# [CUET] 200 MCQS of Consumer behaviour and Demand with answers

Looking for important MCQS of Consumer behaviour and demand for CUET, class 11 CBSE, class 12 ISC, and State Board.

## Multiple Choice Questions of Consumer behaviour and Demand with answers for CUET

Following are the sub-topics of unit 2nd of the Economics syllabus of CUET for B.com, B.A and B.com (H).

### MCQs of Consumers Equilibrium with answers for CUET, class 11 CBSE, class 12 ISC Board

Let’s Practice.

In the study of consumer behaviour, we study decision making by a consumer
with respect to:

a) Spending of income
b) Adjusting purchases due to change in price
c) Both a) and b)
d) Neither a) not b)

Ans – c)

The necessary condition under utility approach to attain consumer’s equilibrium
in case of two commodity is:

a) MUx/Px = Muy/Py
b) MRsx = Px/Py
c) MUx = Px
d) None of these

Ans – a)

A rational consumer is called ‘rational’ becuase he/she aims at:

a) Maximizing purchases
b) Minimizing expenditure
c) Maximizing utility
d) Minimizing wastage

Ans – c)

When we add up utility derived from consumption of all the units of the
commodities, we get:

a) Total utility
b) Initial Utility
c) Marginal utility
d) None of these

Ans – a)

On consuming some units of a good, the utility obtained is 10 utils. It
is an example of:

a) Ordinal utility
b) Cardinal utility
c) Marginal utility
d) None of the above

Ans – b)

There is a ‘Law’ in theory of consumer behaviour which states that as
a consumer consumes more and more units of a good, the utility from each
new unit consumed:

a) Increases
b) Remains constant
c) Decreases
d) Increases initially, remains constant and ultimately decreases.

Ans – c)

Marginal Utility (MU) in terms of money is equal to:

a) Marginal Utility in utils/Marginal Utility of one rupee
b) Marginal utility of one rupee/Marginal Utility in utils
c) Marginal Utility in utils/Price of the Commodity
d) None of these

Ans – a)

According to the Law of diminishing marginal utility, satisfaction obtained from the consumption of each successive unit:

a) Increases
b) Decreases
c) Remains same
d) Either increases or decreases

Ans – b)

Marginal utility refers to utility:

a) From the last unit consumed
b) From one more unit consumed
c) From one less unit consumed
d) All the above

Ans – d)

Marginal utility of a good means utility on consuming:

a) More units
b) Less units
c) One more unit
d) All the above

Ans – d)

Which of these is a condition for consumer’s equilibrium by indifference curve
analysis?

a) MUx = Px
b) MUx/Px = MUy/Py
c) MRSx = Px/Py
d) MUx = MUy

Ans – c)

If MUx/Px > MUy/Py, then to reach the equilibrium position, a consumer should:

b) Buy both the commodities in equal quantity
c) Buy more of X and less of Y
d) Buy more of Y and less of X

Ans – c)

When a consumer increases consumption of a good from 2 units to 4 units,
total utility rises from 9 utils to 14 utils. Marginal utility is:

a) 5 utils
b) 2.5 utils
c) 3 utils
d) Can’t calculate

Ans – b)

According to the Law of Diminishing Marginal Utility, as the consumer reduces
consumption of a good marginal utility of the remaining quantity of that
good:

a) Falls
b) Rises
c) Remains unchanged
d) Can not calculate

Ans – b)

If the consumption of an additional unit of a commodity causes no change in TU, then the resultant MU is:

a) Zero
b) Positive
c) Negative
d) Constant

Ans – a)

Total Utility is ____________ at the point of satiety:

a) Minimum
b) Maximum
c) Zero
d) None of these

Ans – b)

A consumer consumes only two goods X and Y. On planning to spend the whole
of income on these two goods, he finds MUx = 6 utils and MUy = 4 utils. Px and Py are ₹ 4and ₹ 6 per unit respectively. In this situation the consumer will:

a) Stick to his plan
d) Buy more of X and less of Y

Ans – d)

A consumer consumes only two goods X and Y and plans to spend the entire income
on these, The prices of X and Y are respectively ₹ 7 and ₹ 8 per unit respectively. In the plan, marginal utilities of X and Y turn out to be 8 utils and 7 utils respectivley. Suppose marginal utility in the case of each good remains unchanged as more or less is consumed. In such a case consumer
will:

c) Buy both X and Y is equal quantities
d) Stick to his plan

Ans – a)

Marginal Utility (MU) of nth unit is calculated as:

a) MUn = TUn – TUn+1
b) MUn = TUn + TUn+1
c) MUn = TUn + TUn-1
d) MUn = TUn – TUn-1

Ans – d)

In the case of a single commodity, the consumer’s equilibrium is achieved when:

a) MUx > Px
b) MUx < Px
c) MUx not equal to Px
d) MUx = Px

Ans – d)

A consumer consumes only two goods X and Y with prices of ₹ 4 and ₹ 5 per unit
respectively. On making a plan of spending his whole income he finds
MUx = 12 utils and MUy = 15 utils. The consumer:

a) Is in equilibrium
b) Is not in equilibrium nor can reach equilibrium
c) Can reach equilibrium by buying less of X and more of Y
d) Can reach equilibrium by buying more of X and less of Y

Ans – a)

A consumer consumes only two goods X and Y and is in equilibrium with
MUx = MUy, then:

a) Px = Py
b) Px < Py c) Px > Py
d) Any of the above

Ans – a)

Given the total utility schedule of a good, how many units of the good the consumer will buy it the price per unit is ₹ 4.

a) 1 Unit
b) 2 Unit
c) 3 Unit
d) 0 Unit

Ans – d)

How is TU derived from MU?

a) TU = ∑MU
b) TU = U1 + U2 + U3 ——- + Un
c) TUn = MUn + MUn – 1
d) TUn = MUn – MUn – 1

Ans – a), b)

What happens to MU when TU is maximum?

a) MU is negative
b) MU is Zero
c) MU is decreasing
d) MU is increasing

Ans – b)

In case of cardinal utility approach, utility is measured in:

a) Rupees
b) Ranks
c) Utils
d) None of these

Ans – c)

“Cardinality” means utility can be:

a) Measured
b) Ranked
c) Not measured
d) None of these

Ans – a)

Which Law states that: “When a consumer consumers more and more units of a product,
the utility drived from each additional unit decreases”?

a) Law of Equi-Marginal Utility
b) Fundamental Law of Satisfaction
c) Law of Cardinal Utility
d) Law of Diminishing Marginal Utility

Ans – b), d)

The total utility derived by Shyam by earing 6 apples is 300 utils. Marginal Utility
of the 7th apple is 30 utils. The total utility for 7 apples will be __ utils.

a) 330
b) 270
c) 300
d) 30

Ans – a)

The assumption of “Constant marginal utility of money” means that importance of money
to consumer is:

a) Increasing
b) Decreasing
c) Same
d) None of these

Ans – c)

When Economists speak of the utility of a certain product, they are referring to:

a) Demand for the product
b) Usefulness of the product in consumption
c) Satisfaction gained from consuming such product
d) Rate at which consumers are willing to exchange one good for another

Ans – c)

Utility:

a) Differs from person to person
b) Differs from time to time
c) Can be easiliy measured
d) All of these

Ans – a), b)

A consumer in consumption of two commodities A and B is at equilibrium. The prices of
A and B are ₹ 10 and ₹ 20 respectivley and the marginal utility of product B is 50.
What will be the marginal utility of product A?

a) 100
b) 25
c) 250
d) 4

Ans – b)

The Law of Diminishing Marginal utility will not hold good if income of the consumer:

a) Increases
b) Decreases
c) Remains constant
d) Either a) or b)

Ans – d)

As per Ordinal Approach:

a) Measurement of Utility is not possible through money
b) Measurement of Utility is possible but it can not be ranked
c) Measurement of Utility is not possible in cardinal numbers but is can be ranked
d) Ordinal utility is the utility expressed in ranks

Ans – c), d)

Marginal Utility:

a) Is always positive
b) Is always negative
c) Can be positive or negative but not zero
d) Can be positive or negative or zero

Ans – d)

Mollie derives a total utility of 10 utils after having 4 mangoes and total utility on
consuming 5 mangoes is 9. What is her marginal utility for the 5th mango?

a) +1 util
b) 0 Util
c) -1 Util
d) 9 Utils

Ans – c)

After reaching the point of satiety, consumption of additional units of the commodity
cause:

a) TU falls and MU increases
b) Both TU and MU increase
c) TU falls and MU falls and becomes negative
d) TU becomes negative and MU falls

Ans – c)

According to one of the assumptions of the Law of Diminishing Marginal Utility, there
should be _ between the consumption of one unit and another unit.

a) Equal time gap
b) No time gap
c) Long time gap
d) Any of these

Ans – b)

Mux of X is 40 and MUy of Y is 30. If the price of Y is ₹9, then the price of X at
equilibrium will be ________________ .

a) ₹ 9
b) ₹ 30
c) ₹ 15
d) ₹ 12

Ans – d)

The consumer is in equilibrium when Marginal Utility from a Commodity equals:

a) Demand for that Commodity
b) Supply of that Commodity
c) Price of the Commodity
d) All of these

Ans – c)

Consumer consumers only two goods X and Y both priced at ₹ 4 per unit. If the
the consumer chooses a combination of these two goods with a Marginal Rate of Substitution equal to 4, then the consumer will:

a) Buy more units of X
b) Buy more units of Y
c) Buy more units of both, X and Y
d) Buy less units of both, X and Y

Ans – a)

A consumer consumes only two goods X and Y whose prices are ₹ 3 and ₹ 4 per unit
respectively. If the consumer chooses a combination of the two goods with marginal
utility of X equal to 4 and that of Y equal to 3, is the consumer in equilibrium, then
the consumer will:

a) Buy more units of both, X and Y
b) Buy more units of Y and less of X
c) Buy more units of X and less of Y
d) Buy less units of both, X and Y

Ans – c)

Marginal Utility is:

a) the utility from the first unit of a commodity consumed
b) the utility from the last unit consumed
c) total utility divided by the number of units consumed
d) always positive

Ans – b)

Total utility is _______ .

a) the sum of marginal utilities
b) utility from first unit × Number of units consumed
c) always increasing
d) utility from the last unit number of units consumed.

Ans – a)

Which of the following can be referred to as a ‘point of satiety’?

a) Marginal Utility is negative
b) Marginal utility is zero
c) Total Utility is rising
d) Total Utility is falling

Ans – b)

At the point of Satiety:

a) MU is Negative
b) MU is Zero
c) MU is Rising
d) None of these

Ans – b)

If MUy = 20; MUx = 60; Price of Y = ₹ 4, then what will be the price of X at
Equilibrium:

a) ₹ 14
b) ₹ 3
c) ₹ 12
d) ₹ 4

Ans – c)

When Marginal Utility is zero, total utility is:

a) Zero
b) Minimum
c) Maximum
d) Negative

Ans – c)

Which is the First Law of Gossen?

a) Law of Equi-marginal Utility
b) Law of Diminishing Marginal Utility
c) Law of Supply
d) Law of Demand

Ans – b)

Which of the following is a characteristic of utility?

a) Utility is subjective
b) Utility is a relative concept
c) Utility is a Psychological phenomenon
d) All of these

Ans – d)

Which of the following statement is not true?

a) As long as MU is positive, TU increases
b) TU is zero when MU is zero
c) TU Starts decreasing when MU is negative
d) After the point of satiety, MU becomes negative

Ans – b)

### MCQs of Demand with answers for CUET, class 11 CBSE, class 12 ISC Board

Let’s Practice

a) Price
b) Quantity
c) Period of time
d) All the above

Ans – d)

An “inferior” good is one which is:

a) A low quality good
b) A low priced good
c) Below the income status
d) All the above

Ans – c)

When demand for one good falls due to rise in price of the other good, the two
goods are likely to be:

a) Complements
b) Substitutes
c) Competitive
d) Not related

Ans – a)

“Change in quantity demanded” of a good is on account of change in:

a) Price of the related good
b) Own price of the good
d) Tastes

Ans – b)

A demand curve “shits” due to change in:

a) Tastes
b) Income
c) Price of the realted goods
d) All the above

Ans – d)

Downward sloping demand curve shows that:

a) As price falls demand falls
b) As demand falls price falls
c) As price rises demand falls
d) As price rises demand rises

Ans – c)

Spot the inferior good:

a) Wheat
b) Bajra
c) Rice
d) None of the above

Ans – d)

Which of the following is an example of substitute goods?

a) Tea and Coffee
b) Coke and Pepsi
c) Car and Petrol
d) Tea and Sugar

Ans – a), b)

The demand for normal good __ with an increase in income of the consumer.

a) Increases
b) Decreases
c) Remains same
d) Either increases or decreases

Ans – a)

Increase in price of substitute good leads to:

a) Expansion in Demand
b) Increase in Demand
c) Decrease in Demand
d) Contraction in Demand

Ans – b)

A, B and C are three commodities, where A and B are complementary; Wheareas A and
C are substitutes. with increase in price of commodity A:

a) Demand of all the commodities A, B and C will fall
b) Demand of commodities A and B will fall, whereas demand of C will rise
c) Demand of commodities A and C will fall, whereas demand of B will rise
d) Demand of commodities B and C will fall, whereas demand of A will rise

Ans – b)

When two or more goods are demanded simultaneously, it is known as:

a) Joint Demand
b) Alternate Demand
c) Direct Demand
d) Composite Demand

Ans – a)

There will be a _ in the demand curve of cars with an increase in the price of pertrol:

a) Rightward Shift
b) Upward Movement
c) Leftward Shift
d) Downward Movement

Ans – c)

The demand curve for a commodity is generally drawn on the assumption that:

a) Prices of substitute goods do not change.
b) Tastes and preferences of the consumer remain the same
c) Income of the consumer remains the same
d) All of these

Ans – d)

Which one of these is not an example of complementary goods?

a) Tea dn Coffe
b) Coke and Pepsi
c) Pen and Refill

Ans – a), b)

Law of Deand states the _ relationship between price and quantity demanded.

a) Inverse
b) Positive
c) Proportional
d) None of these

Ans – a)

a) Rightward Shift in demand curve
b) Downward Movement along the demand curve
c) Upward Movement along the demand curve
d) None of these

Ans – b)

Which one of these is not a determinant of Individual demand?

a) Size and composition of population
b) Tastes and Preferences
c) Distribution of Income
d) All of these

Ans – a), c)

Expansion in demand occurs due to:

a) Rise in price of the given commodity
b) Fall in price of the given commodity
c) Rise in price of substitute goods
d) Fall in price of complementary goods

Ans – b)

There is a sudden change in climatic conditions resulting is hot weather. Assuming
no change in the price of the cold drinks, it will lead to:

a) Upward movement along the same market demand curve
b) Downward movement along the same market demand curve
c) Rightward shift in the market demand curve
d) Leftward shift in the market demand curve.

Ans – c)

A movement along the demand curve for soft drinks is best described as:

a) Increase in demand
b) Decrease in demand
c) Change in quantity demanded
d) Change in demand

Ans – c)

If more is demanded at the same price or same quantity at a higher price, this
fact of demand is known as:

a) Extension of demand
b) Increase in demand
c) Contraction of demand
d) Decrease in demand

Ans – b)

Cross demand states the relationship between:

a) Demand of given commodity and price of related goods
b) Demand of given commodity and income of the consumer
c) Demand of given commodity and taste and preferences
d) None of these

Ans – a)

Which of the following is not an assumption of law of demand?

a) Price of substitute goods do not change
b) Income of the consumers remain same
c) There is no change in tastes and preferences of the consumers
d) Price of the given commodity does not change.

Ans – d)

If change in price of good A affects the demand for good B, then:

a) A is a substitute of good B.
b) A is a complement of good B.
c) Both a) and b)
d) Either a) or b)

Ans – d)

In a typical demand schedule, quantity demanded:

a) Varies directly with price
b) Varies proportionately with price
c) Varies inverselty with price
d) Is independent of price

Ans – c)

Which of the following is a determinant of market demand?

a) Income of the consumers
b) Season and weather
c) Price of related goods
d) All of the above

Ans – d)

Which of the following factors will lead to a leftward shift in the demand curve:

a) Increase in income in case of inferior goods
b) Increase in income in case of normal goods
c) Decrease in Population
d) Expectation of future increase in price

Ans – a), c)

Decrease in the price of the complementary goods leads to:

a) Upward movement along the same demand curve
b) Downward movement along the same demand curve
c) Rightward shift in the demand curve
d) Leftward shfit in the demand curve

Ans – c)

If Price of good ‘X’ rises and it leads to a fall in demand for good ‘Y’, then
the two goods are:

a) Substitute goods
b) Complementary goods
c) Normal goods
d) Inferior goods

Ans – b)

Market demand curve is obtained by _ summation of the individual demand curves.

a) Vertical
b) Horizontal
c) Both a) and b)
d) Neither a) not b)

Ans – b)

Ceteris paribus means:-

a) Holding supply constant
b) Holding demand constant
c) Price being constant
d) Other factors being constant

Ans – d)

An increase in real income of a consumer induces him to buy more of a commodity
whose prices has fallen. This is known as:

a) Inducement Effect
b) Substitution Effect
c) Income Effect
d) Utility Effect

Ans – c)

Expansion of Demand is associated with:

a) Rise in Price, Rise in quantity demanded
b) Fall in Price, Fall in quantity demanded
c) Fall in price, Rise in quantity demanded
d) Rise in Price, Fall in quantity demanded

Ans – c)

If X and Y are Complementary goods, then with increase in price of X:

a) Demand of X will decrease and demand of Y will increase.
b) Demand of X will increase and demand of Y will decrease
c) Demand of X and Y will increase
d) Demand of X and Y will decrease

Ans – d)

If Tea and Coffee are substitutes, a fall in the prices of Tea leads to:

i) Rise in the demand for Tea
ii) Fall in the demand of Tea
iii) Fall in the demand for Coffee
iv) Rise in the demand of Coffee

a) Both (ii) and (iv)
b) Both (i) and (iii)
c) Both (ii) and (iii)
d) Both (iii) and (iv)

Ans – b)

All except one of the following are assumed to remain same while drawing an individuals
demand curve for a product. Which one is it?

a) Tastes and Preferences of the individual
b) Monetary income
c) Price of the given product
d) Price of related goods

Ans – c)

With fall in price of a commodity, demand of the commodity increases as it becomes
relatively cheaper in comparison to other commodities. This effect is known as:

a) Substitution Effect
b) Income Effect
c) Law of Demand
d) Law of Diminishing Returns

Ans – a)

The demand function of a product X is given as: Dx = 12 – 2Px, where Px stands
for price. The demand at price of ₹ 2 will be:

a) 6
b) 8
c) 5
d) 10

Ans – b)

The demand function of a product X is given as: Dx = 12 – 2px, where Px stands for
price. If an Individual Y has a demand of 8 units, then market price of the product
is:

a) ₹ 4
b) ₹ 5
c) ₹ 3
d) ₹ 4.5

Ans – a)

The demand function of a product X is given as: Dx = 12px, where Px stands for price.
If there are 5,000 customers for the product, then market demand for the product
at market price of ₹ 3 will be:

a) 40,000
b) 30,000
c) 20,000
d) 16,000

Ans – b)

Two Commodities A and B can be inferred as close substitutes of each other if:

a) Rise in price of one leads to an increase in demand of other and vice-versa.
b) Rise in price of one leads to a decrease in demand of other and vice-versa.
c) Fall in price of one lead to fall in demand of other one, but not the other
way round
d) Rise in price of one lead to rise in demand of other one, but not the other way
round

Ans – a)

A goods can be considered a normal good if an increase in income of the consumer
causes _ in demand of the given good.

a) Increase
b) No change
c) Decrease
d) Less than proportionate increase

Ans – a)

Expansion and contraction in demand are caused by:

a) Change in price of the given good
b) Change in income
c) Change in prices of related goods
d) Change in population

Ans – a)

When income of the consumer falls, the impact on price demand curve of an inferior
good is:

a) Shifts to the right
b) Shifts to the left
c) There is upward movement along the curve
d) There is downward movement along the curve

Ans – a)

If due to fall in the price of good X, demand for good Y rises, the two goods are:

a) Substitutes
b) Complements
c) Not realted
d) Competitive

Ans – b)

If with the rise in price of good Y, demand for good X rises, the two goods are:

a) Substitutes
b) Complements
c) Not realted
d) Jointly demanded

Ans – a)

The slope of demand curve is generally:

a) negative
b) Positive
c) Constant
d) Either a) or b)

Ans – a)

Any statement about demand for a good is considered complete only when the following is/are
mentioned in it.

a) Price of the good
b) Quantity of the good
c) Period of time
d) All of the above

Ans – d)

Good X and Good Y are complementary goods, while good X and good Z are substitute
goods. What will happen to good Y and good Z, if the price of good X decreases?

a) The demand for both goods, Y and Z will decrease
b) The demand for both goods, Y and Z will increase
c) The demand for good Y will increase and for good Z will decrease
d) The demand for good Y will decrease and for good, Z will increase

Ans – c)

Which of the following is a reason for ‘Change in Demand’?

a) Change in Income
b) Change in Price of related goods
c) Population increase
d) All of these

Ans – d)

### CUET MCQs of Price Elasticity of Demand of Economics exam for B.com, B.A, B.com(H)

Price elasticity of demand measure shows:

a) Response of price to change in demand
b) Response of demand to change in price
c) Degree of response of price to change in demand
d) Degree of response of demand to change in price

Ans – d)

Price elasticity of demand (-3) means 3 percent fall in demand due to:

a) 3 percent fall in price
b) 3 percent rise in price
c) one percent rise in price
d) one percent fall in price

Ans – c)

Given values of Price elasticities of demand, spot ‘elastic’ demand:

a) – 0.8
b) – 0.9
c) – 1.0
d) – 1.1

Ans – d)

When with the rise in price of a good, total expenditure on the good also rises, the
demand is:

a) Elastic
b) Inelastic
c) Unitary elastic
d) Perfectly elastic

Ans – b)

There is downward sloping straight line demand curve 4 cm. long and touching
both the axis. The price elasticity of demand at the point 2 cm away on the demand
curve is:

a) – 2.0
b) – 0.5
c) – 1.0
d) 0

Ans – c)

On any two points of a demand curve parallel to the x-axis, the price elasticity
of demand is:

a) Unequal
b) Equal
c) Higher on the point to the right
d) Higher on the point to the left

Ans – b)

If there is no change in demand for commodity ‘X’, even after rise in its price,
then its demand is:

a) Perfectly Elastic
b) Perfectly Inelastic
c) Less Elastic
d) Highly Elastic

Ans – b)

The elasticity of demand for a product will not be higher:

a) When it is considered a necessity by its buyers.
b) When less substituties for the product are available.
c) When it has several uses.
d) When it is an expensive commodity

Ans – a), b)

Demand for a good is less elastic when:

a) Percentage change in price > Percentage change in quantity demanded
b) Percentage change in quantity demanded > Percentage change in price
c) Percentage change in price = Percentage change in quantity demanded
d) Demand curve is steeper

Ans – a), d)

Which of the following will have elastic demand?

a) Matchbox
b) Coke
c) Medicines
d) Air Conditioners

Ans – b), d)

If the price elasticity of demand for a commodity is less than unity, a decrease
in price would result in:

a) proportionaltely less increase in the quantity demanded
b) Proportionately more increase in the quantity demanded
c) Increase in total expenditure on the product
d) None of these

Ans – a)

Which one of the following statements is incorrect:

a) Higher numerical value of elasticity indicates larger effect of a price change on
the quantity demanded.
b) Elasticity of demand can vary only between -1 and +1
c) The demand curves for all commodities which have unitary elastic demand will be
rectangular hyperbola.
d) Elasticity of demand establishes a qualitative relationship between quantity
demanded of a commodity and its price, while other factors remain constant.

Ans – b), d)

If the percentage increase in the quantity demanded of a commodity is less than the
percentage fall in its price, then elasticity of demand is:

a) > 1
b) = 1
c) < 1
d) = 0

Ans – c)

Price elasticity of demand is best defined as:

a) Change in the tastes of consumers at different prices.
b) Change in demand when income of the consumer increases
c) The rate of response of demand to a change in price
d) The rate of response of demand to change in price of related goods.

Ans – c)

Which of the following influence price elasticity of demand?

a) Nature of the commodity
b) Income Level
c) Availability of Substitutes
d) All of these

Ans – d)

A negative sign with coefficient of price elasticity of demand denotes:

a) Direct relation between price and quantity demanded
b) Inverse relation between price and quantity demanded
c) No relation between price and quantity demanded
d) None of these

Ans – b)

A 5% fall in the price of X leads to a 10% rise in its demand. In case of Good Y,
a 2% rise in price leads toa 6% fall in its demand. In the given case, __
is more elastic.

a) X
b) Y
c) Both X and Y are equally elastic
d) Both X and Y are inelastic

Ans – b)

In case of _ , there is an infinite demand at a particular price and demand
becomes zero with a slight rise in price.

a) Perfectly inelastic demand
b) Highly elastic demandc
c) Less elastic demand
d) Perfectly elastic demand

Ans – d)

If a good takes up significant share of consumes’ budget. It will be:

a) Less elastic
b) Highly elastic
c) Unitary elatic
d) Perfectly elastic

Ans – b)

If there is no change in quantity demanded to any change in price, then demand is
and demand curve is a __ .

a) Perfectly elastic, horizontal straight line
b) Perfectly elastic, vertical straight line
c) Perfectly inelastic, horizontal straight line
d) Perfectly inelastic, vertical straight line

Ans – d)

If the demand for a good is made by a rich consumer, its demand is generally:

a) Less elastic
b) Highly elastic
c) Unitary elastic
d) Perfectly elastic

Ans – a)

A firm is currently selling 10,000 units of its product per month. The firm plans to reduce the retail price from ₹
1 to ₹ 0.90. From the previous experience, the firm knows that the price elasticity
of demand for the product is (-) 1.5. Assuming no other changes, the firm
can no expect the sales of:

a) 8,500 units
b) 10,500 units
c) 11,000 units
d) 11,500 units

Ans – d)

The demand for meals at a medium priced restaurant is elastic. If the management of the
restaurant is considering raising prices, it can expect a relatively.

a) Proportionately large fall in quantity demanded
b) No change in quantity demanded
c) Proportionaltely small fall in quantity demanded
d) Infinite change in quantity demanded

Ans – a)

With increase in price of burgers by 22%, its demand falls by 25%. This indicates
that demand for burgers is:

a) Elastic
b) Inelastic
c) Unitary elastic
d) Perfectly elastic

Ans – a)

Price Elasticity of Demand of a good is (-) 3. It shows that:

a) When price falls by 1% demand rises by 3%
b) Whe price rises by 1%, demand falls by 3%
c) Either a) or b)
d) Neither a) nor b)

Ans – c)

The Indian government imposed heavy taxes on commodity to reduce its consumption by
the public. Such heavy taxes will decrease the demand of the commodity only when:

a) Ed = 0
b) Ed > 1
c) Ed < 1
d) Ed = 1

Ans – b)

If the percentage change in quantity supplied of commodity X is more than the
percentage change in price of the commodity X, the coefficent of price elasticity
of supply would be __ .

a) Es = 1
b) Es < 1 c) Es = 0 d) Es > 1

Ans – d)

The coefficient of price elasticity of supply of a good is 3. It is known as
__ .

a) Unitary Elastic Supply
b) Perfectly Inelastic Supply
c) Elastic Supply
d) Inelastic Supply

Ans – c) 