CA Foundation Law of Demand and Elasticity of Demand — practice questions
44 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice CA Foundation Law of Demand and Elasticity of Demand in the app →In economics, a consumer's desire for a good becomes 'effective demand' only when that desire is backed by whiThe quantity demanded of a commodity is best described as which of the following?When two goods are complements, a fall in the price of one good will have what effect on the demand for the otBetween a good and the price of its substitute, the relationship of demand to that price is best described as Goods whose quantity demanded rises only up to a certain level of income and then decreases as money income riThe desire of people to buy a good simply because they see others able to own it, a term coined by James DueseDemand for a good falls because others are also consuming it, reflecting a desire to be exclusive and dissociaThe law of demand states that, other things being equal, when the price of a good rises, the quantity demandedFor a linear demand function written as Q = a - bP, the symbol 'a' represents which feature of the demand curvHicks and Allen explained the downward slope of the demand curve through which pair of components of the priceIn the case of inferior goods, the expansion in demand following a price fall takes place only when which condCoarse grains such as bajra and low quality rice, which are inferior, have no close substitutes, and occupy a Which statement about the relationship between Giffen goods and inferior goods is correct?A change in the quantity demanded of a good caused solely by a change in its own price, all other factors consOther things being equal, a rise in the income of consumers for a normal good will cause which change to the dWhich of the following changes would cause a leftward shift (a decrease) in the demand curve for a normal goodPrice elasticity of demand is defined as the percentage change in quantity demanded divided by which of the foA 5% fall in the price of a good leads to a 15% rise in its quantity demanded. The coefficient of price elastiThe price of a commodity falls from Rs 6 to Rs 4 and quantity demanded rises from 10 units to 15 units. Using The quantity demanded at price Rs 9 per unit is 800 units. Price falls by 25% and quantity demanded rises by 1The price of a good falls from Rs 100 to Rs 60 per unit. If the price elasticity of demand is 1.5 and the origA consumer buys 80 units of a good at Rs 4 per unit. If the price elasticity of demand is 4 (in magnitude), atOn a straight-line demand curve tT, the point elasticity at any point R is given by the ratio of which two segOn a linear (straight-line) demand curve, at what location is the price elasticity of demand equal to one?Using the arc (mid-point) method, the price elasticity of demand for headphones when price falls from Rs 500 (Using the arc (mid-point) method, the price elasticity of demand for wheat when price falls from Rs 20 (Q = 50When the percentage change in quantity demanded is exactly equal to the percentage change in price, the demandA demand curve that is a vertical straight line, where quantity demanded does not change at all when price chaThe horizontal demand curve associated with perfectly elastic demand (Ep = infinity) is characteristically fouUnder the total outlay method, if a rise in the price of a good causes the total expenditure (total revenue) oUnder the total outlay method, when a change in the price of a good leaves total expenditure (total revenue) oThe main drawback of the total outlay method of measuring price elasticity is that it:Other things being equal, which characteristic tends to make the demand for a commodity more price elastic?Governments tend to raise indirect taxes on goods such as alcohol and tobacco mainly because the demand for thThe income of a household rises by 10% and the demand for a TV rises by 20%. The income elasticity of demand fWhen a household's income rises by 5%, the demand for bajra falls by 2%. The income elasticity of demand for bReal incomes of customers rose by 10%. A dealer's used-car sales fell from 4,000 to 3,850 units. The income elIf the proportion of a consumer's income spent on a good increases as income increases, the income elasticity When the price of brand Imperial rises by 10%, the demand for brand Royal rises by 15%. The cross-price elastiThe cross-price elasticity between goods X and Y is -0.8. If the price of Y rises by 20%, the quantity demandeTea is priced at Rs 30 with 5 kg demanded. When the price of coffee rises from Rs 25 to Rs 35 per kg, the quanSugar is priced at Rs 50 with 10 kg demanded. When the price of tea falls from Rs 30 to Rs 25 per kg, sugar coA positive cross-price elasticity of demand between two goods indicates that the goods are:If two goods are perfect substitutes for each other, the cross-price elasticity of demand between them is: