MCQs on Law of Demand
Law of demand is a fundamental principle of Economics, it states that quantity demanded is always inversely related to the price of the goods. In other words, with increase in price, quantity demanded will be less and vice versa.
Following are some of the law of demand multiple choice questions and answers that will help the students in brushing up their understanding of the concept of law of demand.
1. Demand for a commodity refers to:
(a) Desire for the commodity
(b) Need for the commodity
(c) Quantity demanded of that commodity
(d) Quantity of the commodity demanded at a certain price during any particular period of time.
Answer: d
2. In case of an inferior good, the income elasticity of demand is:
(a) Positive
(b) Zero
(c) Negative
(d) Infinite
Answer: c
3. For what type of good does demand fall with a rise in income levels of households?
(a) Inferior goods
(b) Substitutes
(c) Luxuries
(d) necessities
Answer: a
4. In case of Inferior goods like bajra, a fall in its price tends to:
(a) Make the demand remain constant
(b) Reduce the demand
(c) Increase the demand
(d) Change the demand in an abnormal way
Answer: b
5. Movement along the same demand curve shows:
(a) Expansion of demand
(b) Expansion of supply
(c) Expansion and contraction of demand
(d) Increase and decrease of demand
Answer: c
6. The price of hot – dogs increase by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:
(a) Elastic
(b) Inelastic
(c) Unitary elastic
(d) Perfectly elastic
Answer: a
7. What is an Engels curve?
(a) Another name of demand curve
(b) Curve showing both demand & supply curves
(c) Curve named after Lord Engels
(d) All
Answer: c
8. Which factor generally keeps the price – elasticity of demand for a good low:
(a) Variety of uses for that good
(b) Its low price
(c) Close substitutes for that good
(d) High proportion of the consumer’s income spent on it
Answer: b
9. 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:
(a) 0
(b) 1
(c) 1.5
(d) 2
Answer: b
10. An increase in demand can result from:
(a) A decline in the market price
(b) An increase in income
(c) A reduction in the price of substitutes
(d) An increase in the price of complements
Answer: b
