CBSE Class 12 Economics Theory of Consumer Behaviour MCQs Set 04

Question: When demand for a good depends upon the demand for the other, it is known as
a) Joint demand
b) Composite demand
c) Derived demand
d) None of the above
Answer: c

Question: Non-linear demand curve is drawn as
a) Downward sloping straight line
b) Upward sloping straight line
c) Rectangular hyperbola
d) None of the above
Answer: c

Question: Price elasticity of demand measures relation between
a) Quantity demanded and price
b) Demand and income of the consumer
c) Demand and price of related good
d) All of the above
Answer: a

Question: Which of the following is/are determinants of demand?
a) Price of the good
b) Income of the consumer
c) Price of related goods
d) All of the above
Answer: d

Question: The relationship between demand for a good and its own price is known as
a) Quantity demanded
b) Demand
c) Composite demand
d) None of these
Answer: a

Question: Movement along the demand curve is also known as
a) Change in demand
b) Change in quantity demanded
c) Change in demand of related goods
d) None of the above
Answer: b

Question: With rise in price of good X, demand for good Y also increases, then how are these goods related?
a) Substitute goods
b) Complementary goods
c) Inferior goods
d) Giffen goods
Answer: a

Question: Due to 15% rise in price, demand changes from 100 to 80 units. Price elasticity of demand will be equal to
a) 1
b) 1.33
c) 1.5
d) 2
Answer: b

Question: Elasticity of demand for good X is half of elasticity of demand for good Y. If 10% fall in price of good Y leads to 20% rise in its quantity demand, what will be the elasticity of demand of good X?
a) 2
b) 1
c) 0.5
d) 0
Answer: b

Question: Which of the following are an example of derived demand?
a) Car and Petrol
b) Tea and Coffee
c) Building and Brick
d) None of these
Answer: c

Question: Shift in the demand curve is also known as
a) Change in demand
b) Change in quantity demanded
c) Change in demand of related goods
d) None of the above
Answer: a

Question: Which of the following statements are true?
a) Market demand curve is the vertical summation of individual demand curves
b) Market demand curve is the horizontal summation of individual demand curves
c) Market demand curve is steeper than individual demand curves
d) None of the above
Answer: b

Question: When two goods are consumed together to get satisfaction, it is referred to as
a) Joint demand
b) Composite demand
c) Derived demand
d) None of the above
Answer: a

Question: Which of the following are exceptions to the law of demand?
a) Giffen goods
b) Addictions
c) Both (a) and (b)
d) Neither (a) nor (b)
Answer: c

Question: There are ………… degrees of elasticity of demand.
a) Three
b) Four
c) Five
d) None of the above
Answer: c

Question: Which of the following is an assumption of law of demand?
a) Price of the commodity should not change
b) Quantity of the good should not change
c) Income of the consumer should not change
d) None of the above
Answer: c

Question: Complementary goods are always demanded at the same proportion.
a) True
b) False
c) Partially true
d) Incomplete statement
Answer: b

Question: If price elasticity of demand is 2, a 10% fall in price of good leads to increase in demand by
a) 10%
b) 15%
c) 20%
d) 25%
Answer: c

Question: With decrease in price of substitute goods, demand for the concerned good will
a) Shift to the right
b) Shift to the left
c) Move downward along demand curve
d) Move upward along demand curve
Answer: b

Question: When more quantity is demanded at the same price, it indicates expansion in demand.
a) True
b) False
c) Partially true
d) Incomplete statement
Answer: b

Question: If a good has multiple substitute goods available, its elasticity will be
a) Equal to zero
b) Less than one
c) Equal to one
d) More than one
Answer: c

Question: Law of demand assumes other factors constant in a given demand function.
a) True
b) False
c) Partially true
d) Incomplete statement
Answer: a

Question: If a 10% rise in price of good X leads to 20% fall in its quantity demanded, its elasticity of demand is
a) Elastic
b) Inelastic
c) Unitary elastic
d) Perfectly inelastic
Answer: a

Question: The demand for food is more elastic under which group of people?
a) Who has low level of income
b) Who has moderate level of income
c) Who has high level of income
d) Who lives in urban areas
Answer: a

Question: What will be the elasticity of demand for school uniform?
a) Perfectly elastic
b) Perfectly inelastic
c) Unitary elastic
d) Inelastic
Answer: b

Question: Law of demand was propounded by
a) Prof. Adam Smith
b) Prof. Alfred Marshall
c) Prof. Gossen
d) Prof. Pigeou
Answer: b

Question: Elasticity of demand is an ………… approach.
a) Quantitative
b) Qualitative
c) Utility
d) None of these
Answer: a

Question: Increase in price of substitute goods leads to expansion of demand.
a) True
b) False
c) Partially true
d) Incomplete statement
Answer: b

Question: Slope of a downward sloping demand curve is
a) Increasing
b) Decreasing
c) Constant
d) Infinity
Answer: b

Question: With rise in price of good X, demand for good Y also decreases, then how these goods are related?
a) Substitute goods
b) Complementary goods
c) Inferior goods
d) Giffen goods
Answer: b

Question: Law of demand is based on which of the following laws?
a) Law of indifference curve
b) Law of diminishing marginal utility
c) Law of variable proportion
d) None of the above
Answer: b

Question: The price elasticity of demand ranges between
a) -1 to 0
b) 0 to 1
c) 0 to infinity
d) Negative infinity to infinity
Answer: c

Question: What will be the impact of fall in income of the good on the demand for an inferior good?
a) Rise in demand
b) Fall in demand
c) Demand remains constant
d) None of the above
Answer: a

Case Based MCQ

Direction Read the following case study and answer questions on the basis of the same.

Year 2020 has witnessed many ups and downs, there were natural calamities around the globe, political tensions and what not.
The outbeeak of coronavirus pandemic had led to worldwide lockdown for several months.
The world almost stopped during April, 2020. India is also not untouched with the impact of pandemic.
Many people lost their jobs during this time, specially migrant workers. Government announced relief packages but still it didn’t boost enough demand.

Question: How should the demand be affected due to the relief package announced by the government?
a) Increase in demand
b) Expansion in quantity demanded
c) Decrease in demand
d) Contraction in quantity demanded
Answer: a

Question: What will be the impact on the consumption demand of necessity goods during the pandemic?
a) Demand curve shifts to the right
b) Demand curve shifts to the left
c) No change in demand curve
d) Downward movement along the demand curve
Answer: c

Question: Assertion (A) Demand for medical equipments was high during the pandemic making its demand highly elastic.
Reason (R) When more goods are demanded even at a higher price, demand becomes elastic.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is true, but Reason (R) is false
d) Both are false
Answer: d

Question: People lose their jobs during the nationwide lockdown, how will this impact the demand curve for inferior goods?
a) Rightward shift in demand curve
b) Leftward shift in demand curve
c) Downward movement along demand curve
d) Upward movement along demand curve
Answer: a

Question: Demand for automobile industry decreased inspite of decreasing price during pandemic. This is referred to as ……… .
a) Contraction in demand
b) Exception of demand
c) Both (a) and (b)
d) None of the above
Answer: b

Direction Read the following case study and answer questions on the basis of the same.

How quickly will American businesses reopen after COVID-19 lockdowns end?
A nationwide survey was conducted of small businesses to measure firms’ expectations about their re-opening and future demand. A plurality of firms in our sample expect to reopen within days of the end of legal restrictions, but a sizable minority expect to delay their reopening.
While health-related variables, such as COVID-19 case rates and physical proximity of workers, do explain the prevalence and expected duration of regulated lockdown, these variables have little or no
correlation with post-lockdown reopening intentions.
Instead, almost one half of closed or partially open businesses said that their reopening would depend on the reopening of related businesses, including customers and suppliers. Owners expect demand to be one-third lower than before the crisis through autumn. Firms with more pessimistic expectations
about demand predict a later reopening. Using an instrumental variables strategy, we estimate the relationship between demand expectations and reopening.
These estimates suggest that post-lockdown delays in reopening can be explained by low levels of expected demand.
Source-Harvard Business School Working Knowledge Baker Library.

Question: Why demand was low even after the lockdown restrictions were lifted in America?
a) Fall in income
b) Lack of availability of factors
c) Fear of corona virus outbreak
d) Both (a) and (c)
Answer: a

Question: Demand curve for essential commodity will have ………… shape.
a) upward sloping and steeper
b) downward sloping and flatter
c) downward sloping and steeper
d) upward sloping and flatter
Answer: c

Question: As a result of fall in demand, demand curve will ……… .
a) shifts rightwards
b) shifts leftwards
c) moves downwards
d) moves upwards
Answer: b

Question: What is the elasticity of demand for necessity goods in the above situation?
a) Elastic
b) Inelastic
c) Perfectly inelastic
d) Perfectly elastic
Answer: b

Question: Assertion (A) Owners of general stores expected demand to be one-third lower in post pandemic situation.
Reason (R) Worldwide lockdowns lead to fall in economic activities and per capita income of the country.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is true, but Reason (R) is false
d) Assertion (A) is false, but Reason (R) is true
Answer: a