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CBSE Questions for Class 11 Commerce Economics Market Equilibrium Quiz 2 - MCQExams.com
CBSE
Class 11 Commerce Economics
Market Equilibrium
Quiz 2
The simultaneous shifts can happen in four possible ways, which are _____.
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both supply and demand curves shift rightwards
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both supply and demand curves shift leftwards
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supply curve shifts leftward and demand curve shifts rightward
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all of these
An industry which is fighting hard to increase its market share in the existing market (with new popular products) is known as:
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Market vendor
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Market operator
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Market leader
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Market challenger
Explanation
An industry that is fighting hard to increase its market share in the existing market (with new popular products) is known as a market challenger.
A market challenger is a firm that has a market share below that of the market leader.
It is mainly for the immediate competitor with the intention to capture a greater market share and earn huge revenues.
Hence d is the correct option.
When demand curve shifts rightward, and supply curve leftward, the equilibrium quantity _________.
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increases
0%
decreases
0%
remains same
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all of the above
Explanation
When demand curve shifts rightward and supply curve leftward, the equilibrium quantity may increase, decrease or remain same, depending on the magnitude of shift in the two curves.
Collateralised Borrowing and Lending Obligation (CBLO) is a
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Money Market Instrument
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Monetary Policy Instrument
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Investment Fund
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Capital Market Instrument
Explanation
Option A is correct.
A collateralized borrowing and lending obligation (
CBLO
) is a money market instrument that represents an obligation between a borrower and a lender as to the terms and conditions of a loan.
At any price lower than equilibrium price, there is _____.
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excess supply
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excess demand
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deficient supply
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deficient demand
Explanation
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist.
Hence b is the correct option.
When both demand and supply curve shift rightward,_______.
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equilibrium quantity increases
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equilibrium pice may increase, decrease or remain unchanged
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equilibrium quantity decreases
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Both A and B
Explanation
When both the demand curve and the supply curve shift rightward, the equilibrium quantity increases, but the equilibrium price may increase, decrease or remain unchanged, depending on the magnitude of shifts in the the two curves.
Which of the following is not considered a money market instrument?
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Treasury bills
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Repurchase agreement
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Commercial paper
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Shares and bonds
Explanation
Money market instruments are the instruments which are invested for a short period of time. They have the maturity period of less than one year. Treasury bills, repurchase agreement and commercial paper all are short term investments and have a maturity level of less than one year. Hence, shares and bonds having maturity of more than one year are not considered as money market instrument.
Reservation price is _________ expected price.
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0%
maximum
0%
ordinary
0%
minimum
0%
higher
Explanation
A
reservation
(or reserve)
price
is a limit on the
price
of a good or service. On the demand side, it is the highest
price
that a buyer is willing to pay. On the supply side, it is the lowest
price
at which a seller is willing to sell a good or service.
Hence, C is the correct option.
When demand curve shifts leftward, and supply curve rightward, the price ___________.
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increases
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decreases
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remains same
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could be A or B or C
Explanation
When decrease in demand is proportionately equal to increase in supply, then leftward shift in demand curve from DD to D
1
D
1
is proportionately equal to rightward shift in supply curve from SS to S
1
S
1
(figure). The new equilibrium is determined at E
1
equilibrium quantity remains the same at OQ, but equilibrium price falls from OP to OP
1
. Hence, correct answer is option B.
Geometric method is also known as Point Method.
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True
0%
False
Explanation
Geometric method
was suggested by Prof. Marshall and is used to measure the elasticity at
a point
on the demand curve. When there are infinitely small changes in price and demand, then the '
Geometric Method
' is used. This
method is also known
as 'Graphic
Method
' or '
Point Method
' or 'Arc
Method
'.
Expansion and increase in supply means the same thing.
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True
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False
Explanation
Both are different to each other, as expansion or contraction of supply is possible due change in price where increase or decrease in supply is possible due to change in other factor like related good, income, govt policy etc.
Hence b is the correct option.
In case of perishable goods supply means the same thing.
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True
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False
Explanation
Perishable goods are goods having a short span of life.
In case of perishable goods since these have limited useful life therefore the supply is inelastic i.e. changes in prices does not affect the supply of goods.
Perishable goods are goods having a short span of life.
Hence it as same thing or constant so a is correct.
Supply of perishable goods is inelastic.
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True
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False
Explanation
It is the true supply of perishable goods, that is inelastic.
Because these goods cannot be stored for a longer time, their supply cannot be changed immediately in response to changes in price.
So a is the correct answer.
The supply curve slopes downwards from left to right.
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True
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False
Explanation
No it is not correct, slope of the supply curve (upward to the right) tells us that as the price goes up, producers are willing to produce more goods.
It is upward primarily because of the profit motive.
Hence b is the correct option.
Supply curve of labour could be backward sloping.
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True
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False
Explanation
The supply curve of labour could be backward sloping.
As higher wages can lead to a decline in labour supply.
It occurs when higher wages encourage workers to work less and enjoy more leisure time.
Hence a is the correct option.
The reservation price for flowers is low.
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True
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False
Explanation
The reservation price for flowers
are likely to stay low due to higher production and it has to be consumed in a short span of time otherwise it will be rotted.
Slope of supply curve is _________.
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negative
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positive
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vertical
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horizontal
Explanation
The law of supply states that all else being equal, the quantity supplied of an item increases as the price increases, and vice versa. Graphically, this means that the supply curve usually has a positive slope, i.e. slopes up and to the right. Hence, correct answer is option B.
Contraction in demand is the result of _____ in the number of consumer.
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an increase
0%
a decrease
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no change
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variation
Explanation
Contraction of demand means when the quantity demanded falls due to the price rise it is called contraction of demand.
Hence in case contraction in demand decreases so consumer number will also decrease and vice versa.
So option b is the correct option.
Individual demand refers to the quantity demanded by_____ .
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a society
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a family
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the nation
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none of the above
Explanation
Individual demand is the demand of an individual or a firm. It is a demand that a single consumer would buy at specific price in a specific market place. Hence, individual demand refers to the quantity demanded by a family.
The demand for consumer goods is _____ .
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direct
0%
indirect
0%
constant
0%
floating
Explanation
Goods that yield direct satisfactions to consumers are said to have direct demand. They consist of clothes, food, house, etc. Hence, the demand for consumer goods is direct.
If the price of inferior goods falls, the quantity demanded for them _______ .
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0%
increases
0%
decreases
0%
remain constant
0%
becomes zero
Explanation
Inferior goods are the goods whose demand falls when consumer's real income rises and whose demand rises when consumer's real income falls. Hence, when the price of the inferior goods falls, the quantity demanded for them decreases.
When there is a decrease in price, the demand_____ .
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rises
0%
decreases
0%
becomes zero
0%
remain constant
Explanation
The law of demand states that
other factors being constant
(cetris peribus), price and quantity demand of any good and service are inversely related to each other. When the price of a product increases, the demand for the same product will fall. Hence, correct answer is option A.
The sum of individual demand constitutes ____ demand.
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national
0%
market
0%
individual
0%
household
Explanation
Market demand refers to the demand of all consumers of a good or service at a given price, with other factors as money income, tastes, and preferences, prices of other goods constant. It can be graphically obtained by aggregating the individuals' consumer demand for a commodity.
Hence option B is correct.
When less is purchased at the constant price, it is called ______ in demand.
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increase
0%
decrease
0%
expansion
0%
contraction
A variation in demand of mango due to decrease in its price is _____ of demand.
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contraction
0%
expansion
0%
increase
0%
decrease
Explanation
According to law of demand, when the price of a commodity increases, the demand for the same commodity decreases and when the price of a commodity decreases, the demand for the same commodity increases. Hence, a variation in demand of mango due to decrease in its price is expansion of demand.
Demand of several consumers is called _____ demand.
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0%
individual
0%
joint
0%
market
0%
independent
Explanation
Market demand is nothing but the total amount of goods and services that all consumers are willing and able to purchase at a specific price in a market place. Hence, demand of several consumers is called market demand.
Demand for a goods which has more than one use is called _____ demand.
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composite
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direct
0%
derived
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indirect
Explanation
Composite demand means the commodity or service is demanded for many alternative uses that demand is called a composite demand.
For example people may demand wheat for producing bread, biofuels or feeding livestock.
Hence a is the correct answer.
Desire means demand.
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True
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False
Explanation
False. D
emand is a desire to buy commodity backed by the ability to pay and willingness to buy a commodity.
Concept of elasticity of demand is useful for finance minister.
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True
0%
False
Explanation
Concept of elasticity of demand is useful for finance minister. It helps the finance minister to levy taxes on the goods which have inelastic demand. The government can collect more money and increase government revenue, It helps in planning also.
If the demand curve is a rectangular hyperbola elasticity co-efficient value is ____.
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one
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zero
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infinity
0%
less than one
Explanation
When the percentage change in the quantity demanded is equal to the percentage change in the price, then the demand for the commodity is said to be unitary elastic. It is also equal to one and the demand curve is also called a rectangular hyperbola. Hence, its co-efficient value is one.
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