R4RIN – MCQs, Mock Tests | Economics Economics Demand and Supply Set-1

Normally a demand curve will have the shape:

1. Horizontal
2. Vertical
3. Downward sloping
4. Upward sloping

✅ Correct Answer: 3

Law of demand shows relation between:

1. Income and price of commodity
2. Price and quantity of a commodity
3. Income and quantity demand
4. Quantity demanded and quantity supplied

✅ Correct Answer: 2

This is an assumption of law of demand:

1. Price of the commodity should not change
2. Quantity should not change
3. Supply should not change
4. Income of consumer should not change

✅ Correct Answer: 4

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

1. Inelastic
2. Unit elastic
3. Elastic
4. Perfectly inelastic

✅ Correct Answer: 4

Other things equal if a good has more substitutes its price elasticity of demand is:

1. Larger
2. Smaller
3. Zero
4. Unity

✅ Correct Answer: 1

Price of a product falls by 10% and its demand rises by 30%. The elasticity of demand is:

1. 10%
2. 30%
3. 3
4. 1?3

✅ Correct Answer: 3

If elasticity of demand is very low it shows that the commodity is:

1. A necessity
2. A luxury
3. Has little importance in total budget
4. (a) and (c) above

✅ Correct Answer: 1

When demand is perfectly inelastic an increase in price will result in:

1. A decrease in total revenue
2. An increase in total revenue
3. No change in total revenue
4. A decrease in quantity demanded

✅ Correct Answer: 2

If demand is unitary elastic a 25% increases in price will result in:

1. 25% change in total revenue
2. No change in quantity demanded
3. 1% decrease in quantity demanded
4. 25% decrease in quantity demanded

✅ Correct Answer: 2

Irrespective of price Sofia always spends Rs. 100 a week on ice cream we conclude that:

1. Elasticity of demand is 0
2. Elasticity of demand is 1
3. Elasticity of demand is infinite
4. The law of demand has been violated

✅ Correct Answer: 2

When cross elasticity of demand is a large positive number one can conclude that:

1. The good is normal
2. The good is inferior
3. The good is a substitute
4. The good is a complement

✅ Correct Answer: 3

If demand is inelastic a change in the price:

1. Will change the quantity in same direction
2. Will change total revenue in same direction
3. Will change total revenue in the opposite direction
4. Will not change quantity

✅ Correct Answer: 2

Which one is the assumption of law of demand?

1. Price of the commodity should not change
2. Quantity demanded should not change
3. Prices of substitutes should not change
4. Demand curve must be linear

✅ Correct Answer: 3

Which of the following is a demand function?

1. Q + 4P = 20
2. Q = 35 + 3P
3. Q - 2P - 15 = 0
4. Q = 4

✅ Correct Answer: 1

Zubair has a special taste for college canteen is hotdogs. The owner of the canteen doubles the prices of hotdogs. Zubair did not respond to the increase in prices and kept on demanding the same quantity of hotdogs. His demand for hotdogs is:

1. Perfectly elastic
2. Perfectly inelastic
3. Elastic
4. Less elastic

✅ Correct Answer: 2

Price and demand are positively correlated in case of:

1. Necessities
2. Comforts
3. Giffen goods
4. Luxuries

✅ Correct Answer: 3

The elasticity of demand of durable goods is:

1. Less than unity
2. Greater than unity
3. Equal to unity
4. Zero

✅ Correct Answer: 2

The elasticity of demand of durable goods is:

1. More elastic
2. Less elastic
3. Zero elastic
4. Infinite elastic

✅ Correct Answer: 1

Mr. Raees Ahmad bought 50 litres of petrol when his monthly income was Rs. 25000. Now his monthly income has risen to Rs. 50000 and he purchases 100 litre of petrol. His income elasticity of demand for petrol is:

1. 1
2. 100%
3. Less than one
4. More than one

✅ Correct Answer: 1

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

1. Positive
2. Negative
3. Constant
4. Greater than one

✅ Correct Answer: 2

Income elasticity of demand for normal good is always:

1. 1
2. More than one
3. Negative
4. Positive

✅ Correct Answer: 4

Demand is a function of:

1. Price
2. Quantity
3. Supply
4. None of these

✅ Correct Answer: 1

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

1. Inelastic
2. Elastic
3. Unrelated
4. Perfectly elastic

✅ Correct Answer: 1

What does price elasticity of demand measure?

1. Change in price caused by changes in demand
2. The rate of change of sales
3. The responsiveness of demand to price changes
4. The value of sales of a given price

✅ Correct Answer: 3

Which one is the assumption of law of demand?

1. Price of the commodity should not change
2. Quantity demanded should not change
3. Income of the consumer should not change
4. None of these

✅ Correct Answer: 3

Which one is increasing function of price:

1. Demand
2. Utility
3. Supply
4. Consumption

✅ Correct Answer: 3

It describes the law of supply:

1. Supply curve
2. Supply schedule
3. Supply equation
4. All the three

✅ Correct Answer: 4

Supply curve will shift when:

1. Price falls
2. Price rises
3. Demand shifts
4. Technology change

✅ Correct Answer: 4

An increase in demand would cause supply curve to:

1. Shift to the left
2. Shift to the right
3. Change in slope of supply curve
4. No effect on supply

✅ Correct Answer: 4

If price changes by 1% and supply changes by 2% then supply is:

1. Elastic
2. Inelastic
3. Indeterminate
4. Static

✅ Correct Answer: 1

If elasticity of supply is greater than one. Supply curve will be:

1. Horizontal
2. Vertical
3. Passing through origin
4. Touching y-axis

✅ Correct Answer: 4

Supply surve:

1. Is vertical in long run
2. Is flatter in long run
3. Is same in long and short run
4. Is horizontal in both short and long run

✅ Correct Answer: 2

During a particular year farmers experienced a dry weather if all other factors remain constant farmers supply curve for wheat will shift to:

1. Rightward
2. Leftward
3. Downward
4. Rise in supply

✅ Correct Answer: 2

When supply of a commodity increases without change in price it is called:

1. Fall in supply
2. Expansion in supply
3. Contraction in supply
4. Rise in supply

✅ Correct Answer: 4

What best explains a shift in market supply curve to the right?

1. An advertising campaign is successful in promoting the good
2. A new technique makes it cheaper to produce the good
3. The government introduces a tax on the good
4. None of these

✅ Correct Answer: 2

Economic problems arise because:

1. Wants are unlimited
2. Resources are scarce
3. Scarce resources have alternative uses
4. All of the above

✅ Correct Answer: 4

Which is not an essential condition for an economic problem to arise?

1. Unlimited wants
2. Use of money
3. Scarcity of resources
4. Alternative uses of scarce resources

✅ Correct Answer: 2

Which is not a central problem of an economy?

1. What to produce
2. How to produce
3. How to maximize private profit
4. For whom to produce

✅ Correct Answer: 3

A mixed economy is characterised by the co-existence of:

1. Modern and traditional industries
2. Public and private sectors
3. Foreign and domestic investments
4. Commercial and subsistence farming

✅ Correct Answer: 2

Which is not an essential feature of a socialist economy?

1. Social ownership of the means of production
2. Freedom of enterprise
3. Use of centralized planning
4. Government decisions

✅ Correct Answer: 2

Which of the following is incorrect?

1. A function shows the relationship between two or more variables
2. Normative Economics studies how the economic problems facing society should be solved
3. A market necessarily refers to a meeting place between buyers and sellers
4. Equilibrium refers to the market conditions which once achieved tend to persist

✅ Correct Answer: 3

Microeconomics deals with the:

1. Allocation of resources of the economy as between production of different goods and services
2. Determination of prices of goods and services
3. Behaviour of industrial decision makers
4. All of the above

✅ Correct Answer: 4

Which of the following is Microeconomics concerned with?

1. The size of national output
2. The levelof employment
3. Changes in the general level of prices
4. None of the above

✅ Correct Answer: 4

Formulation of an economic theory involves:

1. Statement of various assumptions or postulates
2. Logical deductions from the assumptions made
3. Testing the hypothesis against empirical evidence
4. All of the above

✅ Correct Answer: 4

An economic theory is:

1. An axiom
2. A proposition
3. A hypothesis
4. A tested hypothesis

✅ Correct Answer: 4

Identify the aspect of taxation which is related to normative economics:

1. Incidence of tax
2. Effect of tax on the capacity willingness to work
3. Equity of tax
4. None of the above

✅ Correct Answer: 3

Demand for a commodity refers to a:

1. Desire for the commodity
2. Need for the commodity
3. Quantity demanded of that commodity
4. Quantity of the commodity demanded at a certain price during any praticular period of time

✅ Correct Answer: 4