Micro Economics 1 Set 17

Bachelor of Arts in Economics (BA Economics)

Practice Mode Previous Next
On This Page

This set of Micro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 1 Set 17

Q1 | The demand curve for Giffen’s goods:
  • Vertical
  • Horizontal
  • Negative slope
  • Positive slope
Answer: Positive slope
Q2 | When Q = f (P), the elasticity coefficient is measured by:
  • ∆Q/∆P / P/Q
  • ∆P/∆Q * Q/P
  • ∆Q/∆P * P/Q
  • P/∆Q / Q/P
Answer: ∆Q/∆P * P/Q
Q3 | Income elasticity of demand for inferior goods is:
  • Negative
  • Positive
  • Zero
  • Unity
Answer: Negative
Q4 | In the case of luxury goods, the income elasticity of demand will be:
  • Less than unity
  • Unity
  • More than unity
  • All the above
Answer: More than unity
Q5 | Income elasticity is positive, but less than unity in the case of:
  • Necessity
  • Luxury
  • Inferior
  • Substitutes
Answer: Necessity
Q6 | The change in demand is due to the change in :
  • Income
  • Own price
  • Prices of related products
  • Expectations
Answer: Own price
Q7 | Supply curve represents -------- relationship between quantity and price
  • Direct
  • Inverse
  • Either direct or inverse
  • None of the above
Answer: Direct
Q8 | A market:
  • Necessarily refers to a meeting place between buyer and sellers
  • Does not necessarily refers to a meeting place between buyer and sellers
  • Extends over the entire country
  • Extends over a city
Answer: Does not necessarily refers to a meeting place between buyer and sellers
Q9 | The market equilibrium for a commodity is determined by:
  • Market demand
  • Market supply
  • Balancing of the forces of demand and supply
  • Any of the above
Answer: Balancing of the forces of demand and supply
Q10 | In drawing an individual demand curve for a commodity, all but which of the following are kept constant:
  • Individual’s money income
  • The prices of the related commodity
  • Price of the commodity under consideration
  • Tastes of the consumer
Answer: Price of the commodity under consideration
Q11 | A fall in the price of the commodity holding everything else constant results in:
  • Increase in demand
  • Decrease in demand
  • Increase in quantity demanded
  • Decrease in quantity demanded
Answer: Increase in quantity demanded
Q12 | When an individual’s income rises, when everything else remains the same, his demand for normal goods:
  • Rises
  • Falls
  • Remains the same
  • Any of the above is possible
Answer: Rises
Q13 | When an individual’s income falls, when everything else remains the same, his demand for inferior goods:
  • Increases
  • Decreases
  • Remains unchanged
  • Cannot say
Answer: Increases
Q14 | When the price of the substitute commodity of X falls, the demand for X:
  • Rises
  • Falls
  • Remains unchanged
  • All of the above is possible
Answer: Falls
Q15 | When both the price of a substitute and the price of complement of X rises, the demand for X:
  • Rises
  • Falls
  • Remains unchanged
  • All of the above is possible
Answer: All of the above is possible
Q16 | If the supply curve of the commodity is having a positive slope, a rise in the price of the commodity, results in:
  • Increase in supply
  • Increase in quantity supplied
  • Decrease in supply
  • Decrease in quantity supplied
Answer: Increase in quantity supplied
Q17 | From the position of stable equilibrium, the market supply of a commodity decreases, while the market demand remains unchanged, then:
  • Equilibrium price falls
  • Equilibrium quantity rises
  • Both equilibrium price and equilibrium quantity decreases
  • Equilibrium price rises, but equilibrium quantity falls
Answer: Equilibrium price rises, but equilibrium quantity falls
Q18 | 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:
  • Greater than one
  • Equal to one
  • Smaller than one
  • Zero
Answer: Smaller than one
Q19 | A fall in the price of the commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity:
  • Increases
  • Decreases
  • Remains unchanged
  • None of the above
Answer: Remains unchanged
Q20 | If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is
  • Greater than One
  • Equal to one
  • Smaller than one
  • Zero
Answer: Zero
Q21 | An increase in the price of the commodity when demand is inelastic causes the total expenditure of consumers of the commodity to:
  • Increase
  • Decrease
  • Remains unchanged
  • Any of the above
Answer: Remains unchanged
Q22 | A negative income elasticity of demand for a commodity indicates that as income falls, the amount of the commodity purchased:
  • Rises
  • Falls
  • Remains unchanged
  • None of the above
Answer: Rises
Q23 | If the income elasticity of demand is greater than one, then the commodity is:
  • Necessity
  • Luxury
  • Inferior
  • Non-related commodity
Answer: Necessity
Q24 | 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:
  • Positive
  • Negative
  • Zero
  • One
Answer: Zero
Q25 | If the income elasticity of demand for a commodity is found to be 0.4, then the commodity concerned is
  • Luxury
  • Necessity
  • Giffen’s goods
  • Independent good
Answer: Necessity
Previous Next