Question # 1

The demand of a commodity having many substitutes is

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more elastic

less elastic

zero elastic

infinite elastic

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

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

When the demand of a product rises due to factors except price it will be.

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Extension of demands

Rise of demand

Contraction of demand

Extension of demand

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

Cross elasticity of Suzuki and Honda cars will be

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Positive

negative

zero

infinite

The demand curve is negatively sloped due to

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Income effect

Substitution effect

Price effect

All the three

If demand is unitary elastic, a 25% increase in price will result in

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25% change in total revenue

no change in quantity demanded

1% decrease in quantity demanded

25% decrease in quantity demanded

The elasticity of demand of durable goods is

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less than unity

greater than unity

equal to unity

zero

Haris has a special taste for chicken rolls of college canteen. The owner of the canteen doubles the price of chicken roll. Haris did not respond to the increase in prices and kept on demanding the same quantity of chicken roll. His demand for chicken roll is

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perfectly elastic

perfectly inelastic

elastic

less elastic

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

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

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positive

negative

constant

greater than one

Which one is not determinant of demand

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tastes

income

method of production

price

A horizontal demand curve has a price elasticity of

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zero

infinity

1

variable

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

When cross elasticity of demand for A and B is positive number, one can conclude that

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the goods are cheaper

the goods are inferior

the goods are substitutes

the goods are complements

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

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Vertical

horizontal

mathematical

local

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

The following are causes of shift in demand EXCEPT the one

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change in income

change in price

change in fashion

change in prices of substitutes

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

Income elasticity of demand for normal good is always

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1

more than one

negative

positive

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 good falls when.

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Its price falls

Price of the substitute changes

its price rises

It price remain constant

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

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

When the price of a product falls and as a concequence the demand for the product increase. it will be.

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Rise of demands

Fall of demand

Extension of demand

Contraction on demand

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