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.

View Answer

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.

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

View Answer

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

View Answer

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

View Answer

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

View Answer

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

View Answer

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

View Answer

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

View Answer

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

View Answer