Demand and Supply-1

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1. Equilibrium is a condition that can-
(A) Never change
(B) Change only if some outside factor changes
(C) Change only if some internal factor changes
(D) Change only if government policies change
Ans. (C)

2. A firm is in equilibrium when its-
(A) Marginal cost equals the marginal revnue
(B) Total cost is minimum
(C) Total revenue is maximum
(D) Average revenue and marginal revenue are equal
Ans. (A)

3. Which of the following does not determine supply of labour?
(A) Size and age-structure of population
(B) Nature of work
(C) Marginal productivity of labour
(D) Work-leisure ratio
Ans. (C)

4. Extension or contraction of quantity demanded of a commodity is a result of a change in the-
(A) Unit price of the commodity
(B) Income of the consumer
(C) Tastes of the consumer
(D) Climate of the region
Ans. (A)

5. Cross elasticity of demand between petrol and car is-
(A) Infinite
(B) Positve
(C) Zero
(D) Negative
Ans. (D)

6. ‘Law of demand’ implies that when there is excess demand for a commodity, then –
(A) Price of the commodity falls
(B) Price of the commodity remains same
(C) Price of the commodity rises
(D) Puantity demanded of the commodity falls
Ans. (C)

7. The demand curve shows that price and quantity demanded are-
(A) Directly related only
(B) Directly proportional and also directly related
(C) Inversely proportional and also inversely related
(D) Inversely related only
Ans. (C)

8. Economic rent does not arise when the supply of a factor unit is-
(A) Perfectly inelastic
(B) Perfectly elastic
(C) Relatively elastic
(D) Relatively inelastic
Ans. (B)

9. A horizontal demand curve is-
(A) Relatively elastic
B) Perfectly elastic
(C) Relatively elastic
(D) Relatively inelastic
Ans. (B)

10. Under increasing returns the supply curve is-
(A) positiviely sloped from left to right
(B) negatively sloped from left to right
(C) parallel to the quantity axis
(D) parallel to the price axis
Ans. (A)

11. Elasticity of demand measures the responsiveness of the quantity demanded of a goods to a-
(A) change in the price of the goods
(B) change in the price of substitutes
(C) change in the price of the complements
(D) change in the price of joint products
Ans. (A)

12. Which one of the following is having elastic demand?
(A) Electricity
(B) Medicines
(C) Rice
(D) Match boxes
Ans. (A)

13. Name the curve which shows the quantity of products as seller wishes to sell at a given price level-
(A) Demand curve
(B) Cost curve
(C) Supply curve
(D) None of these
Ans. (C)

14. The supply of labour in the economy depends on-
(A) Population
(B) National income
(C) Per capita income
(D) Natural resources
Ans. (A)

15. Which one of the following pairs of goods is an example for Joint Supply?
(A) Coffee and Tea
(B) Ink and Pen
(C) Tooth brush and Paste
(D) Wool and Mutton
Ans. (D)

16. Demand in Economics means:
(A) Aggregate demand
(B) Market demand
(C) Individual demand
(D) Demand backed by purchasing power
Ans. (D)

17. When percentage change in demand for a commodity is less than percentage change in its price, then demand is said to be-
(A) Highly elastic
(B) Inelastic
(C) Relatively elastic
(D) Perfect inelastic
Ans. (B)

18. The demand for necessities is-
(A) Elastic
(B) Perfectly inelastic
(C) Inelastic
(D) Perfectly elastic
Ans. (B)

19. If a good has negative income elasticity and positive price elasticity of demand, it is a-
(A) Giffen good
(B) Normal good
(C) Superior good
(D) An inferior good
Ans. (A)

20. Cross demand expresses the functional relationship between-
(A) Demand and prices of related commodities
(B) Demand and income
(C) Demand and prices
(D) Demand and supply
Ans. (A)

21. The law of Demand is based on-
(A) Manufacturer’s preference
(B) Seller’s returns
(C) Constant returns
(D) Increasing returns
Ans. (D)

22. A supply function expresses the relationship between-
(A) Price and output
(B) Price and selling cost
(C) Price and consumption
(D) Price and consumption
Ans. (A)

23. Any factor of production can earn economicrent, when its supply will be-
(A) Perfectly elastic
(B) Relatively elastic
(C) Perfectly inelastic
(D) All of the above
Ans. (A)

24. The demand of a factor of producton is-
(A) Direct
(B) Derived
(C) Neutral
(D) Discretion of the producer
Ans. (B)

25. A unit price elastic demand curve will touch-
(A) Both price and quantity axis
(B) Neither price axis, nor quantity axis
(C) Only price axis
(D) Only quantity axis
Ans. (B)

26. Other things being equal, a decrease in quantity demanded of a commodity can be caused by-
(A) A rise in the price of the commodity
(B) A rise in the income of the consumer
(C) A fall in the price of a commodity
(D) A fall in the income of the consumer
Ans. (A)

27. A demand curve will not shift-
(A) When only income changes
(B) When only prices of substitute products change
(C) When there is a change in advertisment expenditure
(D) When only price of the commodity changes
Ans. (C)
.
28. Perfectly inelastic demand is equal to-
(A) One
(B) Infinite
(C) Zero
(D) Greater than one
Ans. (C)

29. A demand curve, which is parallel to the horizontal axis, showing quantity, has the price elasticity equal to-
(A) Zero
(B) One
(C) Less than one
(D) Infinity
Ans. (D)

30. The demand curve facing a perfect ly competitive firm is-
(A) Downward sloping
(B) Perfectly inelastic
(C) A concave curve
(D) Perfectly elastic
Ans. (D)

31. Personal disposable income is-
(A) Always equal to personal income
(B) Always more than personal income
(C) Equal to personal income minus direct taxes paid by household
(D) Equal to personal income minus indirect taxes
Ans. (C)

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