THEORY OF DEMAND

1.The demand for factors of production is anexample of (a)joint demand(b)competitive demand(c)derived demand
(d)composite demand
Right Choice: Option D

2.One of the reasons for an exceptional demand curve is the (a)expectation of a future change in price
(b)availability of credit facilities (c)change in the price of the commodity (d)availability of substitutes.
Right Choice: Option D

3.If the price elasticity of demand for a good is 0.43, and increase in the price of the good will result .in
(a) an increase in profit by 43% (b)a net gain (c) a decrease in profit by 43% (d)a net loss.
Right Choice: Option D

4.A normal good with close substitutes is likely to have is price elasticity of demand (a)between zero and one
(b)equal to unity (c)less than unity (d) greater than unity
Right Choice: Option D

5.In a demand curve, the relationship between price and quantity is(a)interminate (b)direct (c)nil (d)inverse.
Right Choice: Option D

6.For an inferior good, a decrease in real income will lead to (a)a lower equilibrium price (b)a change in quantity demanded (c)an outward shift of the demand curve (d)an inward shift of the demand curve.
Right Choice: Option D

7.The price of a good rises from N5 to N8 and the quantity demanded falls from 200 to 190’units. Over this price range, the demand curve is(a)perfectly inelastic (b)fairly inelastic (c)perfectly elastic (d)fairly elastic
Right Choice: Option D

8.A change in demand for a normal good means (a)a shift in the demand curve (b)a change in the price elasticity (c)the demand changes as price changes (d)a movement along a given demand curve
Right Choice: Option D

9.When elasticity is zero, the demand curve is. (a)perfectly elastic (b)perfectly inelastic (c)concave
(d)downward sloping

10.The effects on the demand for product A caused by a change in the price of product B is called
(a)cross-elasticity of demand (b elasticity of supply (c)competitive demand (d)composite demand
Right Choice: Option D

11. If the price of a commodity falls and the quantity purchased of it does not rise, the commodity can be
described as (a)normal (b)abnormal (c)inferior (d)superior
Right Choice: Option D

12. When we draw a market demand curve, we (a)ignore tastes, incomes and other prices (b)assume that
tastes,incomes and other prices do not matter (c)assume that tastes, incomes and all other prices change in the
same direction as prices (d) assume that tastes, incomes and all other prices remain constant.
Right Choice: Option D

13.In a normal (typical) demand schedule, the quantity demanded is (a)directly related to price (b)inversely related to price (c)independent of price (d)proportionally related to supply.
Right Choice: Option D

14.A movement along a given demand curve for a good is caused by a change in (a)consumer income (b)the price of the good (c)taste (d)the prices of other goods
Right Choice: Option D

15.Two goods, X and Y, are said to be complementary when (a)a fall in the price of X raises the demand for Y (b)a fall in the price of X causes a fall in the demand for Y (c) a fall in the price of X does not affect the demand for Y (d) a rise in the price of X does not affect the demand for Y

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