Development Economics Short Questions and Answers

41 Demand for a commodity refers to:

[A] Amount of the commodity demanded at a particular price and at a particular time

[B] Quantity demanded of that commodity

[C] Need for the commodity

[D] Desire for the commodity

Answer: Amount of the commodity demanded at a particular price and at a particular time

42 Which among the following statement is INCORRECT?

[A] If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection.

[B] The price elasticity of demand is expressed in terms of relative not absolute, changes in Price and quantity demanded’

[C] On a linear demand curve, all the five forms of elasticity can be depicted’

[D] If two demand curves are linear, and parallel to each other then at a particular price the coefficient of elasticity would be different on different demand curves.

Answer: If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection.

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43 If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to:

[A] Increase

[B] Remain the same

[C] Become zero

[D] Decrease

Answer: Increase

44 The horizontal demand curve parallel to x-axis implies that the elasticity of demand is:

[A] Greater than zero but less than infinity

[B] Zero

[C] Equal to one

[D] Infinite

Answer: Infinite

45 An individual demand curve slopes downward to the right because of the:

[A] income effect of fall in Price

[B] Working of the law of diminishing marginal utility

[C] substitution effect of decrease in price

[D] All of the above

Answer: All of the above

46 Income elasticity of demand is defined as the responsiveness of:

[A] Quantity demanded to a change in income

[B] Income to a change in quantity demanded

[C] Quantity demanded to a change in price

[D] Price to a change in income

Answer: Quantity demanded to a change in income

47 The supply of a good refers to:

[A] Quantity of the good offered for sale at a particular price per unit of time

[B] Actual Production of the good

[C] Total stock in the warehouse

[D] Stock available for sale

Answer: Quantity of the good offered for sale at a particular price per unit of time

48 In the short run, when the output of a firm increases, its average fixed cost:

[A] Decreases

[B] First decreases and then rises

[C] Remains constant

[D] Increases

Answer: Decreases

49 The cost of one thing in terms of the alternative given up is called:

[A] opportunity cost

[B] Real cost

[C] Production cost

[D] Physical cost

Answer: opportunity cost

50 Assume that consumer’s income and the number of sellers in the market for good X both falls. Based on this information, we can conclude with certainty that the equilibrium:

[A] Quantity will increase

[B] Quantity will decrease

[C] Price will decrease

[D] Price will increase

Answer: Quantity will decrease

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