supply and demand Mcqs
51. Positive cross elasticities suggest that goods are ____ and negative cross-elasticities that goods are ?
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A. normal, inferior

B. substitutes complements

C. substitutes inferior

D. normal, complements

52. For a normal good ?
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A. The price elasticity of demand is positive the income elasticity of demand is negative

B. The price elasticity of demand is negative the income elasticity of demand is negative

C. The price elasticity of demand is positive; the income elasticity of demand is positive

D. The price elasticity of demand is negative the income elasticity of demand is positive
53. The increase in total cost when one more unit is produced is known as ?
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A. marginal cost

B. limited cost

C. opportunity cost

D. average cost
54. The price elasticity of demand is a negative number this means ?
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A. An increase in income will reduce the quantity demanded

B. Demand is price inelastic

C. Demand is price elastic

D. The demand curve is downward sloping
55. An increase in price all other things unchanged leads to ?
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A. Shift demand inwards

B. A contractions of demand

C. Shift demand outwards

D. An extension of demand

56. Profits are maximized when ?
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A. average cost is less than average revenue

B. marginal cost equals marginal revenue

C. revenue is maximized

D. costs are minimized

57. According to the law of diminishing utility ?
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A. Increasing units of consumption increase the marginal utility

B. Utility is at a maximum with the first unit

C. Total utility will rise at a falling rate as more units are consumed

D. Marginal product will fall as more units are consumed

58. The price elasticity of demand is the ?
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A. ratio of the percentage change in quantity demanded to the percentage change in price.

B. ratio of the change in price to the change in quantity demanded.

C. ratio of the change in quantity demanded to the change in price.

D. ratio of the percentage change in price to the percentage change in quantity demanded.

59. Average income increase from Rs20,000 p.a to Rs 22,000 p.a Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
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A. Income elasticity is -2

B. The good is inferior

C. The product is normal

D. Demand is price inelastic

60. The income elasticity is +2 and income increases by 20% sales were 5000 units, what will they be now ?
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A. 7000

B. 5500

C. 3000

D. 4500

61. If a product is a vablen good ?
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A. Demand is directly related to price

B. Demand is inversely related to price

C. Demand is inversely related to income

D. Demand is inversely related to the price of substitutes

62. An increase in price all other things unchanged leads to ?
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A. A contraction of supply

B. A shift in supply inwards

C. A shift in supply outwards

D. An extension of supply
63. An increase in the price of a complement for product A would ?
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A. Shift supply for product A inwards

B. Shift demand for product A inwards

C. Shift demand for Product A outwards

D. Shift supply for product A outwards

64. Demand for a normal product may shift outwards if ?
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A. Price decreases

B. income falls

C. The price of a substitute falls

D. The price of a complement rises

65. What effect is working when the price of a good falls and consumers tend to buy it instead of other goods ?
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A. The income effect

B. The diminishing marginal utility effect.

C. The ceteris paribus effect

D. The substitution effect
66. Market equilibrium exists when _________ at the prevailing price?
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A. quantity demanded equals quantity supplied

B. quantity demanded is less than quantity supplied

C. quantity supplied is greater than quantity demanded

D. quantity demanded is greater than quantity supplied

67. The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?
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A. an increase in the supply of

B. a decrease in the supply of

C. an increase in the quantity supplied of

D. a decrease in the quantity supplied of

68. A contraction in supply occurs when ?
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A. The quantity supplied falls when the price falls

B. The supply curve shifts outwards

C. The supply curve shifts inwards

D. Demand shifts outwards

69. Which best describes a demand curve ?
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A. The quantity consumers are willing and able to buy at each and every income all other things unchanged

B. the quantity consumers would like to buy in an ideal world

C. The quantity consumers are willing and able to buy each and every price all other things changed

D. The quantity consumers are willing to sell

70. Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and Y are ?
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A. substitutes.

B. perfect substitutes

C. complements

D. unrelated goods.

71. If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is ?
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A. -0.25

B. 0.25

C. -4

D. 4

72. Demand curves are derived while holding constant ?
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A. incomes, tastes, and the price of other goods.

B. tastes and the price of other goods

C. income, tastes, and the price of the good.

D. income and tastes

73. Price increases from 10 to 12 pence and the price elasticity of demand is -0.5 The quantity demanded was 500 units. What will it be now ?
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A. 450 units

B. 500 units

C. 490 units

D. 550 units

74. Which best describes a supply curve ?
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A. The quantity producers are willing and able to sell at each and every price all other things unchanged

B. The quantity producers are willing and able to sell at each and every income all other things unchanged

C. The quantity producers are willing and able to sell at each and every point in time all other things unchanged

D. The quantity consumers would like to buy in an ideal world

75. If the price elasticity of demand is unit then a fall in price ?
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A. Leaves revenue unchanged

B. Increase revenue

C. Reduces costs

D. Reduces revenue

76. Supply is likely to be more price elastic ?
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A. If it is easy to expand output

B. If factors of production are relatively immobile between industries

C. In the short run rather than the long run

D. If there are very few producers

77. An increase in price from 25 pence to 30 pence leads to an increase in the quantity supplied from 40 units to 44 units. The price elasticity of supply is ?
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A. +0.5

B. 2

C. -2

D. -0.5

78. The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ____________?
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A. perfectly elastic

B. inelastic.

C. elastic

D. unitarily elastic

79. For an inferior good ?
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A. The price elasticity of demand is negative: the income elasticity of demand is negative

B. The price elasticity of demand is negative the income elasticity of demand is positive

C. The price elasticity of demand is positive the income elasticity of demand is negative

D. The price elasticity of demand is positive the income elasticity of demand is positive

80. The law of demand implies that ?
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A. as prices rise, quantity demanded increases

B. as prices fall, quantity demanded increase

C. as prices rise, demand decrease

D. as prices fall demand increases

81. If marginal utility is zero ?
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A. Total utility is maximized

B. An additional unit of consumption will increase total utility

C. Total utility is zero

D. An additional unit of consumption will decrease total utility

82. Which of the following will NOT cause a shift in the demand curve for compact discs ?
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A. A change in wealth

B. A change in income.

C. A change in the price of compact discs

D. hange in the price of pre-recorded cassette tapes