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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Q. All but one of the following are assumed to remain the same while drawing an individual’s demand curve for a commodity. Which one is it? A. The preferences of the individual B. His monetary income C. The price of the commodity under consideration D. The prices of other goods Answer: The price of
Q. An economic theory is: A. An axiom B. A proposition C. A hypothesis D. A tested hypothesis Answer: A tested hypothesis
Q. Contraction of demand is the result of: A. Decrease in the number of consumers B. Increase in the price of the commodity concerned C. Increase in the prices of other goods D. Decrease in the income of purchasers Answer: Increase in the price of the commodity concerned
Q. Identify the aspect of taxation which is related to normative economics: A. Incidence of tax B. Effect of tax on the capacity willingness to work C. Equity of tax D. None of the above Answer: Equity of tax
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Q. Formulation of an economic theory involves: A. Statement of various assumptions or postulates B. Logical deductions from the assumptions made C. Testing the hypothesis against empirical evidence D. All of the above Answer: All of the above
