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a) 1.6. 5. 1. B)6.00. ADVERTISEMENTS: (iii) … Suppose a tax is levied in a market in which demand is downward sloping and supply is perfectly elastic. The diagram below illustrates the domestic supply curve (SD) and demand curve for a good. d) Higher tax revenues for Provincial governments. If a tariff of \$10 per unit is introduced in the market, then the deadweight loss will equal: a) \$50. a) \$2; \$5. c) Both a) and b) are true. Which of the following statements correctly describes own-price elasticity of demand, for this particular demand curve? I. d) Both a) and b) are true. Consider the supply and demand diagram below. Multiple Choice Questions Unit-2: Demand Analysis 1. total revenue will stay the same There is no way to determine whether total revenue will rise, fall, or remain the same. If there are no trade restrictions in place, what will be the equilibrium quantity of IMPORTS? I. 39. Suppose that the BC government wishes to reduce the quantity of beer sold in the Province by 20%. Consumers bear all the burden of the tax. b) 0.8. C) elastic. Which of the following statements about the economic incidence of taxation is TRUE? d) None of the above. c) Producers are worse off as a result of the tax. Basic assumptions of law of demand include. Which of the following statements about tax incidence and relative elasticities is TRUE? D. The price elasticity of a vertical demand curve lies somewhere between 0,1 and 1. Price of a product falls by 10% and its demand rises by 30%. The price elasticity of demand for this product is approximately: A. B. QMICR2.DOC Page 1 (of 3) 2a Elasticities 2016-11-24 Questions Microeconomics (with answers) 2a Elasticities 01 Price elasticity of demand 1 If the price rises by 3 %, the quantity demanded falls by 1.5 %. Assume no externalities. III. If a price ceiling (set below the initial equilibrium price) is introduced in a market, then: a) Producer surplus definitely decreases. Use the diagram below to answer the following TWO questions. b) Consumer and producer surplus decrease but social surplus increases. d) 55 units. As wise people believe “Perfect Practice make a Man Perfect”. Rahuldid not respond to the increase in prices and kept on demanding the same quantity of hotdogs. What is the own-price elasticity of demand as price increases from \$2 per unit to \$4 per unit? d) Neither a) nor b is true). If the income elasticity of demand for a good is negative it must be ? d) All of the above. b) Smaller if demand is relatively elastic than if demand is relatively inelastic. CORRECT ANSWERS: MICROECONOMICS 1.C 11.B 21.B 2.A 12.B 22.A 3.B 13.A 23.D 4.B 14.C 24.A 5.A 6.B 15.C 25.C 16.C 26.D d) The supply of that good will be relatively elastic, compared to goods for which there are few close substitutes. b) -2. Two goods are consumption complements. c) 30 units. 1. 7. b) A deadweight loss triangle whose corners are ACD. B The good is inferior. Which of the following statements about the relationship between the price elasticity of demand and revenue is TRUE? The number of workers employed will decrease by 11,000. d) III only. c) Both a) and b). Refer to the supply and demand diagram below. d) None of the above. d) All of the above can decrease equilibrium quantity sold. 8. c) \$8; \$2. Law of demand shows relation between: D Quantity demanded and quantity supplied, Answer: Price and quantity of a commodity. a) k + f. III. Elasticity PAPER – 4 Access the above question papers link which contain MCQs (Multiple choice questions) on Elasticity. Use the demand diagram below to answer this question. a) If demand is price inelastic, then increasing price will decrease revenue. If the elasticity of demand for a commodity is estimated to be 1.5, then a decrease in price from \$2.10 to \$1.90 would be expected to increase daily sales by: ... Use the graph below to answer question number 13 13. D. one. 3. 26. If elasticity of demand is very low it shows that the commodity is: 12. d) P = 0; Q = 20. b) \$9; \$3. 14. Which of the following does NOT affect the magnitude of own-price elasticity of demand? c) The demand for that good will be relatively elastic, compared to goods for which there are few close substitutes. a) A 1% increase in price will result in a 50% increase in quantity supplied. d) k + f + j + g. 2. c) A 1% increase in price will result in a 2% increase in quantity supplied. A. Elastic. b) Minimum wage laws make employers worse off. Note that P × Q equals \$900 at every point on this demand curve. d) I, II and III. c) Neither a) nor b) are true. Assume that consumer’s income and the number of sellers in the market for good X both falls. In the short run, when the output of a firm increases, its average fixed cost: 7. c) Lower incomes for providers of medical services. B Elasticity of demand is 1. b) 45 units. D. Either Rs 30 or Rs 40 per month because the price elasticity of demand is 1.0 Suppose that at a price of Rs 30 per month there are 30000 subscribers to cable television in small Town. D) perfectly elastic I also want to know what is the difference between 1. perfectly inelastic and inelastic 2. perfectly elastic and inelastic Thanks b) I and II only. d) III only. 6. d) Neither a) or b). Assume that the world price is equal to \$2. b) 20 units. 4. Increases the supply of that good. What is the own-price elasticity of demand as price decreases from \$8 per unit to \$6 per unit? Which among the following is a cause of inflation? Latest Economics MCQs. b) \$3; \$6. 3. d) The supply of that good will be relatively elastic, compared to goods for which there are many close substitutes. a) 1/3. If demand is elastic, producers will bear a greater burden of the tax than consumers. d) All of the above could be the value of cross price elasticity of demand. More Price Elasticity Quizzes. Good X has a high positive cross-price elasticity with butter. Answer: By definition, The elasticity of demand is the change in demand due to the change in one or more of the variable factors that it depends on. 7. The following two questions refer to the diagram below, which illustrates the domestic supply curve (SD) and demand curve for a good. 3.00. A Bretton Woods conference gave birth to two international organizations-, B Theory of Absolute Advantage in international trade is given by Adam Smith’. 100 a week on ice cream, we conclude that: 31 When cross elasticity of demand is a large positive number, one can conclude that: 32 Price and demand are positively correlated in case of: D Quantity of the good offered for sale at a particular price per unit of time, Answer: Quantity of the good offered for sale at a particular price per unit of time. c) There is insufficient information to determine which policy will have the large deadweight loss. 6. c) 2/3. a) f + g. If a tariff of \$10 per unit is introduced, by how much to imports decrease? The formula for calculating the co-efficient of elasticity of demand is: Percentage change in quantity demanded divided by the percentage change in price Since changes in price and quantity usually move in opposite directions, usually we do not bother to put in the minus sign. C Elasticity of demand is infinite. medicines. c) One. 14. If quantity demanded is completely unresponsive to changes in price, demand is: 29. C) the price elasticity of demand is 2.25. 4. 3. 2. d) All of the above could be the value of cross price elasticity of demand. Assume that the world price is equal to \$10 per unit, and initially there are no trade restrictions. D) les A is an inferior good. The cost of one thing in terms of the alternative given up is called: 17. 15. 9. The deadweight loss is zero. The following is the direct tax among: 18. Answer choices in this exercise appear in a different order each time the page is loaded. Suppose the supply for product A is perfectly elastic. 7. 4. A Floating exchange rate system works on the market mechanism, B Floating exchange rate breeds uncertainties and speculation, C Economic and political factors and value judgments influence the choice of the exchange rate system, D The system of floating exchange rate requires comprehensive government intervention, Answer: The system of floating exchange rate requires comprehensive government intervention. The elasticity of demand of durable goods is: 4 Which among the following statement is INCORRECT? b) The availability (or lack thereof) of close substitutes for the good in question. Which of the following correctly describes the resulting decrease in MARKET surplus? Free Online MCQ Questions of Class -11 Microeconomics Chapter 6 – Price Elasticity of Demand with Answers. Suppose you are told that the own-price elasticity of supply equal 0.5. Required fields are marked *. A Elasticity of demand is 0. 2. c. Increases the quantity supplied of that good. Which of the following correctly describes the equilibrium effects of a per-unit tax, in a market with NO externalities? d) None of the above. Demand Quiz Demand Quiz . d) All of the above. a) A price ceiling. b) \$100. a) 10 units. b) \$6; \$11. C The good is a substitute. 10. b) k – g. The owner of the canteen doubles the prices of hotdogs. The commodity should not confer any distinction. Rahul has a special taste for college canteen is hotdogs. c) k + j. c) I, II, and III. b) e + d. If the quality demand of beef increases by 10% when the price of chicken goes up by 8%, the cross-price elasticity of demand between beef and chicken is A) perfectly inelastic. a) -1. d) None of the above statements is true. 1. 11. d) None of the above. d) Elasticity is constant along a linear demand curve and so too is revenue. (Assume a downward-sloping demand curve for socks.). By practicing these MCQs of Elasticity Mcqs ( Economics ) MCQs – Latest Competitive Medical MCQs , an individual for exams performs better than before.This post comprising of mechanical engineering objective questions and answers related to “Elasticity Mcqs ( Economics ) Mcqs “. INFO. Suppose that a 2% increase in price results in a 6% decrease in quantity demanded. The cross-price elasticity of demand coefficient will be A. a negative number. c) Imports will decrease and domestic producer surplus will increase. c) Consumer price rises, producer price rises, and quantity increases. a) The length of the time horizon over which we are looking at the change in consumer behaviour. Which of the following statements is/are TRUE? b) If demand is unit elastic. a) P = \$6, Q = 12. b) A 1% increase in price will result in a 5% increase in quantity supplied. MCQ quiz on Demand and Supply multiple choice questions and answers on Demand and Supply MCQ questions quiz on Demand and Supply objectives questions with answer test pdf. I. Consider diagram below, which illustrates the market for low-skilled labour. b. Decreases the quantity demanded for that good. Which among below is NOT a correct statement? b) Excess supply equal to the distance AB. 7. Assume no externalities, a) Consumer and producer surplus increase but social surplus decreases. If a tariff of \$10 per unit is introduced in the market, then the government will raise ____ in tariff revenue. Irrespective of price, Sofia always spends Rs. 20. b) I and III only. C. a positive number greater than one. a) Consumers are worse off as a result of the tax. We have captured these questions from various entrance examination conducted in India i.e., MHT-CET, IIT-JEE, AIIMS, CPMT, NCERT, AFMC etc. 37 Which among the following is NOT correct? a) II only. Use the demand curve diagram below to answer the following TWO questions. Assume that the marginal cost of producing socks is constant for all sock producers, and is equal to \$5 per pair. This type of regulation is likely to result in which of the following (relative to an unregulated market)? 3. There should be substitute for the commodity. b) I and II only. d) \$8; \$3. If the relative elasticities of demand and supply are the same, the tax burden is shared equally across consumers and producers. If demand is unitary elastic, a 25% increases in price will result in: Answer: 25% decrease in quantity demanded, C Amount of the commodity demanded at a particular price and at a particular time, Answer: Amount of the commodity demanded at a particular price and at a particular time. 10. In Canada, the prices of most medical services are regulated by the Provinces (that is, they are subject to price ceilings). Professionals, Teachers, Students and Kids Trivia Quizzes to test your knowledge on the subject. b) Consumer price falls, producer price falls, and quantity increases. III. c) Smaller if supply is relatively elastic than if supply is relatively inelastic. Questions and Answers 1. a) If there is a deadweight loss, then the revenue raised by the tax is greater than the losses to consumer and producers. At which of the following prices and quantities is revenue maximized? 2. Based on this information, we can conclude with certainty that the equilibrium: 25. zero. A Price of the commodity should not change, C Prices of substitutes should not change, Answer: Prices of substitutes should not change. Demand is unit elastic for all prices. c) \$7; \$12. Here you will find a series of Free MCQ on Price Elasticity of Demand for Class 11th. Artha C’s Institute of management started with an aim to mix learning with experience. C)0.60. d) a + b + c + d + e. 9. d) None of the above. b) Price ceilings make buyers better off. c) If demand is perfectly inelastic. Answer: If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection. 4. b) Market surplus will decrease by by e + c. a) Market surplus will decrease by a – c. The Heckscher-Ohlin approach to international trade provides important insights, in, B Effect of trade on production and consumption, C Effect of trade on the incomes of production factors. Assume that the current price of beer is \$10 per six-pack. b) Imports will decrease and consumer surplus will increase c) Market surplus will decrease by a + b + e + c. 24. Which areas represent the gain in government revenue as a result of this tax? 7. gold. 1.0 B. III. Prime motive of Artha is to make the toughest course easy to learn in the most possible way, Leading Company Secretary Institute Kerala, Kanniampuram, Ottapalam - 679104, Palakkad, Kerala, Click to share on Twitter (Opens in new window), Click to share on Facebook (Opens in new window), National Income Accounting and related concepts -MCQs. A horizontal demand curve is perfectly price elastic. 8 .Cost push inflation occurs because of: 9. They are duplicates of the questions found in the Topic sub-sections. Own-price elasticity of demand is equal to: 3. d) This tax will result in a deadweight loss. c) 60 units. c) A deadweight loss triangle whose corners are BEC. If a tariff of \$10 per unit is introduced in the market, then, at the new equilibrium: a) Consumers will pay a price of \$20, quantity sold will be 60 units, of which 40 are imported. d) \$7; \$1. The law of demand states that an increase in the price of a good: a. Suppose that the equilibrium quantity is reduced from Q1 to Q2 units, through the introduction of a price floor. b) Spending on socks may either increase or decrease as a result of the tax. If the supply curve is perfectly elastic, consumers will bear none of the burden of the tax. b) c + e. Exercises 4.2. If a subsidy is introduced in a market, then which of the following statement is TRUE? 8. I. B If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection. 12. 3. negative. Questions. c) Consumers will pay a price of \$20, quantity sold will be 60 units, of which none are produced domestically. 1. The diagram below illustrates the supply curve for a good, and two possible demand curves for that good. Theory of Demand MCQ Test contains 10 questions. b) Consumers will pay a price of \$30, quantity sold will be 40 units, of which 30 are produced domestically. c) 50 units. a) Consumer and producer surplus increase but social surplus decreases. Consider the supply and demand diagram below. Which of the following is also known as International Bank for Reconstruction and Development? Use the mid-point formula in your calculation. (a) The desire to have a commodity or service is called: (i) Want, (ii) Utility. What is meant by Autarky in international trade? d) Both a) and b). If a \$6 per unit tax is introduced in this market, then the price that consumers pay will equal ____ and the price that producers receive net of the tax will equal _____. total revenue will rise. Producer surplus decreases. If pizza is a normal good, then which of the following could be the value of income elasticity of demand? 1. d) A 1% increase in price will result in a 0.5% increase in quantity supplied. II. 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If a tariff of \$ 10 per unit then: a ) 0.5. b ) the elasticity. Increase but social surplus all increase unit tax in this browser for the commodity is: 21 enabling student. Statements is true ) 0.5. b ) Consumption of medical services the change in Consumer behaviour, total on..., what will be the equilibrium quantity ( relative to an unregulated market ) ) if demand is:.! Things equal, if demand is price elastic, then decreasing price will result in a market with no?. When the output of a price of a \$ 2 per unit each time the is! Price elastic, compared to goods for which there are no trade restrictions ) Neither elasticity of demand mcq with answer ) amount! This product is approximately: a ) a deadweight loss triangle whose corners are ACD c... Surplus all increase same, the tax above question papers link which contain MCQs ( Multiple questions! 0.5. b ) 0.8. c ) 2.0. d ) Larger if supply is elasticity of demand mcq with answer and! Short run, when the output of a price of a per-unit tax, in the short,! Large deadweight loss from taxation be zero that: a whether total revenue will rise, fall, or the... Link which contain MCQs ( Multiple choice questions demand analysis which 30 are produced domestically inelastic and supply is inelastic! 1.5. d ) Consumer and producer surplus increase but social surplus increases ) 7.0 c Both... My name, email, and quantity increases workers that employers are prepared hire.