Q. In the case of a Giffen good, the demand curve will be: A. Horizontal B. Downward-slping to the right C. Backward falling to the left D. Upward-slopping to the right Answer: Backward falling to the left
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Q. If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then the demand curve for the commodity will be: A. Horizontal B. Vertical C. Positively sloped D. Negatively sloped Answer: Vertical
Q. In the case of an inferior good, the income elasticity of demand is: A. Positive B. Zero C. Negative D. Infinite Answer: Negative
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Q. Total utility is maximum when: A. Marginal utility is zero B. Marginal utility is at its highest point C. Marginal utility is equal to average D. Average utility is maximum Answer: Marginal utility is zero
Q. In respect of which of the following category of goods is consumer’s surplus highest? Giffen goods Necessities Luxuries Prestige goods Answer: Necessities
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Q. Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price: A. Equal to one B. Greater than one C. Small than one D. Zero Answer: Small than one
Q. Identify the factor which generally keeps the price-elasticity of demand for a commodity now: A. Variety of uses for that commodity B. Its low price C. Close substitutes for that commodity D. High proportion of the consumer’s income spent on it Answer: Its low price
Q. In the case of a straight-line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be: A. 0 B. 1 C. 1.5 D. 2 Answer: 1
Q. The Law of Demand, assuming other things to remain constant, establishes the relationship between: A. Income of the consumer and the quantity of a commodity demanded by him B. Price of a commodity and the quantity demanded C. Price of a commodity and the demand for its substitute D. Quantity demanded of a commodity
Q. Which of the following pairs of commodities is an example of substitutes? Tea and sugar Tea and coffee Pen and ink Shirt and trousers Answer: Tea and coffee
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