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Demand MCQs
What is the relationship between Demand and Price?
a. Positive
b. Negative
c. Both (a) and (b)
d. None of the above
ANS: B
Antoine Augustine Cournot first developed a mathematical model of supply and demand in his book Researches on Mathematical Principles of the Theory of Wealth”
a. 1828
b. 1838
c. 1848
d. None of the above
ANS: B
The price elasticity of demand for a Giffen good is would be:
a Positive
b. Negative
c. Zero
d. None of the above
ANS: A
The law of demand refers to:
a. Price-supply relationship
b. Price-cost relationship
c. Price-demand relationship
d. Price-income relationship
ANS: C
The standard form of demand function is:
a. Q = a-bp
b. Q = b + ap
c. X= a – bp
d. Y= b + ap
ANS: A
The high the price, the lower the quantity demanded. This relationship is sometimes called the:
a. Law of positive-sloping demand
b. Law of negative-sloping demand
c. Law of constant-sloping demand
d. Law of increasing-sloping demand
ANS: B
Why the demand curve slopes downward:
a. income effect
b. substitute effect
c. price effect
d. both (a) and (b)
ANS: C
The Hicksian demand curve includes:
a. Just substitute effect
b. Just income effect
c. Price effect
d. Both (a) and (b)
ANS: A
The hicksian demand curve is also known as:
a. Compensated demand curve
b. Uncompensated demand curve
c. Cost indifference curve
d. all of the above
ANS: A
In the case of a normal good, the Marshallian demand curve is always flatter than the:
a. Hicksian demand curve
b. Slutsky demand curve
c. Samuelson demand curve
d. Both (a) and (b)
ANS: A
In the case of inferior and Giffen goods, Hicksian demand curves cannot be upward-sloping for
a. Normal goods
b. Giffen goods
c. Both (a) and (c)
d. None of the above
ANS: C
An ordinary demand curve is based upon:
a. Price effect & substitution effect
b. Substitution effect & Income effect
c. Only substitution effect
d. Only Income effect
ANS: B
The uncompensated demand curve is more sensitive to changes in price. So demand curve is:
a. Perfectly elastic
b. Perfectly inelastic
c. More elastic
d. Less elastic
ANS: C
The compensated demand curve is less sensitive to changes in price, as a result, the demand curve is:
a. Perfectly elastic
b. Perfectly inelastic
c. More elastic
d. Less elastic
ANS: D
In the case of normal goods, the relationship between income and quantity demanded is:
a. Negative
b. Positive
c. Zero
d. Infinite
ANS: B
In the case of normal goods, the relationship between own price of the commodity and its quantity demanded is:
a. Constant
b. Inverse
c. Positive
d. None of these
ANS: B
If there is a price floor, there will be:
a. Surplus
b. Shortage
c. Equilibrium
d. None of the above
ANS: A
Which of the following shifting factor of the demand curve:
a. Test and preferences of Consumers
b. Related good8 (Price of)
c. Income of the consumer
d. All of the above
ANS: D
If the demand curve is very inelastic relative to the supply curve, the burden of the tax183 falls mostly on:
a. Buyers
b. Sellers
c. Both of them
d. None of them
ANS: A
If the demand curve is very elastic relative to the supply curve, it falls mostly on the:
a. Sellers
b. Buyers
c. Both of them
d. None of them
ANS: A
A typical demand curve cannot be:
a. Convex to the origin
b. Concave to the origin
c. A straight line
d. Rising upwards to the right
ANS: D
Where demand is equal to supply (D=S). This phenomenon is also known as:
a. Hicksian Cross
b. Walrasian Cross
c. Marshallian Cross
d. Both (a) and (c)
ANS: C
In Economics when demand for a commodity increases with a fall in its price it is known as:
a. Contraction of demand
b. Expansion of demand
c. No change in demand
d. None of the above
ANS: B
The demand side can be represented by:
a. Market demand curve
b. Market supply curve
c. Both of them
d. None of them
ANS: A
The Marshallian model (demand-supply) is a:
a. Stable equilibrium
b. Dynamic equilibrium
c. Stead-state equilibrium
d. Both (a) and (b)
ANS: A
When the price rises and quantity demand is large quantity supply (Qd>Qs), the excess demand is:
a. Negative
b. Positive
c. Equal
d. Both (a) and (b)
ANS: B
Both Marshallian and Walrasian demand-supply models are:
a. Static stability
b. Dynamic stability
c. Steady-state stability
d. Neutral stability
ANS: A
The Marshallian demand curve downward sloping. While the Walrasian demand curve is:
a. Horizontal axis
b. Vertical axis
c. Upward sloping
d. Downward sloping
ANS: D
The Marshallian supply curve upward sloping. While the Walrasian supply curve is:
a. Downward sloping
b. Horizontal axis
c. Upward sloping
d. Vertical axis
ANS: C
The fluctuations in price and output are called:
a. Marshallian fluctuation
b. Hicksian fluctuation
c. Keynesian fluctuation
d. Cobweb fluctuation
ANS: D
According to Lester O. Bumas, vertical supply function is associated with:
a. Land
b. Capital
c. Labor
d. All of them
ANS: A
According to classical economists, The market is equilibrium. When there is”:
a. Imperfect competition in the market
b. Perfect competition in the market
c. Monopoly and free market economy
d. None of the above
ANS: B
Alfred Marshall broke conceptual periods time into:
a. Two-period
b. Three-period
c. Four-period
d. Five period
ANS: B
Change in demand occurs due to the change in:
a. Income
b. Prices of related goods
c. Taste and preference
d. All of these
ANS: D
Good A is a normal good. The demand curve for good A:
a. Backward X-axis
b. Backward Y-axis
c. Slopes downward
d. Slopes upward
ANS: C
An exception to the law of demand is:
a. Normal good
b. Giffen good
c. Article of distinction
d. Both (b) and (c)
ANS: D
Distribution of income is a determinant of
a. Individual demand function
b. Market demand function
c. Both (a) and (c)
d. None of these
ANS: B
The equilibrium price is o ten called:
a. Market clearing price
b. Market price
c. Both of them
d. None of them
ANS: C
A tax that is levied on producers shifts the supply curve:
a. Upward
b. Downward
c. Remain constant
d. Both (a) and (b)
ANS: A
A tax that is levied on consumers shifts the demand curve:
a. Upward
b. Downward
c. Remain constant
d. Both (a) and (b)
ANS: B
The specific quantity to be purchased against a specific price of the commodity is called:
a. Demand
b. Quantity demand
c. Movement along the demand curve
d. Shift in demand
ANS: B
In the case of normal goods, the demand curve shows:
a. A negative slope
b. A positive slope
c. Zero slope
d. None of these
ANS: A
Law of demand must fail in case of
a. Normal goods
b. Giffen goods
c. Inferior goods
d. None of these
ANS: B
In the case of Giffen’s paradox, the slope of the demand curve is:
a. Negative
b. Positive
c. Parallel to X-axis
d. Parallel to Y-axis
ANS: B
In the case of Giffen goods, the demand curve is:
a. Upward sloping
b. Downward sloping
c. Parallel to X-axis
d. Parallel to Y-axis
ANS: A
Which of the following shifting factor of the demand curve?
a. Buyers (Number of)
b. Expected Future Prices (EFP)
c. Expected Income of Consumers (EYP)
d. All of the above
ANS: D
If two goods are complementary then a rise in the price of one results in:
a. Rise in demand for the other
b. Fall in demand for the other
c. Rise in demand for both
d. None of these
ANS: B
A demand curve is upward-sloping for:
a. Normal goods
b. Inferior goods
c. Giffen goods
d. None of these
ANS: C
When the increase in the price of one good causes an increase in demand for the other, the goods are:
a. Substitutes
b. Complementary
c. Inferior
d. Giffen
ANS: A
The stable cobweb model is:
a. Dynamic model
b. Steady-state model
c. Simple model
d. Both (a) and (c)
ANS: D
A fall in the income of the consumer (in the case of normal goods) will cause:
a. Upward movement on the demand curve
b. Downward movement on the demand curve
c. The rightward shift of the demand curve
d. The leftward shift of the demand curve
ANS: D
Change in quantity demanded of a commodity due to change in its price, other things remaining constant, is called:
a. Cross-price effect
b. Price effect
c. Income effect
d. Substitution effect
ANS: B
Change in quantity demanded of a commodity due to a change in the real income of the consumer caused by the change in own price of the commodity is called:
a. Cross-price effect
b. Price effect
c. Income effect
d. Substitution effect
ANS: C
The Marshallian demand and supply model resolved the:
a. Air-diamond paradox
b. Pigouian-paradox
c. Water-diamond paradox
d. Hicksian paradox
ANS: C
Marshall’s demand-supply model represents the:
a. General equilibrium
b. Partial equilibrium
c. Both of them
d. None of them
ANS: B
The ‘Law’ of Downward-Sloping Demand therefore always applies to:
a. Inferior goods
b. Giffen goods
c. Normal goods
d. Both (a) and (c)
ANS: C
Hicksian (compensated) demand curves cannot be upward-sloping, because:
a. Substitution effect, cannot be positive
b. Substitution effect cannot be negative
c. Both (a) and (c)
d. None of the above
ANS: A
According to modern economists, maximum price (or price ceiling) as part of an:
a. Anti-inflationary economic policy
b. Anti-deflationary economics policy
c. Both (a) and (b)
d. None of the above
ANS: A
The substitution effect takes place when the price of the commodity becomes:
a. Relatively cheaper
b. Relatively dearer
c. Stable
d. Both (a) and (b)
ANS: D
Different quantities purchased at different possible prices of a commodity are called:
a. Demand schedule
b. Quantity demanded
c. Demand function
d. Individual demand
ANS: A
Diagrammatic presentation of the demand schedule of an individual buyer of a commodity in the market yields:
a. Market demand schedule
b. Individual demand curve
c. Individual demand scheduled. Market demand curve
ANS: B
Complementary goods:
a. Complete the demand for each other
b. Are substituted for each other
c. Are demanded together
d. Both (a) and (c)
ANS: D