Question # 1

If price and total revenue move in the same direction, then demand is

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inelastic

elastic

unrelated

perfectly elastic

Price and demand are positively correlated in case of

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necessities

comforts

Giffen goods

Luxuries

The elasticity of demand of durable goods is

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less than unity

greater than unity

equal to unity

zero

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

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

Cross elasticity of Suzuki and Honda cars will be

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Positive

negative

zero

infinite

Which one is not determinant of demand

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tastes

income

method of production

price

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

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

If quantity demanded is completely unresponsive to changes in price, demand is

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inelastic

unit elastic

elastic

perfectly inelastic

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

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

The demand of a good falls when.

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Its price falls

Price of the substitute changes

its price rises

It price remain constant

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

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Vertical

horizontal

mathematical

local

Price of a product falls by 10% and its demand rises by 30%. The elasticity of demand is

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10%

30%

3

1/3

Other things equal, if a good has more substitutes, its price elasticty of demand is

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larger

smaller

zero

unity

The demand of a commodity having many substitutes is

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more elastic

less elastic

zero elastic

infinite elastic

To say that two goods are unrelated, their cross price elasticity of demand should be

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less than 0

greater than 0

equal to 0

1

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

When demand is perfectly inelastic, an increase in price will result in

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decrease in total revenue

increase in total revenue

no change in total revenue

decrease in quantity demanded

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