Demand and Supply Mcqs Test 07 Preparation Online

1. Which of the following statements is incorrect?

A. The total effect of a change in the price of a good on its quantity demanded is called the price effect

B. The elasticity of substitution between two goods to a consumer is zero

C. Convexity of a curve implies that the slope of the curve diminishes as one moves from left to right

D. An indifference curve must be downward sloping to the right

2. The consumer is in equilibrium at a point where the budget line?

A. Is above an indifference curve

B. Is tangent to an indifference curve

C. Is below an indifference curve

D. Cuts an indifference curve

3. An indifference curve slopes down towards right since more of one commodity and less of another result in?

A. Same satisfaction

B. Decreasing Expenditure

C. Maximum satisfaction

D. Greater satisfaction

4. If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be?

A. Vertical

B. Horizontal

C. Negatively sloped

D. Positively sloped

5. The budget-line is also known as the?

A. Consumption possibility line

B. Isoquant

C. Production possibility line

D. Iso-utility curve

6. Which one is not a assumption of the theory of demand based on analysis of indifference curves?

A. Diminishing marginal rate of substitution

B. Given scale of preferences as between different combinations of two goods

C. Consumers would always prefer more of a particular good to less of it, other things remaining the same

D. Constant marginal utility of money

7. The Revealed Preference Theory deduces the inverse price-quantity relationship from?

A. Assumption of indifference

B. Introspection

C. Postulate of utility maximization

D. Observed behaviour of the consumer

8. In the case of a Giffen good, the demand curve will be?

A. Horizontal

B. Backward falling to the left

C. Upward-slopping to the right

D. Downward-slping to the right

9. The elasticity of substitution between two perfect substitutions is?

A. Zero

B. Infinity

C. Less than infinity

D. Greater than zero

10. If the demand for a commodity is inelastic, an increase in its price will cause the total expenditure of the consumers of the commodity to?

A. Decrease

B. Remain the same

C. Increase

D. Any of the above

Demand and Supply Mcqs Test 07 Preparation Online

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