Islamabad Campus

Department of Social sciences

Quiz 1

Microeconomics Date: 31.03.2021

Nayab Fatima-061

1 2 3 4 5 6 7 8 9 10

b b c b c a a b c true

1. Income elasticity of demand for normal goods id always

a). Inverse
b). Positive
c). zero
d). Infinite

2. If demand is unitary elastic, a 25% increase in price will always

result in

a). a 25%decrease in quantity demanded

b) a 1% decrease in quantity demanded
c). no change in quantity demanded
d). a 25% change in total revenue

3. For necessities, elasticity of demand is

a). less than one

b). unitary elastic
c). greater than one
d). zero
4. If demand for tobacco is inelastic, increase in tax on tobacco will

a). Increase revenue

b). will not affect revenue
c). decrease revenue
d). None of the above

5. Which of the following will not decrease the demand for a

commodity?
a. The price of a substitute decreases
b. Income falls and the good is normal
c. The price of a complement increases
d. The commodity's price increases

6. If a good is inferior, then

a. the income elasticity of demand will be negative.
b. the income elasticity of demand will be zero.
c. the income elasticity of demand will be positive.
d. a decrease in income will cause demand to decrease.

7. The quantity demanded of Pepsi has decreased. The best explanation

for this is that:

a. The price of Pepsi increased.

b. Pepsi consumers had an increase in income.
c. Pepsi's advertising is not as effective as in the past.
d. The price of Coca Cola has increased.

8. When the decrease in the price of one good causes the demand for
another good to decrease, the goods are:

a. Normal
b. Inferior
c. Substitutes
d. Complements
9. If the demand for coffee decreases an income decreases, coffee is
a) An inferior good
b) A complementary good
c) A substitute good
d) A normal good

10. If the goods are complements, then an increase in one good price
tends to decrease the demand of the other good.
(T/F)