Question 1

Net addition to total cost is called:

Accepted Answer

A)  marginal cost
B)  average cost
C)  fixed cost
D)  variable cost A

Question 2

-------------- cost can never become zero.

Accepted Answer

A)  variable cost
B)  fixed cost
C)  marginal cost
D)  average cost B

Question 3

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

Accepted Answer

A)  inelastic
B)  elastic
C)  unitary elastic
D)  perfectly elastic A

Question 4

Most important determinant of demand is :

Accepted Answer

A)  income
B)  wealth
C)  price
D)  advertisement

Question 5

Cross elasticity of demand in the case of substitutes:

Accepted Answer

A)  zero
B)  negative
C)  positive
D)  infinity

Question 6

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

Accepted Answer

A)  rises
B)  falls
C)  remains unchanged
D)  all of the above is possible

Question 7

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

Accepted Answer

A)  perfectly elastic
B)  perfectly inelastic
C)  elastic
D)  inelastic

Question 8

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

Accepted Answer

A)  equilibrium price falls
B)  equilibrium quantity rises
C)  both equilibrium price and equilibrium quantity decreases
D)  equilibrium price rises, but equilibrium quantity falls

Question 9

The market equilibrium for a commodity is determined by :

Accepted Answer

A)  market demand
B)  market supply
C)  balancing of the forces of demand and supply
D)  any of the above

Question 10

Average cost is the sum of AVC and

Accepted Answer

A)  mc
B)  tc
C)  afc
D)  atc

Question 11

In which of the following market, advertisement is absent:

Accepted Answer

A)  monopolistic competition
B)  perfect competition
C)  oligopoly
D)  none of the above

Question 12

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

Accepted Answer

A)  equal to zero
B)  equal to one
C)  greater than one
D)  constant

Question 13

Which of the following is the reason for law of demand:

Accepted Answer

A)  price effect
B)  backlash effect
C)  income effect
D)  real balance effect

Question 14

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

Accepted Answer

A)  individual's money income
B)  the prices of the related commodity
C)  price of the commodity under consideration
D)  tastes of the consumer

Question 15

The law of diminishing marginal utility was popularized by:

Accepted Answer

A)  keynes
B)  marshall
C)  smith
D)  samuelson

Question 16

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

Accepted Answer

A)  luxury
B)  necessity
C)   giffen's goods
D)  independent good

Question 17

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

Accepted Answer

A)  greater than
B)  one equal to one
C)  smaller than one
D)  zero

Question 18

Net addition to total utility when one more unit is consumed is:

Accepted Answer

A)  au
B)  mu
C)  mc
D)  tu

Question 19

Which of the following is an exception to the law of demand?

Accepted Answer

A)   giffen good
B)  normal good
C)  superior good
D)  all of the above

Question 20

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

Accepted Answer

A)  increase in supply
B)  increase in quantity supplied
C)  decrease in supply
D)  decrease in quantity supplied

Exam 3: Demand and Elasticity