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CBSE Questions for Class 11 Commerce Economics Theory Of Consumer Behaviour Quiz 6 - MCQExams.com
CBSE
Class 11 Commerce Economics
Theory Of Consumer Behaviour
Quiz 6
If the price elasticity of demand of Britannia cookies is
(
−
)
0.55
, then a
20
%
increase in price of cookies will lead to ________ in quantity demanded of cookies at that price.
Report Question
0%
11
%
increase
0%
11
%
decrease
0%
20.55
%
increase
0%
19.45
%
decrease
Explanation
Elasticity of demand = (-) Percentage fall in quantity demanded/Percentage in price.
(-) 0.55 = Percentage fall in quantity demanded/20%
Percentage fall in quantity demanded = (-) 0.55 x 20% = (-) 11%.
Hence, correct answer is option B.
If X demands
30
lts of petrol when his monthly income is Rs.
3000
, however if his income rises to Rs.
5000
per month his demand for petrol will also increases to
40
lts per month. The income elasticity of petrol is ____________.
Report Question
0%
0.5
0%
0.75
0%
0.90
0%
1.0
Explanation
Income elasticity of petrol = (Change in demand/Change in income) x (Income/Demand) = (10/2000) x (3000/30) = 0.5.
Hence, correct answer is option A.
Where, change in income = Rs.5,000 - Rs.3,000 = Rs.2,000.
Change in demand = 40 - 30 = 10 units.
A production possibility frontier explains ________ of Economics.
Report Question
0%
law of diminishing marginal returns
0%
law of variable proportions
0%
law of marginal utility
0%
water vs. diamond paradox
Explanation
Production possibility frontier explain the law of diminishing marginal returns as with the consumption of every additional unit of one good ,the consumer is willing to sacrifice much less and less ,in two-commodity case.That is why the production possibility curve is concave to the origin.
In economics the term "elasticity" refers to __________.
Report Question
0%
flexibility
0%
sensitiveness
0%
rigidity
0%
durability
Point elasticity concept of demand was coined by__________.
Report Question
0%
Alfred Marshall
0%
JR Hicks
0%
RGD Lipsey
0%
Recardo
Change in price of the goods causes ___________.
Report Question
0%
change in quantity demanded
0%
shift in demand curve
0%
change in price
0%
no effect on quantity demanded
Explanation
The law of demand states that quantity purchased varies inversely with price.
An increase in quantity demanded is caused by a decrease in the price of the product (and vice versa).
Change in price of the goods causes change in quantity demanded.
Hence option A is correct.
Law of diminishing marginal utility states that ____________.
Report Question
0%
with successive increase in consumption of additional units, marginal utility also increases
0%
with successive increase in consumption of additional units, marginal utility decreases
0%
with successive increase in consumption of additional units, marginal utility remains constant
0%
with successive increase in consumption of additional unit, marginal utility first increases then decreases
Explanation
Law of diminishing marginal utility states that with the increase in consumption, the marginal utility gets decreased .This happens because in two commodity case a consumer is willing to sacrifice less of one good for consuming an additional unit of another good.
If two products are perfectly complementary to each other, their indifference curve will be _________.
Report Question
0%
L shaped
0%
U shaped
0%
Straight line
0%
I shaped
Explanation
If the two goods are perfect complements the indifference curve is right-angled or L shaped.
Main reason being both are consumed together so an extra unit of one good does not makes the consumer better off.
option A is correct
Sugar and Coffee are goods ________________.
Report Question
0%
Perfectly substitute
0%
Complementary goods
0%
Both
0%
None
Explanation
Coffee and sugar are considered complementary goods.
Complementary goods are those goods which are complementary to one another in the sense that they are used jointly or together such as cars and petrol, sugar and coffee.
Hence b is the correct answer.
The figures depict indifference curves.
Figure
F
.3
here shows:
Report Question
0%
Increasing
M
R
S
x
y
0%
Decreasing
M
R
S
x
y
0%
Constant
M
R
S
x
y
0%
None of the above
Explanation
In Figure
F
.3
the shape of IC is concave, which represents increasing
M
R
S
x
y
Indifference curves cannot be a straight line as it would imply __________.
Report Question
0%
constant marginal rate of substitution
0%
increasing marginal rate of substitution
0%
increasing returns to scale
0%
none of the above
Explanation
A constant marginal rate of substitution would mean that the consumer will only be able to choose a equal number of both goods. This would mean the satisfaction of the consumer cannot be analysed anymore as he is indifferent between products as the opportunity cost for choosing the other product is the same.
Which of these is not a characteristic of an indifference curve?
Report Question
0%
Cannot intersect each other
0%
Convex to origin
0%
U shaped
0%
Negatively sloped
Explanation
There are a number of characteristics and assumptions which are taken into account when applying the indifference curve analysis. It is because of these properties we are able to use the indifference curve in a productive manner. An indifference curve can never be U shaped because the consumer would have multiple points with various levels of utility.
If price of chocobar decreases we expect _________
.
Report Question
0%
the quantity demanded to increase
0%
quantity demanded to decrease
0%
demand curve shifts to left
0%
no change in quantity demanded
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.
Hence as per law of demand if price of chocobar decreases we expect the quantity demanded to increase.
Goods which are perfect substitute of each other will have rate of substitution of _________ .
Report Question
0%
unity
0%
less than 1
0%
more then 1
0%
zero
Explanation
Goods that are a perfect substitutes for each other will have the rate of substitution of unity.
A perfect substitute can be used in exactly the same way as the good or service it replaces. This is where the utility of the product or service is pretty much identical.
Hence A is the correct option.
When the prices of complementary products increases, the demand of the other product will ______.
Report Question
0%
fall
0%
increase
0%
remains same
0%
all the three possible
Explanation
Complementary goods are those goods which are complementary to one another in the sense that they are used jointly or consumed together to satisfy a given want. There is an inverse relationship between the demand for the good and the price of its complementary good.
Hence, option A is correct.
Increase in demand is also known as ___________.
Report Question
0%
extraction in demand
0%
expansion in demand
0%
extension in demand
0%
compression in demand
Explanation
Extraction in demand means an increase in demand due to changes in price and other factors remaining the same.
Contraction in demand means a decrease in demand due to a change in price other things remain the same.
Hence option A is correct.
Which of these pair will not have positive cross elasticity of demand?
Report Question
0%
Tea and Coffee
0%
Sugar and Coffee
0%
Sugar and Tea
0%
Milk powder and Tea
Explanation
Positive cross elasticity of demand means that the demand for good A will increase as the price of good B goes up.
It means when the price of tea increases then demand for coffee will increase hence there is a positive change so the elasticity of demand will be positive.
Hence a is the correct answer.
Which of these is not an essential assumption of law of diminishing marginal utility concept?
Report Question
0%
Different units consumed should be identical
0%
Consumers taste and preference should not change
0%
There should be some time gap between consumption
0%
The different units consumed should consist of standard unit
Explanation
One of the assumption of law of diminishing marginal utility is that the consumption should be continuous. For example, to hold the law of diminishing marginal utility a consumer should consume ice-creams continuously at a particular point of time.
Engel's curve depicts _________.
Report Question
0%
relationship between income and demand through a curve
0%
relationship between cost and price through a curve
0%
relationship between input and output through a curve
0%
relationship between demand and price through a curve
Explanation
An Engel curve describes
how household expenditure on a particular good or service varies with household income
. Hence, correct answer is option A.
Which of these is not a factor determining demand?
Report Question
0%
Price of the commodity
0%
Level of income and wealth
0%
Cost of production
0%
Fashion
Explanation
The factor of demand includes the price of the commodity, related goods, income, population, fashion, etc.
Cost of production determines the factor of production not demand.
Factor costs include all the costs of the factors of production to produce a given product in an economy.
Hence c is the correct option.
Goods that can substitute each others are called _________.
Report Question
0%
complementary goods
0%
substitute goods
0%
inferior goods
0%
duplicate goods
Explanation
In microeconomics, two goods are substitutes if
the products could be used for the same purpose by the consumers
. There is a direct relationship between price of given good and demand for given substitute goods. Hence, correct answer is option B.
Traditional approach to law of demand was propounded by ______________.
Report Question
0%
Giffen
0%
A Samuelson
0%
Alfred Marshall
0%
Pique
Explanation
Traditional approach to law of demand was propounded by Alfred Marshall.
Hence, option C is correct.
If the price of Bread Omlet rises from Rs.
10
per Omlet to Rs.
12
per Omlet as a result of which the daily sales decreases from
300
to
180
pieces per day. The price elasticity of demand can be estimated as _________.
Report Question
0%
2
0%
1.8
0%
2.25
0%
2.10
Goods which are not perfect substitute of each other but have to be consumed in a fixed ratio will have _______ rate of substitution
Report Question
0%
unity
0%
less than 1
0%
more than 1
0%
zero
Explanation
Rate of substitution is the rate at which one goods will be substituted for another. It is only applicable in case of substitute goods. If two goods are not perfect substitute of each other and have to be consumed in a fixed ratio it will have zero rate of substitution.
Hence, option D is correct.
Under law of demand, the other things being held constant is/are ________.
Report Question
0%
income of the consumer
0%
fashion and consumer taste
0%
both
0%
none
Explanation
The law of demand states that if all other factors remain constant, then the price and the demanded quantity of any good and service are inversely related to one another.
Here other things are related to goods, income, technology, fashion, taste and preferences etc.
Hence c is the correct answer.
Sugar and coffee are _________ goods.
Report Question
0%
complementary
0%
perfect substitute of each other
0%
both
0%
unrelated
Explanation
Complementary goods are those goods which are complementary to one another in the sense that they are used jointly or consumed together to satisfy a given want. There is an inverse relationship between the demand for the good and the price of its complementary. Increase in the price of sugar causes fall in the demand of coffee.
Hence, option A is correct.
A good can be considered a normal good in economics if increase in disposal income of the consumer causes _______________.
Report Question
0%
an increase in demand
0%
no change in demand
0%
decrease in demand
0%
less than proportionate change in demand
Explanation
A good can be considered as a normal good if increase in disposable income of the consumer causes increase in demand. Disposable income is the income left with the consumer after deducting taxes. If the income increases the demand for normal also goods increases.
Hence option is correct
An imposition of excise duty would effect the demand of a product due to _________.
Report Question
0%
income effect
0%
substitution effect
0%
both
0%
none
Explanation
Substitution effect refers to substituting one commodity in place of another when it becomes relatively cheaper.
Income effect refers to the effect on demand when the real income of the consumer changes due to a change in the price of the given commodity.
The imposition of any tax or duty would affect the demand for a product due to both income and substitution effects. Hence, the correct option is C.
Tea and Coffee are perfect substitute of each other, given the price of Tea and Coffee being Rs. 100 and Rs. 200 per kg a consumer is prepared to buy 3 kg. of each. If the price of tea remain same and the price of Coffee rises to Rs. 400 per kg. the demand for Tea goes to 6 kg. and that of Coffee falls to 1 kg. The elasticity of substitution between Tea and Coffee is ________.
Report Question
0%
1
0%
4
0%
5
0%
3
Veg Biryani and Mixed fried rice are close substitute, if the price of Veg Biryani increases the demand for Mixed fried rice will _________.
Report Question
0%
contract and the demand for Mixed Fried Rice will shift outwards.
0%
remain same but the demand for fried rice will shift inward.
0%
decrease and the demand for fried rice will shift leftward.
0%
Not affected at all
Elasticity of supply tends to be higher if ________.
Report Question
0%
There are number of close substitute of the product
0%
Time period is short
0%
There are no substitute of the product
0%
Goods are perishable in nature
Indifference curve is the ________ of various combination of two goods.
Report Question
0%
intersection
0%
centre
0%
locus
0%
common points
Non-durable goods are those which are consumed ______.
Report Question
0%
more than once over a period of time
0%
once or twice
0%
only once
0%
used of indefinite time
If decrease in price of sugar cause increase in quantity demanded of coffee then sugar and coffee can be called _______ goods.
Report Question
0%
complementary
0%
substitute
0%
intermediate
0%
unrelated
Shift in Demand curve or change in Demand curve occurs due to ________.
Report Question
0%
increase in cost of production
0%
decrease in cost of production
0%
change in Ceteris paribus conditions
0%
all the three
Explanation
Ceteris peribus condition inculdes change in the price of other goods, change in the number of consumers and change in the income of purchaser leads to a shift of the demand curve of a commodity.
Ceteris peribus includes all other factors except the price of own commodity.
Hence, option C is correct.
Goods and services that are necessary for life are called _______.
Report Question
0%
wants
0%
desires
0%
necessities
0%
essentials
Explanation
Necessity goods are product and services that consumers will buy regardless of the changes in their income levels, therefore making these products less sensitive to income change. They are necessity for life. Hence, correct answer is option C.
If indifference curves were to concave to the origin it would implies ___________.
Report Question
0%
constant marginal rate of substitution
0%
increasing marginal rate of substitution
0%
increasing returns to scale
0%
none
Explanation
When the marginal rate of substitution is increasing, the indifference curve will be concave to the origin.
This means if you want more of good x, you would have to give up more of good y than you did earlier to get one more unit of good x.
Hence b is the correct option.
What is the elasticity of demand with respect to price at point p = 3, for demand curve = 6/(p + 7) = 0) ?
Report Question
0%
3/2
0%
3/5
0%
1/3
0%
0
Durable goods are those which are consumed _________.
Report Question
0%
more than once over a period of time
0%
once or twice
0%
only once
0%
used for indefinite time
The concept of Consumer Surplus is derived from the law of; ..
Report Question
0%
Economies of scale
0%
Diminishing marginal utility
0%
Law of demand
0%
Law of supply
. is the rate at which the consumer is prepared to exchange one good for other
Report Question
0%
Marginal rate of substitution
0%
Marginal rate of technical substitution
0%
Diminishing returns to scale
0%
Increasing returns to scale
Consumer surplus is maximum in the case of _________________.
Report Question
0%
luxury goods
0%
necessities
0%
inferior goods
0%
normal goods
A production possibility frontier explains-
Report Question
0%
Law of diminishing marginal returns
0%
Law of variable proportions
0%
Law of marginal utility
0%
Water vs diamond paradox
Law of Diminishing Marginal Utility is not applicable to which of these goods;
Report Question
0%
Tea
0%
Gold
0%
Coffee
0%
Chickens
The law of indifference is also know by ________.
Report Question
0%
Law of substitution
0%
Law of equimarginal utility
0%
Gossen's second law
0%
All the three
Goods which are perfect substitute of each other will have elasticity f substitution ________.
Report Question
0%
unity
0%
less than 1
0%
more than 1
0%
infinite
If price of sugar increase, the demand for tea will _______.
Report Question
0%
fall
0%
increase
0%
not affected
0%
no relation
Explanation
Complementary goods are those goods which are complementary to one another in the sense that they are used jointly or consumed together to satisfy a given want. There is an inverse relationship between the demand for the good and the price of its complementary. As the price of sugar oncreases, the demand for tea reduces.
hence, option A is correct.
Law of Diminishing Marginal utility is applicable to _________.
Report Question
0%
Intermediate products
0%
Capital goods
0%
Consumer goods
0%
Raw materials
Explanation
Law of diminishing marginal utility is applicable to the goods which are consumed by the consumers. The law states that as the consumption of a good increases, the marginal utility tends to decline as the consumer is willing to sacrifice much lesser amount of one good in order to consume one additional unit of another good.
What helps a market economy to decide what to produce?
Report Question
0%
Market survey
0%
Economic models
0%
Intensity of consumer demand
0%
Cost of production
Explanation
Intensity of consumer demand guides a capitalist economy to decide what to produce. In capitalist economy the goods are produced as per the demand of the consumers. The free interaction of demand and supply is allowed.
Hence c is the correct answer.
Demand is the _______.
Report Question
0%
unlimited wants of consumers
0%
entire relationship between the quantity demanded and the price of a good
0%
willingness to pay for a good if income is large enough
0%
ability to pay for a good
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