1. Normally the demand curve will have a _______________ shape.

a. Upward sloping
b. Downward sloping
c. Vertical
d. Horizontal

Answer: b
2. Which of the following is an assumption made while drawing the demand curve?
a. The demand curve must be linear
b. The price of substitutes should not change
c. The quantity demanded should not change
d. The price of the commodity should not change

Answer: b
3. The elasticity for the demand of durable goods is __________.
a. Zero
b. Equal to unity
c. Greater than unity
d. Less than unity

Answer: c
4. Law of demand shows a relation between the ___________.
a. Quantity demand and quantity supply of a commodity
b. Income and quantity demand of a commodity
c. Price and quantity of a commodity
d. Income and price of a commodity

Answer: c
5. If the quantity demanded of a commodity is unresponsive to change in prices, then the
demand of that commodity is ________.
a. Perfectly inelastic
b. Elastic
c. Unit elastic
d. Inelastic

Answer: a
6. When the price of a product falls by 10% and its demand rises by 30%, then the elasticity of
demand is _________.
a. 13
b. 3
c. 10
d. 30

Answer: b
7. When the elasticity of demand for a commodity is very low, it shows that the product
________.
a. Has little importance in the total budget
 b. Is a luxury
c. Is a necessity
d. None of the above

Answer: c
8. Which of the following is not a cause of the shift in demand for a product?
a. Change in the price of substitutes
b. Change in the income of a consumer
c. Change in the price of a product
d. None of the above

Answer: c
9. When the demand for a product is perfectly inelastic, a price increase will result in
__________.
a. A decrease in quantity demanded of the product
b. No change in the total income from a product
c. An increase in the total income from a product
d. A reduction in the total income from a product

Answer: c
10. In case the price of a product and the total revenue from that product move in the same
direction, then the demand is ____________.
a. Perfectly elastic
b. Inelastic
c. Elastic
d. Unrelated

Answer: b
11. Would an increase in demand for a product cause the supply curve to shift in any direction?
a. No effect on supply
b. Change in the slope of a supply curve
c. The supply curve will move to the right
d. The supply curve will move to the left

Answer: a
12. If the elasticity of supply is greater than one, the supply curve would be _______.
a. Touching y-axis
b. Passing through the origin
c. Vertical
d. Horizontal

Answer: a
13. In a particular year, the farmers experienced dry weather. If all other factors remain the
same, the supply curve of wheat for farmers will shift to the ________ direction.
a. Downward
b. Rightward
c. Leftward
 d. None of the above

Answer: c
14. In May 2019, a firm was providing 5000 kg of sugar at a market price of Rs. 30 per kg. But
in June 2019, the supply of sugar decreased to 4500 kg at a market price of Rs. 20 per kg.
This change shows that the supply of sugar is _____.
a. More elastic
b. Less elastic
c. Perfectly inelastic
d. Perfectly elastic

Answer: b
15. If the market supply curve for a product shifts rightwards, what is the best possible
explanation for this shift?
a. Increase in the price of raw materials
b. Introduction of a tax on that product by the government
c. Introduction of a new technique that makes the production of that commodity cheaper
d. An advertising campaign that is successful in promoting the product

Answer: c
16. Which of the following scenarios will not shift the demand curve for a particular product?
a. A change in the income of the consumers of that product
b. Effective advertising campaign by producers of a substitute good
c. A reduction in the price of the raw material for that product
d. A widely publicised study that says the product is harmful to the health of consumers

Answer: c
17. A firm’s supply curve is on an upward slope because ______.
a. The production costs of additional units of output will rise beyond a point
b. Consumers see a positive relationship between price and quality
c. Expansion of production leads to the use of inferior inputs
d. None of the above

Answer: a
18. Which of the following scenarios will not lead to a change in demand for a product?
a. A change in the tastes of its consumers
b. A change in the price of that product
c. An increase in the income of its consumers
d. None of the above

Answer: d
19. ______ leads to an increase in the supply of a commodity without a change in its price.
a. Rise in supply
b. Contraction in supply
c. Expansion in supply
d. Fall in supply
 Answer: a
20. If price changes by 1% and supply changes by 2%, then the supply is ______.
a. Static
b. Indeterminate
c. Inelastic
d. Elastic

Answer: d
21. If the income of a consumer increases or the price of a complementary good falls, then the
__________.
a. The demand curve for the product shifts rightward
b. The demand curve for the product shifts leftward
c. The supply curve for the product shifts rightward
d. The supply curve for the product shifts leftward

Answer: a
22. Because of increasing marginal costs, most supply curves ________.
a. Have a positive slope
b. Have a negative slope
c. Are horizontal
d. Are vertical

Answer: a
23. Which of the following metrics is not a constant factor while moving upwards along the
supply curve?
a. The price of the commodity
b. The number of sellers
c. Expected future prices
d. Cost of the resources used for producing that commodity

Answer: a
24. An increase in the number of restaurants serving fast-food leads to _______.
a. Growth in the demand of fast-food meals
b. Increase in the supply of fast-food meals
c. Increase in the price of fast-food meals
d. Growth in the demand for substitutes of fast-food meals

Answer: b
25. When the quantity demanded of a goods is equal to the quantity supplied of that goods, then
___________.
a. There is a surplus
b. The government is intervening in the market
c. There is a shortage
d. None of the above

Answer: d