# Elasticity of Demand and Supply MCQs

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#### Elasticity of Demand and Supply MCQs

The concept of elasticity of demand was introduced by:
a. Alfred Marshall
c. R. G. D Allen
d. J. R. Hicks
ANS: A

A line demand curve has as:
a. Varying elasticity throughout225
b. Constant elasticity throughout
c. Zero elasticity throughout
d. Positive elasticity throughout
ANS: A

If the demand curve is flatter, the value of elasticity is:
a. less than one
b. unitary elastic
c. greater than one
d. near to infinity
ANS: C

If the value of elasticity is less than one, then the demand curve is:
a. flatter
b. steeper
c. vertical
d. horizontal
ANS: B

According to modern economists, the slope of the demand curve is:
a. varying elasticity
b. absolute elasticity
c. zero elasticity
d. both (a) and (c)
ANS: B

If the demand curve is horizontal and the value of elasticity is infinity. Then:
a. Relatively elastic demand
b. Relatively inelastic demand
c. Perfect elasticity demand
d. Perfect inelasticity demand
ANS: C

The elasticity of demand for cigarettes by a non-smoker is:
a. Unitary price elastic
b. Relatively price inelastic
c. Perfect price elastic
d. Perfectly price inelastic
ANS: D

Benedict purchases product Y for which his income elasticity of demand is negative, apparently product Y is:
a. A necessity
b. A substitute
c. An inferior good
d. A luxury good
ANS: C

The market demand curve is:
a. Vertical summation of individual demand curves
b. Upward summation of individual demand curves
c. Downward summation of individual demand curves
d. Horizontal summation of individual demand curves
ANS:D

At the midpoint on a straight-lined demand curve, demand is
a. Elastic
b. Inelastic
c. Unit elastic
d. Zero
ANS: C

The income elasticity of demand:
a) Is positive only
b) Is negative only
c) Must lie between -1 and +1
d) Can be positive, negative, or zero
ANS: D

When Q = f (P), the elasticity coefficient is measured by:
a) AQ/AP/P/Q
b) AP/AQ * Q/P
c) AQ/AP * P/Q
d) P/AQ/Q/P
ANS: C

In the case of complementary goods, the cross elasticity of demand is:
a. Positive
b. Negative
c. Zero
d. Infinity
ANS: B

In the case of perfect substitute goods, the cross elasticity of demand is:
a. Positive
b. Negative
c. Infinity
d. Zero
ANS: C

In the case of un-related goods, the cross elasticity of demand is:
a. Negative
b. Positive
c. Infinity
d. Zero
ANS: D

A perfectly elastic supply curve will be:
a. Parallel to Y axis
b. Parallel to X axis
c. U shaped
d. Downward sloping
ANS: B

The point elasticity concept was propounded by:
a. R.G. Lipsey
b. R. G. D. Allen
c. Alfred Marshall
d. J. R. Hicks
ANS: A

Income elasticity is positive but less than unity in the case of:
a. Necessity
b. Luxury
c. Inferior
d. Substitutes
ANS: A

In the case of substitutes, cross elasticity of demand is:
a. Zero
b. Negative
c. Positive
d. Infinity
ANS: C

The arc elasticity concept was propounded by:
a. R.G. D. Allen.
b. R.G. Lipsey
c. R. G. D. Allen
d. Alfred Marshall
e. All of them
ANS: C

The Giffen paradox is an exception to:
a. Law of demand
b. Law of Supply
c. Law of Diminishing Marginal Utility
ANS: A

The ‘Revenue Method of elasticity” was introduced by:
a. Joan Robinson
b. Alfred Marshall
c. Prof. R.G. D. Allen.
d. R.G. Lipsey
ANS: A

The elasticity of demand for luxuries tends to be:
a. Greater than one
b. Less than one
c. Equal to one
d: Equal to zero
ANS: A

Demand is elastic if elasticity is:
a. Less than one
b. Equal to one
c. Equal to zero
d. Greater than one
ANS: D

A more elastic supply curve means that the incidence falls more on the:
a. Consumer
b. Supplier
c. Both (a) and (b)
d. None of the above
ANS: A

Demand is inelastic if elasticity is:
a. Less than one
b. Equal to one
c. Greater than one
d. Equal to zero
ANS: A

Demand is unit elastic if elasticity is:
a. Less than one
b. Greater than one
c. Equal to one
d. Equal to zero
ANS: B

The fiancÃ© minister levied tax with on less elastic goods to increase government income.
a. Less rate
b. More rate
c. Both (a) and (b)
d. Don’t change tax rate
ANS: B

Which of the following is not a method of measurement of price elasticity of demand in economics
a. Total Outlay
b. Total savings
c. Point method
d. Arc method
ANS: B

As per the total outlay method, demand is said to be elastic if a result of change in price total outlay:
a. Increases
b. Decrease
c. Remain the same
d. None
ANS: C

If the demand for a commodity is less elastic then an entrepreneur will make its price to increase its profiles:
a. Increase
b. Decrease
c. Both (a) and (b)
d. None of the above
ANS: A

A less elastic supply curve means the incidence falls more on the:
a. Consumer
b. Supplier
c. Both (a) and (b)
d. None of the above

ANS:

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