# Demand MCQs

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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:
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
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
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
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?
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
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:
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

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