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MCQs Chapter No.

15

1. Adding up individual choices yield:


a) Individual’s Demand b) Market Demand c) Individual’s Supply d) Market Supply
1 (𝑝
2. Aggregate demand for good-1 i.e. 𝑋 1 , 𝑝2 , 𝑚1 … … 𝑚𝑛 ) is given by:
a) ∑ 𝑥𝑖2 (𝑝1 , 𝑝2 , 𝑚𝑖 ) b) ∑ 𝑥𝑖1 (𝑝1 , 𝑝2 ) c) ∑ 𝑥𝑖1 (𝑝1 , 𝑝2 , 𝑚𝑖 ) d) ∑ 𝑥𝑖1 (𝑚𝑖 )
3. Aggregate demand depends upon prices and………………………:
a) Distribution of income b) Individual’s income c) Firm’s income
4. For aggregate demand the concept other than ‘distribution of income’ is also used as income of
representative consumer. Income of representative consumer is achieved by……….. incomes of
all consumers in the market:
a) Subtracting b) multiplying c) adding d) dividing
5. When income and prices of related goods are constant and price is increased then quantity
demanded will be:
a) Increased b) decreased c) remain constant d) none of these
6. When incomes are constant and price of substitute (good-2) is increased then quantity
demanded for interested good (good-1) will be:
a) Increased b) decreased c) remain constant d) all of these
7. When incomes are constant and price of complement (good-2) is increased then quantity
demanded for interested good (good-1) will be:
a) Increased
8. When price is changed quantity demanded is changed. This change in demand curve is shown
by:
a) Movement along the curve b) Shift of the curve c) change in functional form of curve
9. When factors other than price are changed then quantity demanded is changed. This change in
demand is shown by:
a) Movement along the curve b) Shift of the curve c) change in functional form of the curv
10. When income is increased then quantity demanded of a good is increased. Such good is:
a) Normal good b) inferior good c) Giffen good d) luxury good
11. When income is increased then quantity demanded of a good is decreased. Such good is:
a) Normal good b) inferior good c) Giffen good d) luxury good
12. In mathematics sometimes the function is represented in reverse where independent variable is
shown to be depended upon dependent variable. Such a concept of mathematics is known as:
a) Direct function b) inverse function c) difference function d) equal function
13. The inverse function is just a matter of representation and original relationship between
dependent and independent variable is………………:
a) Not changed b) changed c) reversed d) inversed
14. Following is the inverse demand function:
a) Qd = f(P) b) Qd = f(P, M) c) P = f(Qd) d) Qd = f(P, M, Pr)
15. “A variable that can only take certain number of values and don’t have infinite number of values
or the values of such variables are achieved by jumps e.g. counting pen”. This is definition of:
a) Continuous variable b) constant c) parameter d) discrete variable
16. A good that is measurable only by discrete variable is known as:
a) Discrete good b) substitute good c) complement good d) normal good
17. In case of discrete goods when there is small changes in price then there is possibility that you
are either able to purchase the good or not able to purchase the good. Such adjustment of
consumer in economics is known as:
a) Extensive margin b) intensive margin c) upper margin d) lower margin
18. Responsiveness of quantity demanded due to a change in price is called:
a) Own price elasticity of demand b) income elasticity of demand c) Cross price elasticity of demand
19. Responsiveness of quantity demanded due to a change in income is called:
a) Own price elasticity of demand b) income elasticity of demand c) Cross price elasticity of demand
20. Responsiveness of quantity demanded due to a change in price of related good is called:
a) Own price elasticity of demand b) income elasticity of demand c) Cross price elasticity of demand
21. Elasticity is a good measure of “RENSPONSIVENESS” than slope because for estimating slope
units for measuring price and quantity are………………………………:
a) Different b) same c) parallel d) none of these
22. Elasticity can be expressed as the ratio of price to quantity (p/q) multiplied by the:
a) Derivative b) intercept c) slope d) Level curve
23. Sign of the elasticity …………….. but economist assumed it to be in …………….. term :
a) Negative—Absolute b) Negative-----positive c) Negative----Negative
24. If demand curve is given by 𝑞 = 𝑎 − 𝑏𝑝 then elasticity is given by:
𝑝 𝑝 𝑞 ∆𝑝 𝑝 ∆𝑝
a) −𝑏 b) 𝑏 c) d)
𝑞 𝑞 𝑝 ∆𝑞 𝑞 ∆𝑞
25. When 𝑝 = 0, then 𝑒 = …….., and when 𝑞 = 0, then 𝑒 = …….. :
a) 0 -- ∞ b) ∞ -- 0 c) 0 – 0 d) ∞ -- ∞
26. When 𝑒 = 1, 𝑒 > 1, 𝑒 < 1 then quantity demanded is known to be ………. respectively:
a) Elastic, inelastic, unit elastic b) inelastic, elastic, unit elastic d) unit elastic, elastic, inelastic
27. Revenue = …………… :
a) ∆P x ∆Q b) P x Q c) P/Q d) ∆P/∆Q
28. Change in revenue i.e. ‘∆R’ is defined as “change in total revenue due to a change in ……..”:
a) Quantity b) price c) both these d) none of these
29. Marginal revenue: is defined as “change in total revenue due to a change in ……..”:
30. Quantity b) price c) both these d) none of these
31. The demand curve over which every point exhibits elasticity equal to “1” is known as ……….. :
a) Unit demand curve b) constant elasticity demand curve c) Elastic demand curve
32. When 𝑒 = 1, 𝑒 < 1 𝑎𝑛𝑑 𝑒 > 1, then MR ……………………. respectively:
a) < 0, =0, and >0 b) = 0, <0, and >0 c) > 0, <0, and =0 d) none of these
Short Questions Chapter No. 15

 How to construct a market demand curve from individual demand curve?


 Give brief description about inverse demand function?
 Elasticity is an important concept in economics. Describe what you know about it?
 If q = a – bp is the linear demand curve then with the help of diagram only show that
elasticity is different on different points of demand curve.
 What would happen to revenue when price is changed? Answer your question using
mathematical derivation.
 What would happen to revenue when price is changed? Answer your question using
diagram.
 Write a note on constant elasticity demand curve.
 What would happen to marginal revenue when quantity is changed? Answer your
question using mathematical derivation.
 Describe the concept of Marginal Revenue Curves with the help of mathematical
derivation.
 Describe the concept of Marginal Revenue Curves with the help of diagram only.