Question # 1

If supply is fixed then due to fall of demand

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Equilibrium price decreases

Equilibrium quantity increases

Equilibrium price increases

Equilibrium price does not change

If price of a commodity remains constant but its supply decreases or price increases but supply remains constant, it is called

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Rise of supply

Extension of supply

Fall of supply

Contraction of supply

If demand curve is parallel to y-axis, then elasticity of demand is

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Equal to unity

More than unity

Less than unity

Zero

If the demand for a commodity is less 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 does not change, then due to fall of supply

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Equilibrium price increases

Equilibrium price decreases

Equilibrium quantity increases

If supply goes on increasing due to a slight increase in price, then elasticity of supply is called

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Zero

Infinite

Equal to unity

More than unity

Equilibrium means

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the condition that is not possible

an unstable condition

a condition that can change

stable position

In case of rise in demand, demand curve shifts:

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Right side

Downward

Upward

(a) and (c)

According to the law of supply, there is relation in price and supply

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Inverse

Increasing

Negative

indirect

If demand for commodity X changes due to the change in price of commodity, it is called

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Cross elasticity

Price elasticity

Income elasticity

Arc elasticity

Quantity supplied of a commodity extends because

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Population changes

Change occurs in assumtions of law of supply

Income of the entrepreneur increases

Price of the commodity increases

In case of perfectly elastic supply or infinite elasticity of supply, supply curve is

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Horizontal (parallel to x-axis)

Vertical (parallel to y-axis)

Positive sloped

Negative sloped

Usually market price is ____________ normal price

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Equal to

Less than

More than

None of these

Which one is not condition of perfect competition

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Homogeneity of good

Difference in price of good

Large number of buyers and sellers

Perfect knowledge of market

If the ratio of change in demand is equal to the ratio of change in price, elasticity of demand will be

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More than unity

Less than unity

Equal to unity

Infinite

Quantity of a commodity offered for sale in a market at a certain price during a given period of time, is called

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Stock

Demand

Supply

Quantity demanded

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

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