1. As income increases, the consumer will go in for superior goods and consequently the demand for inferior goods will fall. This means:
(a) income elasticity of demand less than one.
(b) negative income elasticity of demand.
(c) zero income elasticity of demand.
(d) unitary income elasticity of demand.
2. When income increases the money spent on necessaries of life may not increase in the same proportion, This means:
(a) income elasticity of demand is zero.
(b) income elasticity of demand is one.
(c) income elasticity of demand is greater than one.
(d) income elasticity of demand is less than one.
3. The luxury goods like jewellery and fancy articles will have
(a) low income elasticity of demand (b) high income elasticity of demand
(c) zero income elasticity of demand (d) none of the above
4. The price of tomatoes increases and people buy tomato puree. You infer that tomato puree
and tomatoes are
(a) normal goods. (b) complements.
(c) substitutes. (d) inferior goods.
5. The quantity supplied of a good or service is the amount that
(a) is actually bought during a given time period at a given price.
(b) producers wish they could sell at a higher price.
(c) producers plan to sell during a given time period at a given price.
(d) people are willing to buy during a given time period at a given price
6. Supply is the
(a) limited resources that are available with the seller.
(b) cost of producing a good.
(c) entire relationship between the quantity supplied and the price of good.
(d) Willingness to produce a good if the technology to produce it becomes available.
7. If price of computers increases by 10% and supply increases by 25%. The elasticity of supply is
(a) 2.5 (b) 0.4
(c) (-) 2.5 (d) (-) 0.4
8. An increase in the number of sellers of bikes will increase the
(a) the price of a bike. (b) demand for bikes.
(c) the supply of bikes. (d) demand for helmets
9. When supply curve moves to the left, it means
(a) Smaller supply at a given price. (b) larger supply at a given price.
(c) constant supply at a lower price. (d) none of the above
10. When supply curve moves to right, it means
(a) supply increases. (b) supply decreases.
(c) supply remains constant. (d) none of the above.
11. Elasticity of supply is zero means
(a) perfectly inelastic supply. (b) perfectly elastic supply.
(c) imperfectly elastic supply. (d) none of the above.
12. Which of the following statements about price elasticity of demand is correct?
(a) Price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good.
(b) Price elasticity of demand is computed as the percentage change in quantity demanded divided by the percentage change in price.
(c) Price elasticity of demand in the long run would be different from that of the short run.
(d) All the above.
13. Supply is a concept.
(a) stock (b) flow and stock
(c) flow (d) none of the above
14. The cross elasticity between Rye bread and Whole Wheat bread is expected to be:
(a) positive (b) negative
(c) zero (d) can’t say
15. A service or commodity has a , if a given quantity of it can be supplied whatever
might be the price
(a) Relatively less elastic supply (b) Unitary elastic supply
(c) Perfectly elastic supply (d) Perfectly inelastic supply
16. The cross elasticity between personal computers and soft wares is:
(a) positive. (b) negative.
(c) zero . (d) one.
17. When demand for a commodity increases with a fall in its price it is known as:
(a) contraction of demand. (b) expansion of demand.
(c) no change in demand. (d) none of the above.
18. What is the shape of the demand curve faced by a firm under perfect competition?
(a) Horizontal (b) Vertical
(c) Positively sloped (d) Negatively sloped
19. Which of the following is not a condition of perfect competition?
(a) A large number of firms.
(b) Perfect mobility of factors.
(c) Informative advertising to ensure that consumers have good information.
(d) Freedom of entry and exit into and out of the market.
20. Which of the following is not a characteristic of monopolistic competition?
(a) Ease of entry into the industry. (b) Product differentiation.
(c) A relatively large number of sellers. (d) A homogeneous product