Table of Contents
Indian Economy Mcq Questions
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Q1. If the price elasticity of demand for a good is .75, the demand for the good can be described as:
a) normal.
b) elastic.
c) inferior.
d) inelastic.
Q2. When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is:
a) elastic.
b) inelastic.
c) cross-elastic.
d) unitary elastic.
Q3. If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will:
a) increase quantity demanded by 5 percent.
b) increase quantity demanded by 0.5 percent.
c) decrease quantity demanded by 5 percent.
d) decrease quantity demanded by 0.5 percent.
Q4. If an increase in the supply of a product results in a decrease in the price, but no change in the actual quantity of the product exchanged, then:
a) the price elasticity of supply is zero.
b) the price elasticity of supply is infinite.
c) the price elasticity of demand is unitary.
d) the price elasticity of demand is zero.
Q5. If 100 units of product K are sold at a unit price of $10 and 75 units of product K are sold at a unit price of $15, one can conclude that in this price range:
a) demand for product K is elastic.
b) demand for product K is inelastic.
c) demand for product K has shifted to the right.
d) consumers are sensitive to price changes of product K.
Q6. Total revenue falls as the price of a good increases if price ela sticity of demand is:
a) elastic.
b) inelastic.
c) unitary elastic.
d) perfectly elastic.
Q7. The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that:
a) Cheerios are a luxury.
b) cereals are a necessity.
c) there are more substitutes for Cheerios than for cereals as a whole.
d) consumption of cereals as a whole is greater than consumption of Cheerios.
Q8. What is the most likely effect of the development of television, videocassette players,and rental movies on the movie theater industry?
a) decreased costs of producing movies
b) increased demand for movie theater tickets
c) movie theater tickets become an inferior good
d) increased price elasticity of demand for movie theater tickets Page 3
Q9. The price elasticity of demand will increase with the length of the period to which the demand curve pertains because:
a) consumers’ incomes will increase.
b) the demand curve will shift outward.
c) all prices will increase over time.
d) consumers will be better able to find substitutes.
Q10. A state government wants to increase the taxes on cigarettes to increase tax revenue.This tax would only be effective in raising new tax revenues if the price elasticity of demand is:
a) unity.
b) elastic.
c) inelastic.
d) perfectly elastic.
ANSWERS:
- d
- a
- a
- d
- b
- a
- c
- d
- d
- c
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