ECONOMICS -DEMAND (CLASS 12)

1. Which of the following statements about free goods are correct?

a) Present in Unlimited quantity
b) Do not command a price
c) Both (a) and (b)
d) Scarce in nature.
Answer
Answer: c) Both (a) and (b)

2. Economic goods are;

a) Unlimited
b) Scarce
c) Free
d) All of the following
Answer
Answer: b) Scarce

3. Prices of goods and services in an economy are determined by_____.

a) Demand
b) Supply
c) Predetermined
d) Both (a) and (b)
Answer
Answer: d) Both (a) and (b)

4. Which one of the following is True about the Meaning of Demand:

(a) Demand is an Effective Desire
(b) Demand in Economics is always at Price
(c) Demand is expressed with reference to a particular time period
(d) All of the Above
Answer
Answer: d) All of the above

5. Taste and preferences of the customer depend on

a) Social customs
b) Habits of the consumer
c) Lifestyle of people
d)All of the above
Answer
Answer: d) All of the above

6. _______ refers to the number of goods that consumers want to buy at a particular point of
time.
a) Planned consumption
b)Unplanned consumption
c) Ex post demand
d) Ex-ante demand
Answer
Answer: d) Ex-ante demand
7._______ refers to the number of goods and services that consumers actually buy.
a) Actual consumption
b) Ex-ante demand
c) Ex post demand
d) None of the above
Answer
Answer: c) Ex post demand

8. _________ refers to the demand for two or more goods that are purchased together.
a) Combined consumption
b) Joint demand
c) Ex post demand
d) Ex-ante demand
Answer
Answer: b) Joint demand

9. The demand for a commodity that arises due to demand of some other commodity is
called
a) Derived demand
b) Joint demand
c) Both (a) and (b)
d) None of the above
Answer
Answer: a) Derived demand

10. Demand for goods that have multiple uses is called

a) Derived demand
b) Joint demand
c) Composite demand
d) All of the above
Answer
Answer: c) Composite demand

11. The functional relationship between the demand of a commodity and the income of the
consumer is known as
a) Price demand
b) Income demand
c) Composite demand
d) None of the above
Answer
Answer: b) Income demand

12. ________ goods can be used in place of each other

a) Income goods
b) Price goods
c) Substitute goods
d) Complementary goods
Answer
Answer: c) Substitute goods

13. Which of the following are Complementary Goods

(a) Pencil and Pen
(b) McDonald’s and Burger King
(c) Tea and Sugar
(d) Tea and Coffee
Answer (c) Tea and Sugar
14. The functional relationship between demand for a commodity and income of consumer is
called
(a) Income demand
(b) Price demand
(c) Money demand
(d) Consumer demand
Answer
Answer: (a) Income demand

15. As the income of a consumer increases, the demand for goods like jowar/maize will
_____
(a) increase
(b) remain constant
(c) decrease
(d) None of the above
Answer
Answer: (c) decrease

16. _________ are those goods which are used jointly or consumed together to satisfy a
given want
(a) Joint goods
(b) Composite Goods
(c) Complementary Goods
(d) Derived Goods
Answer
Answer: (c) Complementary Goods

17. Individual demand is the same as –

(a) Household demand
(b) Market Demand
(c) Industry Demand
(d) Both (c) and (b)
Answer
Answer: (a) Household demand

18. If distribution of income in a country is uneven, then there will be more demand for
_______
(a) normal goods
(b) luxury goods
(c) necessities
(d) None of the Above
Answer
Answer: (b) luxury goods

19. Which of the following are determinants of demand for a commodity.

a) Price of the commodity
b) Income of the consumer
c) Consumer’s taste
d) All of the above
Answer
Answer: d) All of the above
20. The demand for a quantity Y increases with a decrease in the price of a product X. The
product Y is a:
(a) Substitute Good
(b) Complementary Good
(c) Giffen Good
(d) Luxury Product
Answer
Answer: (b) Complementary Good

21. Which one of the following is not a determinant of demand:

(a) Consumers’ Expectations
(b) Climatic Factors
(c) Input Prices
(d) Distribution of Income
Answer
Answer: (c) Input Prices

22. There is a ______ relationship between the price of the commodity and quantity
demanded
a) Inverse.
b) Direct
c) No relationship
d) None of the above
Answer
Answer: a) Inverse.

23. ______ refers to different quantities of a commodity purchased at different prices.

a) Composite demand
b) Joint demand
c) Price demand
d) Income demand
Answer
Answer: a) Composite demand

24. The three types of goods when talking about income and purchasing power of consumer
are
a) Inferior goods.
b) Normal goods
c) Inexpensive necessities of life
d) All of the above
Answer
Answer: d) All of the above

25. The demand for ____ goods increases with an increase in income.
a) Normal goods
b) Inferior goods
c) Inexpensive necessities of life
d) None of the above
Answer
Answer: a) Normal goods
26. Which of the following are examples of inferior goods
a) Black and white tv
b) Coarse cloth
c) Coarse cereals
d) All of the above
Answer
Answer: d) All of the above

27. Which of the following is an example of inexpensive necessities

a) Salt
b) Matchbox
c) Both (a) and (b)
d) None of the above
Answer
Answer: c) Both (a) and (b)

28. The given diagram shows the relation between the quantity demanded of X and the price
of Z, what type of goods are X and Z

(a) Unrelated Goods

(b) Substitute Goods
(c) Complementary Goods
(d) None of the Above
Answer
Answer: (c) Complementary Goods

29. People often tend to buy expensive clothes such as Gucci and Prada despite their
extremely high price, just to emulate the consumption style of other people, this is called
(a) Income Effect
(b) Price Effect
(c) Demonstration Effect
(d) Substitution Effect
Answer
Answer: c) Demonstration Effect

30. Relationship between the demand for a product and its various determinants is called
a) Demand
b) Demand function
c) Price demand
d) Income function
Answer
Answer: (b) Demand function
 31. A graphic presentation of levels of demand is called
a) Demand curve
b) Demand schedule
c) Demand function
d) All of the above
Answer
Answer: a) Demand curve

32. ________ is the effect that a change in relative prices of substitute goods has on the
quantity demanded
a) Demand effect
b) Price effect
c) Substitution effect
d) None of the above
Answer
Answer: c) Substitution effect

33. Which of the following decides the Law of demand

a) Law of diminishing Marginal utility
b) Income effect
c) Substitution effect
d) All of the above
Answer
Answer: d) All of the above

34. The Law of Demand states that other things remaining equal, the quantity demanded of a
commodity ______ when its price falls and decreases when it’s price ______
(a) Increases, rises
(b) decreases, rise
(c) Increases, falls
(d) Decreases, falls
Answer
Answer: (a) Increases, rises

35. Which one of these is a reason for the downward slope of the demand curve
(a) Law of Diminishing Marginal Utility
(b) Emergency Situations
(c) Expectation that prices will rise in the future
(d) Quality-Price Relationship
Answer
Answer: (a) Law of Diminishing Marginal Utility

36. The sum total of Income Effect and Substitution Effect is called
(a) Money Effect
(b) Cost Effect
(c) Price Effect
(d) Demand Effect
Answer
Answer: (c) Price Effect
 37. If the price of a commodity is rising now at a high pace and is expected to rise even more
than what it is worth today in the future, then despite the high price, the demand for the
commodity will
(a) increase
(b) decrease
(c) Be unchanged
(d) None of the above
Answer
Answer: a) increase

38. Movement along the demand curve leads to

(a) Increase in demand
(b) Decrease in demand
(c) Contraction of Demand
(d) None of the above
Answer
Answer: (c) Contraction of Demand

39. Name this movement along the demand curve

(a) Increase in Demand

(b) Expansion of Demand
(c) Leftward Shift of demand
(d) None of the Above
Answer
Answer: (a) Increase in Demand

40. A _______ in demand means that the entire demand curve shifts to the _____, indicating
a smaller amount purchased at every price
(a) Increase, left
(b) decrease, right
(c) increase, right
(d) decrease, left
Answer
Answer: (d) decrease, left

41. The relationship between the demand for a product and its various determinants is called
a) Demand
b) Demand function
c) Price demand
d) Income function
Answer
Answer: b) Demand function
42. ________ is the effect that a change in relative prices of substitute goods has on the
quantity demanded
a) Demand effect
b) Price effect
c) Substitution effect
d) None of the above
Answer
Answer: b) Price effect
43. Which of the following decides the Law of demand
a) Law of diminishing Marginal utility
b) Income effect
c) Substitution effect
d) All of the above
Answer
Answer: d) All of the above

44. A change in demand on account of a change in the real income resulting from a change
in price of a commodity is called ____
(a) Income effect
(b) Price effect
(c) Substitution Effect
(d) Change effect
Answer
Answer: (a) Income effect

45. Substitution effect is the effect that a change in ____ of substitute goods has on quantity
demanded
(a) total prices
(b) external cost
(c) relative prices
(d) utility
Answer
Answer: (c) relative prices

46. ______ Is the horizontal summation of the demand curves of all households
(a) Individual Demand Schedule
(b) Market Demand Curve
(c) Market Schedule
(d) Market Demand Map
Answer
Answer: (b) Market Demand Curve
49. When a commodity goes out of fashion, consumers will not purchase a larger amount of
the commodity even if the price is ______
(a) increased
(b) reduced
(c) doubled
(d) unchanged
Answer
Answer: (b) reduced
52. A reduction in the size of the population will lead to _______ in demand
(a) increase
(b) decrease
(c) no change
(d) cannot be determined
Answer: (b)decrease