Supply and Demand AFCAT Questions

AFCAT Indian Economy

Supply and Demand MCQ Questions


13.
Tea and coffee are generally considered substitute goods. If the price of coffee rises, what is the likely effect on the demand for tea?
A.
Supply of tea decreases
B.
Demand for tea decreases
C.
Demand for tea increases, as buyers switch towards the relatively cheaper substitute
D.
Demand for tea remains completely unaffected
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ANSWER :
C. Demand for tea increases, as buyers switch towards the relatively cheaper substitute
14.
Cars and petrol are an example of complementary goods. If the price of petrol rises sharply, what is the likely effect on the demand for cars?
A.
Demand for cars is unaffected, since petrol and cars have separate markets
B.
Supply of cars increases
C.
Demand for cars increases
D.
Demand for cars decreases, as running a car becomes more expensive overall
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ANSWER :
D. Demand for cars decreases, as running a car becomes more expensive overall
15.
For a normal good, what happens to demand when consumer income rises, other factors remaining constant?
A.
Demand for the good increases
B.
Demand for the good decreases
C.
Demand becomes perfectly inelastic
D.
Demand remains exactly the same
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ANSWER :
A. Demand for the good increases
16.
For an inferior good, what happens to its demand as consumer income rises?
A.
Demand becomes perfectly elastic
B.
Demand for the good decreases as consumers switch to superior alternatives
C.
Demand remains unaffected by income changes
D.
Demand for the good increases proportionately
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ANSWER :
B. Demand for the good decreases as consumers switch to superior alternatives
17.
A favourable change in consumer tastes and preferences towards a commodity will cause:
A.
A movement along the same demand curve
B.
No change in demand at any price
C.
The demand curve to shift to the left
D.
The entire demand curve for that commodity to shift to the right
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ANSWER :
D. The entire demand curve for that commodity to shift to the right
18.
An increase in the number of buyers (population) in a market, other things being equal, will typically cause:
A.
Market demand to decrease
B.
The price of the good to fall automatically
C.
Market demand to increase, shifting the demand curve to the right
D.
Only individual demand to change, with no effect on market demand
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ANSWER :
C. Market demand to increase, shifting the demand curve to the right