Demand and Supply-Economics 525 Basics of Demand and Supply and Forms of Market Competition - Economics 1 / 29 . When the quantity demanded increases due to a decrease in the price of a commodity, what is it called? (a) Expansion in demand (b) Contraction in demand (c) Extension in demand (d) Shift in demand 2 / 29 What type of market structure has only one seller with complete market power? (a) Perfect Competition (b) Monopolistic Competition (c) Oligopoly (d) Monopoly 3 / 29 In which market structure do consumers have a preference for choosing one product over another, and sellers can set slightly differentiated prices? (a) Perfect Competition (b) Monopolistic Competition (c) Oligopoly (d) Monopoly 4 / 29  What is the result of an increase in the price of a complement on demand, assuming other factors remain constant? (a) Increase in demand (b) Decrease in demand (c) No change in demand (d) Unpredictable change in demand 5 / 29 What does an increase in demand cause in terms of the demand curve? (a) It shifts the curve to the left (b) It shifts the curve to the right (c) It does not affect the curve (d) It makes the curve steeper 6 / 29 When is cross elasticity of demand negative? (a) When two commodities are not related (b) When commodity X is a perfect substitute for commodity Y (c) When commodity Y is complementary to commodity X (d) When the price of related goods decreases 7 / 29 What does the income elasticity of demand measure? (a) How sensitive demand is to changes in prices (b) The degree of responsiveness of demand to changes in income (c) The responsiveness of demand to changes in the prices of related commodities (d) The relationship between supply and demand 8 / 29 Which factor leads to an increase in the elasticity of demand over time? (a) Availability of Substitutes (b) Necessity of the Good (c) Consumer Habits (d) Time Period 9 / 29 . What type of demand occurs when consumers can easily find alternatives or substitutes for a product? (a) Elastic Demand (b) Inelastic Demand (c) Perfectly Elastic Demand (d) Relatively Elastic Demand 10 / 29 What happens to the demand for very costly goods when their prices increase, according to the text? (a) Demand becomes more elastic (b) Demand remains unchanged. (c) Demand becomes more inelastic. (d) Demand increases significantly. 11 / 29 19. The reason for the kinked demand curve is that: The oligopolist believe that competitors will follow price cuts but not price rises. None of these The oligopolist believe that competitors will follow output increase but not output. Both 12 / 29 18. Excess supply of a commodity will cause ................. in its price. Rise No effect Fall Consistency 13 / 29 17. If demand decreases and supply remains constant, equilibrium price will ................. Constant No affect Moves up Moves down 14 / 29 16. If the price for laptops increases, and relatively the demand for tablets increases then, laptops and tablets are Ceteris Paribus products Substitute products Independent products Complementary products 15 / 29 15. Which of the following are the barriers to entry? All of the above High cost of production Government regulation Product differentiation 16 / 29 14. Monopolist is a ................. Price motivator Price taker Price dictator Price maker 17 / 29 13. Discriminating monopolist charges a higher price from the market which has a relatively ................. demand. Perfectly elastic Elastic Greater than 1 Inelastic 18 / 29 12. The perfectly competitive firm can sell its output at ................. prices. Normal Variable Normal or fixed Fixed 19 / 29  What happens to the demand for very costly goods when their prices increase, according to the text? (a) Demand becomes more elastic. (b) Demand remains unchanged. (c) Demand becomes more inelastic. (d) Demand increases significantly. 20 / 29  What is the numerical value of unitary elastic demand? (a) Zero (ep=0) (b) One (ep=1) (c) Infinity (ep=∞) (d) Not mentioned in the passage 21 / 29  Which type of demand is characterized by a small change in demand with a greater change in price? (a) Perfectly Elastic Demand (b) Perfectly Inelastic Demand (c) Relatively Elastic Demand (d) Relatively Inelastic Demand 22 / 29  What does the concept of "elasticity of demand" measure? (a) How sensitive demand is to changes in prices and consumer income. (b) The quantity of goods supplied in the market. (c) The equilibrium price in a market. (d) The relationship between supply and demand. 23 / 29 When does a surplus occur in the market according to the information provided? (a) When the quantity demanded exceeds the quantity supplied. (b) When the price is higher than $60. (c) When the price is lower than $60. (d) When the price remains constant. 24 / 29 What is the equilibrium price in the given scenario? (a) $20 (b) $50 (c) $60 (d) $41 25 / 29 What exceptional cases are mentioned where the law of demand may not apply? (a) Giffen Goods, Articles of Snob Appeal, and Speculation (b) Change in government policy and consumer's psychological bias (c) Change in weather conditions and consumer's income (d) Change in fashion and distribution of income 26 / 29 Under what conditions is the law of demand applicable? (a) When consumer preferences change. (b) When there is an expectation of future price changes. (c) When the weather conditions change. (d) When "other things being equal" remain constant. 27 / 29 Which factor primarily determines the demand for a commodity according to the law of demand? (a) Consumer preferences (b) Income of consumers (c) Price of related goods (d) Price of the commodity 28 / 29 According to the law of demand, what happens to the quantity demanded when the price of a commodity falls? (a) It rises. (b) It remains constant. (c) It fluctuates unpredictably. (d) It declines. 29 / 29 What is the main economic principle that demand refers to? (a) The quantity of goods and services a consumer can afford. (b) The quantity of goods and services a consumer desires. (c) The quantity of goods and services available in the market. (d) The quantity of goods and services produced by manufacturers. Your score is LinkedIn Facebook Twitter VKontakte