Demand and Supply MCQs | Demand and Supply Objective Type Questions & Answers

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Questions
21 An individual demand curve slopes downward to the right because of the:
A Working of the law of diminishing marginal utility
B substitution effect of decrease in price
C income effect of fall in Price
D All of the above

Answer: All of the above
22 The cost of one thing in terms of the alternative given up is called:
A Real cost
B Production cost
C Physical cost
D opportunity cost

Answer: opportunity cost
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23 The following is the direct tax among:
A House tax
B Entertainment tax
C Service tax
D Value Added tax

Answer: House tax
24 Which among the following is NOT correct?
A During inflation lenders suffer and borrowers benefit out’
B Rising inflation indicates rising aggregate demand and indicates comparatively lower supply and higher purchasing capacity among the consumers’
C With rising inflation the currency of the economy depreciates provided it follows the flexible currency regime.
D Inflation decreases the nominal (face) value of the wages while the real value increases.

Answer: Inflation decreases the nominal (face) value of the wages while the real value increases.
25 Which among below is NOT a correct statement?
A Bretton Woods conference gave birth to two international organizations-
B Theory of Absolute Advantage in international trade is given by Adam Smith’
C Pure and perfect competition is the same market structures.
D Mint par theory of exchange rate determination is applicable in countries under gold standard.

Answer: Pure and perfect competition is the same market structures.
26 A change in fiscal policy affects the balance of payments through:
A The current account only
B The capital account only
C Both, the current account and capital account
D Neither current account nor capital account

Answer: Both, the current account and capital account
27 The Heckscher-Ohlin approach to international trade provides important insights, in
A Gains from trade
B Effect of trade on production and consumption
C Effect of trade on the incomes of production factors
D All of the above

Answer: All of the above
28 The elasticity of demand of durable goods is:
A More elastic
B Less elastic
C Zero elastic
D Infinite elastic

Answer: More elastic
29 If demand is inelastic, a change in the price:
A Will change the quantity in same direction
B Will change total revenue in same direction
C Will change total revenue in the opposite direction
D Will not change quantity

Answer: Will change total revenue in same direction
30 Zubair has a special taste for college canteen is hotdogs. The owner of the canteen doubles the prices of hotdogs. Zubair did not respond to the increase in prices and kept on demanding the same quantity of hotdogs. His demand for hotdogs is:
A Perfectly elastic
B Perfectly inelastic
C Elastic
D Less elastic

Answer: Perfectly inelastic
31 Income elasticity of demand is defined as the responsiveness of:
A Quantity demanded to a change in income
B Quantity demanded to a change in price
C Price to a change in income
D Income to a change in quantity demanded

Answer: Quantity demanded to a change in income
32 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 Price will decrease
B Price will increase
C Quantity will increase
D Quantity will decrease

Answer: Quantity will decrease
33 Which among the following is a cause of inflation?
A Deficit financing
B Rise in external loans
C Unfavourable balance of payment
D A hike in the CRR by the central bank of the country

Answer: Deficit financing
34 The capital that is consumed by an economy or a firm in the production process is known as:
A Capital loss
B Production cost
C Dead-weight loss
D Depreciation

Answer: Depreciation
35 Who among the following enunciated the concept of single factoral terms of trade?
A Jacob Viner
B G.S.Donens
C Taussig
D J.S.Mill

Answer: Jacob Viner
36 The following are causes of shift in demand EXCEPT the one:
A Change in income
B Change in price
C Change in fashion
D Change in prices of substitutes

Answer: Change in price
37 If quantity demanded is completely unresponsive to changes in price, demand is:
A Inelastic
B Unit elastic
C Elastic
D Perfectly inelastic

Answer: Perfectly inelastic
38 Law of demand shows relation between:
A Income and price of commodity
B Price and quantity of a commodity
C Income and quantity demand
D Quantity demanded and quantity supplied

Answer: Price and quantity of a commodity
39 Price of a product falls by 10% and its demand rises by 30%. The elasticity of demand is:
A 10%
B 30%
C 3
D 1?3

Answer: 3
40 Irrespective of price, Sofia always spends Rs. 100 a week on ice cream, we conclude that:
A Elasticity of demand is 0
B Elasticity of demand is 1
C Elasticity of demand is infinite
D The law of demand has been violated

Answer: Elasticity of demand is 1
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