Test: Theory Of Demand- 3

# Test: Theory Of Demand- 3

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## 30 Questions MCQ Test Business Economics for CA Foundation | Test: Theory Of Demand- 3

Test: Theory Of Demand- 3 for CA Foundation 2023 is part of Business Economics for CA Foundation preparation. The Test: Theory Of Demand- 3 questions and answers have been prepared according to the CA Foundation exam syllabus.The Test: Theory Of Demand- 3 MCQs are made for CA Foundation 2023 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Theory Of Demand- 3 below.
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Test: Theory Of Demand- 3 - Question 1

### In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______

Test: Theory Of Demand- 3 - Question 2

### If the price elasticity of demand is zero, the shape of the curve will be:

Test: Theory Of Demand- 3 - Question 3

### Which of the following is not determinant of demand?

Test: Theory Of Demand- 3 - Question 4

Cross elasticity of complementary goods is:

Test: Theory Of Demand- 3 - Question 5

Generally, when income of consumer increases, he goes in for superior goods, leading to a fall in demand for inferior goods. It means, income elasticity of demand is ________.

Test: Theory Of Demand- 3 - Question 6

In which of the following cases the demand for goods tends to be less elastic?

Test: Theory Of Demand- 3 - Question 7

Demand for electricity power is elastic because_______

Test: Theory Of Demand- 3 - Question 8

Bricks for houses is an example of which kind of demand?

Test: Theory Of Demand- 3 - Question 9

What will be the price elasticity it original price is Rs. 5, original quantity is 8 units and changed price is Rs. 6, changed quantity is 4 units:

Test: Theory Of Demand- 3 - Question 10

In expansion and contraction of demand _____

Test: Theory Of Demand- 3 - Question 11

The price of a commodity decreases from 10 to 8 and the quantity demanded of it increases from 25 to 30 units, then the coefficient of price elasticity will be______.

Test: Theory Of Demand- 3 - Question 12

What is the elasticity between mid-point and upper extreme point of a straight line continuous demand curve?

Test: Theory Of Demand- 3 - Question 13

The demand for factors of production is ______.

Test: Theory Of Demand- 3 - Question 14

Expansion and contraction in demand are caused by:

Test: Theory Of Demand- 3 - Question 15

A 10% increase in the price of tea results is an 8% increase in the demand for coffee. Cross elasticity of demand will be:

Test: Theory Of Demand- 3 - Question 16

In case of luxury goods, the income elasticity of demand will be_______

Test: Theory Of Demand- 3 - Question 17

Increase in Price from Rs. 4 to Rs. 6 then decrease in demand from 15 units to 10 units. What is the price elasticity. (Point elasticity)

Detailed Solution for Test: Theory Of Demand- 3 - Question 17

∆P = P1 - P = 6 - 4 = 2

∆Q = Q1 - Q = 10 - 15 = -5

Price Elasticity= P/Q × ∆Q/∆P =

(-) 4/15×(-)5/2

=0.66

Test: Theory Of Demand- 3 - Question 18

In case of a straight line demand curve meeting the two axes, the price elasticity of demand at the mid-point of the line would be:

Test: Theory Of Demand- 3 - Question 19

Price of Tiffin Box is Rs. 100 per unit and the quantity demanded in market is 1,25,000 units. Company increased the price to Rs. 125. Due to this increase in price, quantity demanded decreases to 1, 00,000 units. What will be the price elasticity of demand?

Detailed Solution for Test: Theory Of Demand- 3 - Question 19

Explanation : Q1 = 100                 P1 = 125000

Q2 = 125                 P2 = 100000

(Q2-Q1)/Q = P(P2-P1)

=> (25000/125000) * (100/25)

= 4/5

= 0.8

Test: Theory Of Demand- 3 - Question 20

In case of an inferior good, the income elasticity of demand is:

Test: Theory Of Demand- 3 - Question 21

Cross elasticity of complementary goods is:

Test: Theory Of Demand- 3 - Question 22

Which of the following elasticity of demand measures a movement along the demand curve rather than a shift in the curve?

Test: Theory Of Demand- 3 - Question 23

Generally, when income of consumer increases, he goes in for superior goods, leading to a fall in demand for inferior goods. It means, income elasticity of demand is ________.

Detailed Solution for Test: Theory Of Demand- 3 - Question 23

In case of inferior goods, there will be negative income elasticity (Ey<0).

Test: Theory Of Demand- 3 - Question 24

For a commodity with a unitary elastic demand curve if the price of the commodity raises, then the consumer’s total expenditure on this commodity would:

Test: Theory Of Demand- 3 - Question 25

Suppose the price of movies seen at a theatre rises form Rs. 120 per person to Rs.200 per person. The theatre manager observed that the rise in prices has lead to a fall in attendance at a given movie from 300 persons to 200 persons. What is the price elasticity of demand for the movie? (arc elasticity)

Detailed Solution for Test: Theory Of Demand- 3 - Question 25

Arc elasticity may be expressed as: [(Q1 - Q)/(Q1 + Q)] x [(P1 + P)/(P1 - P)]

Therefore,

[(300 - 200)/(300 + 200)] x [(200 + 120)/(200 - 120)]

= (100/500) x (320/80)

So, Arc elasticity = 4/5 = 0.8

(differences were large hence arc elasticity is used.)

Test: Theory Of Demand- 3 - Question 26

A consumer spends Rs. 80 on purchasing a commodity when its price is Re. 1 per unit and spends Rs. 96 when the price is Rs. 2 per unit. Calculate the price elasticity of demand.

Test: Theory Of Demand- 3 - Question 27

When price falls from Rs. 6 to Rs. 4, the demand rises form 10 to 15 units. Calculate price elasticity of demand. (Point elasticity)

Test: Theory Of Demand- 3 - Question 28

The price of hot-dogs increases by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:

Test: Theory Of Demand- 3 - Question 29

A 10% increase in the price of tea results is an 8% increase in the demand for coffee. Cross elasticity of demand will be:

Test: Theory Of Demand- 3 - Question 30

What is income elasticity of demand, when income changes by 20% and demand changes by 40%

## Business Economics for CA Foundation

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## Business Economics for CA Foundation

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