440+ Micro Economics 1 Solved MCQs

401.

The demand curve for Giffen’s goods:

A. Vertical
B. Horizontal
C. Negative slope
D. Positive slope
Answer» D. Positive slope
402.

When Q = f (P), the elasticity coefficient is measured by:

A. ∆Q/∆P / P/Q
B. ∆P/∆Q * Q/P
C. ∆Q/∆P * P/Q
D. P/∆Q / Q/P
Answer» C. ∆Q/∆P * P/Q
403.

Income elasticity of demand for inferior goods is:

A. Negative
B. Positive
C. Zero
D. Unity
Answer» A. Negative
404.

In the case of luxury goods, the income elasticity of demand will be:

A. Less than unity
B. Unity
C. More than unity
D. All the above
Answer» C. More than unity
405.

Income elasticity is positive, but less than unity in the case of:

A. Necessity
B. Luxury
C. Inferior
D. Substitutes
Answer» A. Necessity
406.

The change in demand is due to the change in :

A. Income
B. Own price
C. Prices of related products
D. Expectations
Answer» B. Own price
407.

Supply curve represents -------- relationship between quantity and price

A. Direct
B. Inverse
C. Either direct or inverse
D. None of the above
Answer» A. Direct
408.

A market:

A. Necessarily refers to a meeting place between buyer and sellers
B. Does not necessarily refers to a meeting place between buyer and sellers
C. Extends over the entire country
D. Extends over a city
Answer» B. Does not necessarily refers to a meeting place between buyer and sellers
409.

The market equilibrium for a commodity is determined by:

A. Market demand
B. Market supply
C. Balancing of the forces of demand and supply
D. Any of the above
Answer» C. Balancing of the forces of demand and supply
410.

In drawing an individual demand curve for a commodity, all but which of the following are kept constant:

A. Individual’s money income
B. The prices of the related commodity
C. Price of the commodity under consideration
D. Tastes of the consumer
Answer» C. Price of the commodity under consideration
411.

A fall in the price of the commodity holding everything else constant results in:

A. Increase in demand
B. Decrease in demand
C. Increase in quantity demanded
D. Decrease in quantity demanded
Answer» C. Increase in quantity demanded
412.

When an individual’s income rises, when everything else remains the same, his demand for normal goods:

A. Rises
B. Falls
C. Remains the same
D. Any of the above is possible
Answer» A. Rises
413.

When an individual’s income falls, when everything else remains the same, his demand for inferior goods:

A. Increases
B. Decreases
C. Remains unchanged
D. Cannot say
Answer» A. Increases
414.

When the price of the substitute commodity of X falls, the demand for X:

A. Rises
B. Falls
C. Remains unchanged
D. All of the above is possible
Answer» B. Falls
415.

When both the price of a substitute and the price of complement of X rises, the demand for X:

A. Rises
B. Falls
C. Remains unchanged
D. All of the above is possible
Answer» D. All of the above is possible
416.

If the supply curve of the commodity is having a positive slope, a rise in the price of the commodity, results in:

A. Increase in supply
B. Increase in quantity supplied
C. Decrease in supply
D. Decrease in quantity supplied
Answer» B. Increase in quantity supplied
417.

From the position of stable equilibrium, the market supply of a commodity decreases, while the market demand remains unchanged, then:

A. Equilibrium price falls
B. Equilibrium quantity rises
C. Both equilibrium price and equilibrium quantity decreases
D. Equilibrium price rises, but equilibrium quantity falls
Answer» D. Equilibrium price rises, but equilibrium quantity falls
418.

If the percentage increase in the quantity demanded of a commodity is smaller than the percentage fall in its price, the coefficient of price elasticity:

A. Greater than one
B. Equal to one
C. Smaller than one
D. Zero
Answer» C. Smaller than one
419.

A fall in the price of the commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity:

A. Increases
B. Decreases
C. Remains unchanged
D. None of the above
Answer» C. Remains unchanged
420.

If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is

A. Greater than One
B. Equal to one
C. Smaller than one
D. Zero
Answer» D. Zero
421.

An increase in the price of the commodity when demand is inelastic causes the total expenditure of consumers of the commodity to:

A. Increase
B. Decrease
C. Remains unchanged
D. Any of the above
Answer» C. Remains unchanged
422.

A negative income elasticity of demand for a commodity indicates that as income falls, the amount of the commodity purchased:

A. Rises
B. Falls
C. Remains unchanged
D. None of the above
Answer» A. Rises
423.

If the income elasticity of demand is greater than one, then the commodity is:

A. Necessity
B. Luxury
C. Inferior
D. Non-related commodity
Answer» A. Necessity
424.

If the amount of the commodity purchased remains unchanged when the price of another commodity changes, the cross elasticity of demand between them will be:

A. Positive
B. Negative
C. Zero
D. One
Answer» C. Zero
425.

If the income elasticity of demand for a commodity is found to be 0.4, then the commodity concerned is

A. Luxury
B. Necessity
C. Giffen’s goods
D. Independent good
Answer» B. Necessity
426.

Elasticity of supply for a positively sloped straight line supply curve that intersects the price axis is:

A. Equal to zero
B. Equal to one
C. Greater than one
D. Constant
Answer» C. Greater than one
427.

If a positively sloped linear supply curve crosses the quantity axis, the elasticity of supply is:

A. Inelastic
B. Elastic
C. Unitary elastic
D. Perfectly elastic
Answer» A. Inelastic
428.

If a positively sloped linear supply curve passes through the origin, the elasticity of supply is:

A. Inelastic
B. Elastic
C. Unitary elastic
D. Perfectly elastic
Answer» C. Unitary elastic
429.

The horizontal supply curve parallel to quantity axis represents:

A. Elastic supply
B. Inelastic supply
C. Perfectly elastic supply
D. Perfectly inelastic supply
Answer» C. Perfectly elastic supply
430.

A fall in income of the consumer, other things being equal, causes:

A. Increase in demand
B. Decrease in demand
C. Increase in quantity demanded
D. Decease in quantity demanded
Answer» A. Increase in demand
431.

Which of the following causes an increase in supply:

A. Fall in price of inputs
B. Increase in number of producers
C. Decrease in the price of production substitutes
D. All of the above
Answer» D. All of the above
432.

Which of the following Elasticities measure movement along a curve, rather than a shift in the curve:

A. Price elasticity of demand
B. Income elasticity of demand
C. Cross elasticity of demand
D. None of the above
Answer» A. Price elasticity of demand
433.

Cross elasticity of demand in the case of substitutes:

A. Zero
B. Negative
C. Positive
D. Infinity
Answer» C. Positive
434.

A movement down the given demand curve shows:

A. Increase in demand
B. Decrease in demand
C. Extension in demand
D. Contraction in demand
Answer» C. Extension in demand
435.

Which of the following results in an increase in an increase in demand:

A. Fall in prices of substitutes
B. Increase in price of complementary goods
C. Fall in consumer’s income
D. None of the above
Answer» D. None of the above
436.

Change in quantity supplied of a product can result from:

A. Changes in own price
B. Changes in cost of production
C. Change in technology
D. Change in price of related products
Answer» A. Changes in own price
437.

An increase in supply means:

A. Movement down given supply curve
B. Movement upward given supply curve
C. Leftward shift in supply curve
D. Rightward shift in supply curve
Answer» D. Rightward shift in supply curve
438.

At prices above the equilibrium price:

A. Quantity supplied exceeds quantity demanded
B. Quantity demanded exceeds quantity supplied
C. There is shortage
D. All of the above is possible
Answer» A. Quantity supplied exceeds quantity demanded
439.

An increase in market supply, demand remaining the same causes:

A. Increase in equilibrium price
B. Decrease in equilibrium quantity
C. Decrease in equilibrium price and increase in equilibrium quantity
D. Both equilibrium price and quantity rises
Answer» C. Decrease in equilibrium price and increase in equilibrium quantity
440.

An increase in market demand, supply remaining the same results in:

A. Decrease in equilibrium price
B. Decrease in equilibrium quantity
C. Decrease in equilibrium price and increase in equilibrium quantity
D. Both equilibrium price and quantity rises
Answer» D. Both equilibrium price and quantity rises
441.

A fall in the market demand, supply remaining the same results in:

A. Increase in equilibrium price
B. Increase in equilibrium quantity
C. Increase in equilibrium price and decrease in equilibrium quantity
D. Both equilibrium price and quantity falls
Answer» D. Both equilibrium price and quantity falls
442.

Which one of the following elasticities takes the average of prices and quantities:

A. Point elasticity of demand
B. Arc elasticity of demand
C. Income elasticity of demand
D. Cross elasticity of demand
Answer» B. Arc elasticity of demand
443.

As a result of a fall in the price total expenditure on the commodity decreases, the coefficient of elasticity will be:

A. Equal to one
B. Greater than one
C. Less than one
D. Cannot say
Answer» C. Less than one
444.

If a small change in price leads to infinitely large change in quantity demanded, then the demand is:

A. Perfectly elastic
B. Perfectly inelastic
C. Elastic
D. Inelastic
Answer» B. Perfectly inelastic
445.

When demand curve is rectangular hyperbola, the value of price elasticity of demand will be:

A. Zero
B. One
C. Greater than one
D. Infinity
Answer» B. One
446.

On a linear demand curve, the coefficient of price elasticity is unity, then the value of MR will be:

A. Positive
B. Zero
C. Negative
D. One
Answer» B. Zero
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