Demand And Supply Flashcards
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DEMAND AND SUPPLY
Demand
1. What is meant by demand for a commodity in economics?
(A) To desire for a commodity
(B) To have power to buy
(C) To have power to buy a commodity with desire
(D) Quantity of a commodity
2. Relationship between price and quantity demanded is called:
(A) Demand schedule
(B) Demand curve
(C) Law of demand
(D) Assumptions of law of demand
3. According to the law of demand, when the price of a commodity decreases, then demand:
(A) Moves from left to right upward
(B) Moves from left to right downward
(C) Moves horizontally
(D) Moves vertically
4. According to the law of demand, demand curve moves from:
(A) Left to right upward
(B) Left to right downward
(C) Horizontally
(D) Vertically
5. This type of tendency is called:
(A) Positive tendency (Slope)
(B) Negative tendency (Slope)
(C) Extension and contraction of demand
(D) Rise and fall of demand
6. The goods on which law of demand does not apply are called:
(A) Services
(B) Goods and services
(C) Giffen goods
(D) Capital goods
7. Slope of the demand curve of Giffen (inferior) goods is:
(A) Negative
(B) Positive
(C) Zero
(D) Horizontal
8. Demand for Giffen goods due to a fall in price:
(A) Decreases
(B) Increases
(C) Does not change
(D) Decreases or increases
9. Decrease in demand for a commodity due to an increase in its price is called:
(A) Decrease in demand
(B) Contraction of demand
(C) Fall of demand
(D) Rise of demand
10. Increase in demand for a commodity due to a decrease in its price is called:
(A) Extension of demand
(B) Contraction of demand
(C) Rise of demand
(D) Fall of demand
11. When demand increases due to other factors instead of price, it is called:
(A) Extension of demand
(B) Contraction of demand
(C) Rise of demand
(D) Fall of demand
12. When demand decreases due to other factors instead of price, it is called:
(A) Rise of demand
(B) Contraction of demand
(C) Fall of demand
(D) Extension of demand
13. When demand changes due to other factors instead of price, it is called:
(A) Extension of demand
(B) Contraction of demand
(C) Extension & contraction of demand
(D) Rise and fall of demand
14. In the functional equation of demand “Q = a - bp”, P and Q are:
(A) Constants
(B) Variables
(C) Continuous variables
(D) Discontinuous variables
15. In the functional equation of demand “Q = a - bp”, a and b are:
(A) Constants
(B) Variables
(C) Continuous variables
(D) Discontinuous variables
16. Elasticity of demand is the measure of:
(A) Change in price
(B) Change in income
(C) Change in demand
(D) Change in income and price
17. The concept of elasticity of demand was introduced by:
(A) Alfred Marshall
(B) Adam Smith
(C) Professor Bonham
(D) Professor Robbins
18. If the ratio of change in demand is greater than the ratio of change in price, elasticity of demand will be:
(A) More than unity
(B) Less than unity
(C) Equal to unity
(D) Zero
19. If the ratio of change in demand is equal to the ratio of change in price, elasticity of demand will be:
(A) More than unity
(B) Less than unity
(C) Equal to unity
(D) Infinite
20. If the ratio of change in demand is less than the ratio of change in price, elasticity of demand will be:
(A) More than unity
(B) Less than unity
(C) Equal to unity
(D) Zero
Here’s the properly formatted and proofread version of the next set of multiple-choice questions:
Elasticity of Demand
21. If due to a very significant decrease in price, demand keeps increasing, the elasticity of demand will be:
(A) More than unity
(B) Less than unity
(C) Infinite
(D) Zero
22. The concept of measuring elasticity of demand was introduced by:
(A) Adam Smith
(B) Robbins
(C) Marshall
(D) Keynes
23. If demand for a commodity changes due to a change in the price of its substitute, it is called:
(A) Price elasticity
(B) Point elasticity
(C) Cross elasticity
(D) Arc elasticity
24. If demand for commodity X changes due to a change in the price of commodity Y, it is called:
(A) Income elasticity
(B) Price elasticity
(C) Cross elasticity
(D) Arc elasticity
25. If demand for a commodity changes due to a change in income, it is called:
(A) Point elasticity
(B) Arc elasticity
(C) Income elasticity
(D) Price elasticity
26. If the demand for a commodity is more elastic, then an entrepreneur, in order to increase profit, should:
(A) Increase its price
(B) Decrease its price
(C) Not change its price
(D) Sometimes increase and sometimes decrease its price
27. If the demand for a commodity is less elastic, then an entrepreneur, in order to increase profit, should:
(A) Increase its price
(B) Decrease its price
(C) Not change its price
(D) Sometimes increase and sometimes decrease its price
28. The finance minister, in order to increase public revenue, imposes tax on commodities whose demand is less elastic:
(A) At a low rate
(B) At a high rate
(C) Sometimes decreases the tax rate and sometimes increases it
(D) Does not change the tax rate
29. The finance minister, in order to increase public revenue, imposes tax on commodities whose demand is more elastic:
(A) At a low rate
(B) At a high rate
(C) Sometimes decreases the tax rate and sometimes increases it
(D) Does not change the tax rate
30. When the price of a commodity decreases but its demand does not change, this situation is called:
(A) Constant demand
(B) Fall of demand
(C) Rise of demand
(D) Extension of demand
31. When the price of a commodity increases but its demand does not change, this situation is called:
(A) Constant demand
(B) Fall of demand
(C) Rise of demand
(D) Contraction of demand
32. If total expenditure of the consumer decreases due to an increase in price, then the nature of elasticity of demand will be:
(A) Equal to unity
(B) Less than unity
(C) More than unity
(D) Elasticity of demand = Zero
33. If total expenditure of the consumer increases due to a decrease in price, then the nature of elasticity of demand will be:
(A) Equal to unity
(B) Less than unity
(C) More than unity
(D) Elasticity of demand = Zero
34. If total expenditure of the consumer increases due to an increase in price, then the nature of elasticity of demand will be:
(A) Equal to unity
(B) Less than unity
(C) More than unity
(D) Elasticity of demand = Zero
35. If total expenditure of the consumer decreases due to a decrease in price, then the nature of elasticity of demand will be:
(A) Equal to unity
(B) Less than unity
(C) More than unity
(D) Elasticity of demand = Zero
36. If total expenditure of the consumer does not change due to an increase or decrease in price, then the nature of elasticity of demand will be:
(A) Equal to unity
(B) Less than unity
(C) More than unity
(D) Elasticity of demand = Zero
37. Income elasticity of demand is concerned with:
(A) Income and consumption of wealth
(B) Price and income of the consumer
(C) Income and demand for goods
(D) Price and demand for goods
38. Demand for luxuries is:
(A) Less elastic
(B) More elastic
(C) Perfectly elastic
(D) Perfectly inelastic
39. Demand for necessities of life is:
(A) Less elastic
(B) More elastic
(C) Perfectly elastic
(D) Perfectly inelastic
40. When the demand curve shifts rightward (or upward), it is called:
(A) Rise of demand
(B) Fall of demand
(C) Extension of demand
(D) Contraction of demand
41. When the demand curve shifts leftward (or downward), it is called:
(A) Rise of demand
(B) Fall of demand
(C) Extension of demand
(D) Contraction of demand
42. The quantity of a commodity that consumers are ready to purchase at a particular price is called:
(A) Demand
(B) Supply
(C) Stock
(D) Demand and supply
43. The quantity of a commodity that a person is ready to purchase at a particular price is called:
(A) Individual demand
(B) Market demand
(C) Supply
(D) Market supply
44. The cause of shifting of the demand curve is:
(A) Change in price
(B) Desire
(C) Other factors
(D) Exceptions
45. The degree of change in quantity demanded due to a change in price is called:
(A) Income elasticity
(B) Price elasticity
(C) Cross elasticity
(D) Arc elasticity
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What is meant by demand?
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Meaning of Demand: Demand means the quantity of a commodity which a consumer is ready to purchase at different prices.
What is meant by extension and contraction of demand?
Differentiate between rise and fall of demand?
OR
Difference between rise and fall of demand:
According to law of demand, when price of a commodity decreases, its demand increases.
It is called extension of demand. On the other hand when price of a commodity increases; jts demand decreases. It is called contraction of demand.
If the price of a commodity remains constant, but demand for it increases due to some other cause, it is called rise of demand.
If the price of a commodity remains constant, but demand for it decreases due to some other cause, it is called fall of demand.
Define elasticity of demand.
Write the names of the methods of measurement of elasticity of demand.,
Definition of elasticity of demand: Elasticity of demand is the rate of change in quantity demanded of a commodity to a change in its price.
There are three methods of measurement of elasticity of demand. (i)
Percentáge method:
Total outlay method.
By Mathematical formula.
Define income elasticity of demand. Write formula to measure income elasticity of demand.
Define cross elasticity of demand. Write formula to measure cross elasticity of demand.
Define point elasticity of demand. Write formula of point elasticity of demand.
Define arc elasticity of demand. Write formula of are elasticity of demand.
Definition of income elasticity of demand: Ratio of percentage change in demand for a commodity in response to a percentage change in income, is called income elasticity of demand.
Definition of elasticity of demand: If as a result of change in price of one commodity, demand for some other commodity changes while price of the other commodity remains constant. For example, demand for commodity X changes due to the change in price of commodity Y. Then it is called cross elasticity of demand.
Definition of Point elasticity of demand: If there is very small change in demand as a result of a very small change in price, this type of change in demand is called point elasticity of demand. In this case, both the points on the demand curve are so closed to each other that they look like one point.
Meaning of clasticity of demand: If there is a big change in demand as a result a big change in price, then this type of change in demand is called arc clasticity of demand. In.
- this case two distinct points appear on the demand curve.
Defiue law of demand.
Q.15:
Defirition of law of demand: If other things remain constant, when the price of a wit modity decreases, its demand increases and when its price increases, its demand
What is the tendency or slope of demand curve?
Why has demand curve negative slope?
Ans:
0.17:
The demand curve has always tendency to move from the left to the right. It means that demand curve ahs always negative slope.
There are three reasons of negative slope of demand curve:-Increase in the number of consumers due to the fall in price.
（H）
Income effect: Due to the fall in price of a commodity real income of the consumers increases and they purchase more of the commodity.
(11)
Substitution effect: When the price of a particular commodity falls, it becomes relatively cheaper than its substitutes. So, people increase its demand.
What is meant by Joint demand.
Q.18: Whit is meant by composite demand?
Meaning of Joint Demand: In order to satisfy seme wants more than one commodities are needed. For example bat and ball, racket and shuttle cock, car and petrol etc. These are jointly demanded. Demand for such commodities is called joint demand. Jointly demanded goods are also called complements.
na- and ca. suasir.ocit.es fo all ef thei. purposas is called co.spesite de.ni
IT QUESTIONS
295
example electricity is used for light, to run different types of machines and for so many other purposes. Demand for electricity for all these purposes will be composite demand
Differentiate between more elastic and less elastic (inelastic) demand.
More elastic demand: When a small change in price causes a big change in demand, it is called more elastic demand. The demand for comforts and luxury goods is more elastic.
Less elastic demand or inelastic demand:
If a big change in price causes a very
small change in demand, it is called less elastic demand. The demand for necessities of life is less elastic.
Deline elasticity of demand equal to unity.
Define elasticity of demand more than unity.
Define elasticity of demand less than unity.
33:
Elasticity of demand equal to unity: If the ratio of change in demand is equal to the ratio, of change in price, elasticity of demand is said to be equal to unity.
Elasticity of demand more than unity: If the ratio of change in demand is greater than the ratio of change in price, elasticity of demand is said to be more than unity.
Elasticity of demand less than unity: If the ratio of change in demand is less than the ration of change in price, elasticity of demand is said to be less than unity.
What is meant by infinite elasticity of demand or perfectly elastic demand?
124: What is meant by zero elasticity of demand or perfectly inelastic demand?
25:
Infinite elasticity of demand: When the demand for a commodity becomes zero due to a very slight rise in price and a very slight decrease in price causes an infinite increase in demand, it is called infinite elasticity of demand or perfectly elastic demand. The curve of this type of elasticity of demand is always parallel to ox (horizontal) axis.
Perfectly inelastic demand: If the demand for a commodity is not influenced by the change in price or the demand does not change irrespective of the fall or rise in price, it is called perfectly inelastic demand or elasticity of demand is zero. The curve of zero elasticity of demand is parallel to oy (vertical) axis.
What is meant by individual demand?
What is meant by market demand?
Individual Demand: Individual demand means the quantity of commodity which a consumer is ready to purchase at different prices.
Market Demand: The total quantity of a commodity demanded by all the consumers in - the market at various prices is called market demand.
Write four assumptions of law of demand.
23: What is meant by exceptions of law of demand. as:
Q.30: Write five causes of change in demand.
0.31: Write five determinants of elasticity of demand.
Q.32: Write four points of importance of elasticity of demand.
Q33:
Ans:
What are substitute goods?
What is meant by complements or joint demanded goods?
035: What is meant by Giffin goods?
SUPPLY
Substitute goods: The goods which can be used in place of each other, are called substitutes or substitute goods. For instance, mutton and chicken, tea and coffee etc are substitutes of each other.
omplements or Joint demanded good: The goods that are demanded jointly to satisfy a want are called joint demanded goods or complements c.g. Bat and ball, car and petrol, pen and ink etc.
State meaning of supply.
Differentiate between supply and stock.
Meaning of supply: Supply means the quantity of a commodity offered for sale in a market at a certain price during a given period of time. For example, if the price of flour is Rs 15/-per Kg in the market and 1000 Kg flour is offered in market for sale, then the supply of flour will be 1000 Kgs.
Dillerence between supply and stock: The total quantity of a commodity available in the market or in the possession of the sellers at some period of time is called stock, whereas supply is the quantity which is offered for sale at a certain price out of the present stock.
For example if the sellers have total 500 tons of sugar at some period of time, it is called stock. If they offer 300 tons of sugar out of 500 tons for sale at price Rs 30/- per Kg in the market, it will be called supply.
