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Elasticity of Demand and Supply MCQs
The concept of elasticity of demand was introduced by:
a. Alfred Marshall
b. Adam Smith
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
d. Law of Diminishing return to scale
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 fiancé 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: