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CA Foundation Unit 2A: Demand, Supply and Market Equilibrium — practice questions

Explore 42 free Unit 2A: Demand, Supply and Market Equilibrium questions in CA Foundation Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Unit 2A: Demand, Supply and Market Equilibrium questions and exercises with answers

Showing questions 1–30 of 42.

The law of demand states that, other things equal, as price rises, quantity demandedRead the answer and worked solution →CA Foundation · Economics · Demand Determinants — PairRead the answer and worked solution →CA Foundation · Economics · Snob, Bandwagon, or Veblen EffectRead the answer and worked solution →Between a good and the price of its substitute, the relationship of demand to that price is best described as which of the following?Read the answer and worked solution →The desire of people to buy a good simply because they see others able to own it, a term coined by James Duesenberry, is known as which effect?Read the answer and worked solution →The law of demand states that, other things being equal, when the price of a good rises, the quantity demanded of the good will do which of the following?Read the answer and worked solution →For a linear demand function written as Q = a - bP, the symbol 'a' represents which feature of the demand curve?Read the answer and worked solution →A 5% fall in the price of a good leads to a 15% rise in its quantity demanded. The coefficient of price elasticity of demand is:Read the answer and worked solution →The quantity demanded at price Rs 9 per unit is 800 units. Price falls by 25% and quantity demanded rises by 160 units. The price elasticity of demand is:Read the answer and worked solution →A consumer buys 80 units of a good at Rs 4 per unit. If the price elasticity of demand is 4 (in magnitude), at what price will he buy 60 units?Read the answer and worked solution →On a linear (straight-line) demand curve, at what location is the price elasticity of demand equal to one?Read the answer and worked solution →Using the arc (mid-point) method, the price elasticity of demand for headphones when price falls from Rs 500 (Q = 100) to Rs 400 (Q = 150) is:Read the answer and worked solution →Using the arc (mid-point) method, the price elasticity of demand for wheat when price falls from Rs 20 (Q = 500) to Rs 18 (Q = 520) is approximately:Read the answer and worked solution →When the percentage change in quantity demanded is exactly equal to the percentage change in price, the demand is described as:Read the answer and worked solution →The main drawback of the total outlay method of measuring price elasticity is that it:Read the answer and worked solution →Governments tend to raise indirect taxes on goods such as alcohol and tobacco mainly because the demand for these goods is:Read the answer and worked solution →The income of a household rises by 10% and the demand for a TV rises by 20%. The income elasticity of demand for the TV is:Read the answer and worked solution →The cross-price elasticity between goods X and Y is -0.8. If the price of Y rises by 20%, the quantity demanded of X will change by:Read the answer and worked solution →A positive cross-price elasticity of demand between two goods indicates that the goods are:Read the answer and worked solution →If two goods are perfect substitutes for each other, the cross-price elasticity of demand between them is:Read the answer and worked solution →Supply is correctly classified as which type of economic variable?Read the answer and worked solution →When a fall in market price leads producers to offer less for sale, moving down along the same supply curve, this is best described as:Read the answer and worked solution →When a supply curve shifts bodily to the left, it conveys that, at each given price, producers now offer:Read the answer and worked solution →Elasticity of supply measures the responsiveness of the quantity supplied of a good to a change in its:Read the answer and worked solution →A vertical supply curve drawn parallel to the price axis indicates that the elasticity of supply is:Read the answer and worked solution →A horizontal supply curve drawn parallel to the quantity axis indicates that the elasticity of supply is:Read the answer and worked solution →The price of a commodity rises from Rs 200 to Rs 220 and, as a result, the quantity supplied rises from 1,000 units to 1,300 units. The elasticity of supply is:Read the answer and worked solution →The price of a good rises by 8% and the quantity supplied of it rises by 12%. The elasticity of supply equals:Read the answer and worked solution →The supply function for a good is $q = -50 + 5p$. Using the point method, the elasticity of supply when price is Rs 20 equals:Read the answer and worked solution →The supply function for a good is $q = -20 + 4p$. Using the point method, the elasticity of supply when price is Rs 10 equals:Read the answer and worked solution →

Worked practice questions

The law of demand states that, other things equal, as price rises, quantity demanded

  1. rises
  2. falls
  3. stays the same
  4. becomes zero
Show answer and solution

Correct answer: B. falls

Law of demand: price and quantity demanded are inversely related, ceteris paribus.

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CA Foundation · Economics · Demand Determinants — Pair

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Matching pairs
  1. Left
    Price of the good itself
    Right
    Inverse relationship (Law of Demand)
  2. Left
    Price of substitute
    Right
    Direct relationship with demand for tea
  3. Left
    Price of complement
    Right
    Inverse relationship with demand for car
Instructions
Match each demand determinant to its effect.

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CA Foundation · Economics · Snob, Bandwagon, or Veblen Effect

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Questions
  1. Items
    1. Bandwagon effect
    2. Substitution effect
    3. Snob effect
    4. Veblen effect
    Reason
    Substitution effect is part of the Law of Demand; the others are special demand effects.
    Odd item
    Substitution effect
  2. Items
    1. Demonstration
    2. Bandwagon
    3. Marginal Utility
    4. Snob
    Reason
    Marginal Utility belongs to consumer theory; the others are psychological demand effects.
    Odd item
    Marginal Utility
  3. Items
    1. Normal Good
    2. Inferior Good
    3. Giffen Good
    4. Public Good
    Reason
    Public Goods are classified by excludability and rivalry; the others are by income response.
    Odd item
    Public Good
  4. Items
    1. Income Statement
    2. Demand Curve
    3. Supply Curve
    4. Demand Schedule
    Reason
    Income Statement is an accounting document; the others are economics tools.
    Odd item
    Income Statement
Instructions
Tap the term that does not belong.

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More Economics topics

Unit 1A: Scarcity, Choice and Opportunity CostUnit 3: Production, Cost & Perfect CompetitionTheory of Consumer Behaviour & DemandUnit 5: Factor Markets & Resource AllocationUnit 4: Imperfect Competition & Market StructuresTheory of Demand & Elasticity