

Infinite

Zero

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

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

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