MCQs - Price Determination Commerce Notes | EduRev

Crash Course of Micro Economics -Class 12

Commerce : MCQs - Price Determination Commerce Notes | EduRev

The document MCQs - Price Determination Commerce Notes | EduRev is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
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Q.1 Which of the following condition will push the equilibrium price and the equilibrium quantity to rise?

(a) Increase in demand < increase in supply

(b) Decrease in demand < increase in supply 

(c) Increase in demand < decrease in supply

(d) Increase in demand > increase in supply
Ans: D

Q.2 
Which of the following situation will not lead to an increase in equilibrium price?

(a) Decrease in supply = increase in demand
(b) Decrease in supply only

(c) Increase in supply = decrease in demand

(d) Increase in demand only

Ans: C


Q.3  A price fixed by government which is lower than the equilibrium price can lead to 

(a) Black marketing

(b) Excess supply

(c) Fall in demand

(d) Increase in demand
Ans: A

Q.4 
If demand and supply curves shift to the left

(a) Equilibrium price falls and effect on quantity cannot be determined

(b) Both price and quantity fall

(c) Effect on both price and quantity cannot be determined

(d) Quantity falls but effect on price cannot be determined
Ans: B

Q.5 
When there is excess demand in an unregulated market

(a) Demand tends to increase
(b) Supply tends to increase

(c) Price rises

(d) Price falls

Ans: C

Q.6 
Price fixed by the government which is lower than the equilibrium price can lead to

(a) Black marketing

(b) Fall in demand

(c) Excess supply

(d) Increase in demand
Ans: A

Q.7 
If the government fixes the market price higher than the equilibrium price, it will lead to

(a) Excess demand

(b) Excess supply

(c) Increase in demand
(d) Decrease in demand
Ans: B

Q.8 
A rise in the number of firms would cause:

(a) fall in equilibrium price and quantity

(b) rise in equilibrium price and quantity

(c) equilibrium price to fall & quantity to rise

(d) equilibrium price to rise & quantity to fall
Ans: C

Q.9 
Demand being perfectly inelastic, what will be the effect of decrease in supply on equilibrium price and equilibrium quantity?

(a) Equilibrium price increases

(b) Equilibrium price decreases

(c) No effect on equilibrium quantity
(d) Both (a) and (c)

Ans: D

Q.10 
Decrease in the price of a complementary good will cause:

(a) Fall in equilibrium price and quantity

(b) Rise in equilibrium price and quantity

(c) Fall in equilibrium price & quantity to rise

(d) Rise in equilibrium price & quantity to fall
Ans: B

Q.11 As fixed by the government, minimum price of a commodity is known as:

(a) Ceiling price

(b) Floor price
(c) Support price

(d) Market price
Ans: B

Q.12 
As fixed by the government, the maximum price of a commodity is known as:

(a) Ceiling price

(b) Floor price
(c) Support price

(d) Market price
Ans: A

Q.13 
Minimum price ceiling benefits the:

(a) producers
(b) consumers

(c) both (a) and (b)

(d) none
Ans: A

Q.14 
When demand increases with no change in supply , equilibrium price _ & equilibrium quantity __

(a) Rises, rises

(b) Rises, falls

(c) Falls, falls

(d) Falls, rises
Ans: A

Q.15 Price Floor can also be described as:

(a) Minimum support price

(b) Price at which quantity supplied exceeds the quantity demanded
(c) Minimum price above the equilibrium price

(d) All of these
Ans: D

Q.16 
If increase in demand is greater than the increase in supply, then the equilibrium price:

(a) Decreases
(b) Increases

(c) Does not change at all

(d) Cannot be determined
Ans: B

Q.17 
The individual demand and supply functions of a product are given as: Dx = 10 – 2Px, Sx = 20 + 2Px, where Px stands for price and Dx and Sx respectively stands for quantity demanded and quantity supplied.  If there are 4,000 consumers and 1,000 firms in the market, then quantity demanded and supplied at the equilibrium price of Rs. 2.

(a) 20,000

(b) 22,000

(c) 21,000

(d) 24,000

Ans: D

Q.18 
Which of the following situation does not lead to an increase in equilibrium price?

(a) An increase in demand without a change in supply

(b) A decrease in supply accompanied by proportionately equal increase in demand

(c) A decrease in supply without a change in demand

(d) An increase in supply accompanied by proportionately equal decrease in demand

Ans: D

Q.19 
Which of the following statements about Price Ceiling is accurate ?

(a) An effective Price Ceiling must be at a price below the equilibrium price.

(b) Price Ceiling will increase the quantity of good supplied.

(c) An effective Price Ceiling must be at a price more than the equilibrium price.

(d) Price Ceiling will decrease the quantity demanded.

Ans: A

Q.20 
Which of the following statement is correct in case of non-viable industry ?

(a) Supply curve lies above the demand curve

(b) Supply curve lies below the demand curve

(c) Supply curve & demand curve interest

(d) Supply curve coincide with the demand curve
Ans: A

Q.21 
What will be the effect of increase in price of factor inputs on the equilibrium price and equilibrium quantity ?

(a) Equilibrium price will rise and equilibrium quantity will fall

(b) Both will fall

(c) Equilibrium price will fall and equilibrium quantity will rise

(d) Both will remain same
Ans: A

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