Question # 1

This is an assumption of law of demand

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price of the commodity does not change

quantity should not change

supply should not change

income of consumer should not change

The demand curve slopes downward from left to right because of:

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Income effect

Substitution effect

Entry of new buyers

All of the above

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 will expand when:

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Other things do not remain constant.

Price of the products changes.

Value of money falls.

None of the three

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

If demand is inelastic, a change in the price

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will change the quantity in same direction

will change total revenue in same direction

will change total revenue in the opposite direction

will not change quantity

This is the assumption of law of demand

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price of the commodity should not change

Quantity demanded should not change

Price of substitutes should not change

Demand curve must be linear

One of the following is not an exception the law of demand.

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Very high price products

Very low price products

Ignorance of consumers

Non of the above

When price elasticity of demand for normal goods in calculated, the value is always

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positive

negative

constant

greater than one

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

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inelastic

elastic

unrelated

perfectly elastic

The demand of a commodity having many substitutes is

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more elastic

less elastic

zero elastic

infinite elastic

If demand has unit price elasticity, a change in price causes

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increase in total revenue

decrease in total revenue

no change in total revenue

indeterminate

A horizontal demand curve has a price elasticity of

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zero

infinity

1

variable

Price elastic of demand measures

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change in price caused by changes in demand

the rate of change of sales

the responsiveness of demand to price changes

the value of sales at a given price

Wit rapid economic growth in a country the individual demand curve will:

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Rise

Fall

Extend

Contract

The law demand will not be valid in case of.

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Very high price products

Normal goods

Price effect

Income effects

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

Price and demand are positively correlated in case of

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necessities

comforts

Giffen goods

Luxuries

Which one is not determinant of demand

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tastes

income

method of production

price

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

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inelastic

unit elastic

elastic

perfectly inelastic

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