23 + Interview Questions in ELASTICITY-OF-DEMAND IN GENERAL AWARENESS Page 1 InterviewSolution

1.	When price of a good falls from â‚¹ 15 per unit to â‚¹ 12 per unit, its demand rises by 25% , calculate `P.e_(D)`A. 0.8B. 0.33C. 1.25D. none of these
Answer» Correct Answer - A

Discussion

2.	If ratio of Change in quantity `(DeltaQ)` to original quantity Q is 0.5 and elasticity of demand is (-) 1.25, calculate the percentage change in price.
Answer» Given: `(DeltaQ)/Q= 0.5` (Positive Value indicated that quantity has increased. It means , new price is less than the original price, i.e price has decreased.) Percentage Change in Demand = `(DeltaQ)/Q xx 100 = 0.5 xx 100 = 50 %` price Elasticity of Demand `(E_(d)) = ("percentage change in Quantity Demanded")/(" Percentage change in price ")` `(-) 1.25 = (50%)/("Percentage change in price ")` Percentage change (fall) in price = 40 %

Discussion

3.	The Indian Government imposed heavy taxes on commodity to reduce its consumption by the pubic such heavy taxes will decrease the deamand of the commodity only when:A. `E_(d)=0`B. `E_(d) gt 1`C. `E_(d) lt 1`D. `E_(d)=1`
Answer» Correct Answer - b N/a

Discussion

4.	If the demand for a good is made by a rich consumer , its demand is generally.A. Less elasticB. Highly elasticC. Unitary elasticD. Perfectly elastic
Answer» Correct Answer - a N/a

Discussion

5.	price elasticity of demand measure percentage change in quantity demanded of a good due to precentage change inA. price of complementary goodsB. price of the goodC. income of a consumerD. tastes of a consumer.
Answer» Correct Answer - B

Discussion

6.	The Percentage change in demand is three times the percentage change in price. If original demand was 30 units at the price of ₹ 7 per unit, then calculate the price elasticity of demand, given price increased by 10% . Indicate whether the demand is elastic or not. Also calculate the new quantity demanded.
Answer» Correct Answer - Price Elastictiy of demand `(E_(d)) = (-)3;` Demand is highly elastic as `E_(d) gt1 ; ` New Quantity =21 units Given: percentage change in demand = 3times of percentage change in price i.e % change (fall) in demand = `3 xx 10 = -30 % ` (as price has increased by 10 %) Price Elasticity of Demand `(E_(d))= ("percentage change in Quantity Demand ")/("Percentage Change in price")` price Elasticirty of Demand `(E_(d))=(-30)/10 = (-) 3` As price is increasing , the quantity demanded will fall. it maeans, New Quantity = Original Quantity (Q) -% fall in demand = 30 - 30 % of 30 -30 -9 =21 units

Discussion

7.	The factors affecting `P.e_(D)` areA. nature of the commodityB. time periodC. availability of close substitutesD. all of these.
Answer» Correct Answer - D

Discussion

8.	Perfectly elasticy demand is represented by a curve which isA. prallel to Y-axisB. rectangular hyoperbolaC. parallell to X -axisD. Strainght line downward sloping.
Answer» Correct Answer - C

Discussion

9.	A 5% fall in the price of X leads to a 10% rise in its demand. In case of GoodY , a2% rise in price leads to a 6% fall in its demand. In the given case, _______ is more elastic.A. XB. YC. Both X and Y are equally elasticD. Both X and Y are inelastic
Answer» Correct Answer - b N/a

Discussion

10.	What will be `P.e_(D)` on any two points of a demand curve which is parllel to X axis ?A. zeroB. unequalC. equalD. higher on the point to the right.
Answer» Correct Answer - C

Discussion

11.	the following diagram represents____________elastic demand for commodity X. A. LessB. HighlyC. UnitaryD. Perfectly
Answer» Correct Answer - b N/a

Discussion

12.	A negative sign with coefficient of price elasticity of demaned denotes.A. Direct relation between price and quantity dmeandedB. Inverse relation between price and quantity demandedC. No relation between price and quantity demanded.D. none of these.
Answer» Correct Answer - b N/a

Discussion

13.	Which one of the following statements is incorrect:A. Higher numerical value of elasticity indicates larger effect of a price change on the quantity demanded.B. Elasticirty of demand can vary only between -1 and +1.C. The demand curves for all commodities which have unitary elastic demand will be rectangular hyperbola.D. Elasticity of demand establishes a quantitative relationship between quantity demanded of a commodity and its price. While other factors remain constant.
Answer» Correct Answer - b N/a

Discussion

14.	which of the following influence price elasticity of demand ?A. Nature of the commodityB. Income LevelC. Availability of subsitutesD. All the these.
Answer» Correct Answer - d N/a

Discussion

15.	Price elasticity of demand is best defined as :A. Change in the tastes of cpmsi,ers at doffermet prices.B. Change in demand when income of the consumer increases.C. The rate of response of demand toa change in pirce.D. The rate of response of demand to change in pirce of related goods.
Answer» Correct Answer - c N/a

Discussion

16.	If the price elasticity of demand for a commodity is less than unity, a decrease in price would result inA. Proportionately less in the quantity demanded.B. Prooportionately more inceases in the quantity demanded.C. Increases in total expenditure on the product.D. none of these.
Answer» Correct Answer - a N/a

Discussion

17.	If there is no change in quantity demanded to any charge in price, then demand is ___________ and demand curve is a _______.A. perfectly elastic, horizontal straight lineB. perfectly elastic, vertical straight lineC. perfectly inelastic , horizontal straight line.D. perfectly inelastic , horizontal straight line
Answer» Correct Answer - d N/a

Discussion

18.	Give the formula for measuring price is generally price elasticity of demand according to percentage method.
Answer» Elasticity of Demand `(E_(d))=("percentage Change in Demand")/("Percentage Change in price")`

Discussion

19.	Price Elasticity of Demand of a good is (-) 3 it shows that:A. When price falls by 1% demand rises by 3%B. when price rises by 1% demand its falls by 3%C. Either a or bD. Neither a nor b
Answer» Correct Answer - c N/a

Discussion

20.	`P.e_(D)` of good X is (-) 2 and of good Y is (-)3. which of the two goods is more price elastic ?A. XB. YC. both a and bD. Neither a nor b
Answer» Correct Answer - A

Discussion

21.	Among the following demand curves, which one is more elastic ? A. FB. EC. GD. H
Answer» Correct Answer - b N/a

Discussion

22.	the demand for meals at a medium- priced restaurant is elastic. If the management of the restaurant is considering raising prices, it can expect a relatively:A. proportionately large fallin quantity demandedB. No change in quantity demandedC. Proportionately small fall in quantity demandedD. infinite change in quantity demanded
Answer» Correct Answer - a N/a

Discussion

23.	Price Elasticity of Demand is infinty in case of horizontal straight line demand curve.
Answer» In case of horizontal straight line demand curve, slope of demand curve is zero. As a result, price elasticity of demand is infinity . It is proved as under. Elasticity of Demand `(E_(d))= 1/("Slope of demand Curve")xxP/Q=1/0xxP/Q=oo`

Discussion

Explore topic-wise InterviewSolutions in .

When price of a good falls from â‚¹ 15 per unit to â‚¹ 12 per unit, its demand rises by 25% , calculate `P.e_(D)`A. 0.8B. 0.33C. 1.25D. none of these

If ratio of Change in quantity `(DeltaQ)` to original quantity Q is 0.5 and elasticity of demand is (-) 1.25, calculate the percentage change in price.

The Indian Government imposed heavy taxes on commodity to reduce its consumption by the pubic such heavy taxes will decrease the deamand of the commodity only when:A. `E_(d)=0`B. `E_(d) gt 1`C. `E_(d) lt 1`D. `E_(d)=1`

If the demand for a good is made by a rich consumer , its demand is generally.A. Less elasticB. Highly elasticC. Unitary elasticD. Perfectly elastic

price elasticity of demand measure percentage change in quantity demanded of a good due to precentage change inA. price of complementary goodsB. price of the goodC. income of a consumerD. tastes of a consumer.

The factors affecting `P.e_(D)` areA. nature of the commodityB. time periodC. availability of close substitutesD. all of these.

Perfectly elasticy demand is represented by a curve which isA. prallel to Y-axisB. rectangular hyoperbolaC. parallell to X -axisD. Strainght line downward sloping.

A 5% fall in the price of X leads to a 10% rise in its demand. In case of GoodY , a2% rise in price leads to a 6% fall in its demand. In the given case, _______ is more elastic.A. XB. YC. Both X and Y are equally elasticD. Both X and Y are inelastic

What will be `P.e_(D)` on any two points of a demand curve which is parllel to X axis ?A. zeroB. unequalC. equalD. higher on the point to the right.

the following diagram represents____________elastic demand for commodity X. A. LessB. HighlyC. UnitaryD. Perfectly

A negative sign with coefficient of price elasticity of demaned denotes.A. Direct relation between price and quantity dmeandedB. Inverse relation between price and quantity demandedC. No relation between price and quantity demanded.D. none of these.

which of the following influence price elasticity of demand ?A. Nature of the commodityB. Income LevelC. Availability of subsitutesD. All the these.

Price elasticity of demand is best defined as :A. Change in the tastes of cpmsi,ers at doffermet prices.B. Change in demand when income of the consumer increases.C. The rate of response of demand toa change in pirce.D. The rate of response of demand to change in pirce of related goods.

If the price elasticity of demand for a commodity is less than unity, a decrease in price would result inA. Proportionately less in the quantity demanded.B. Prooportionately more inceases in the quantity demanded.C. Increases in total expenditure on the product.D. none of these.

Give the formula for measuring price is generally price elasticity of demand according to percentage method.

Price Elasticity of Demand of a good is (-) 3 it shows that:A. When price falls by 1% demand rises by 3%B. when price rises by 1% demand its falls by 3%C. Either a or bD. Neither a nor b

`P.e_(D)` of good X is (-) 2 and of good Y is (-)3. which of the two goods is more price elastic ?A. XB. YC. both a and bD. Neither a nor b

Among the following demand curves, which one is more elastic ? A. FB. EC. GD. H

Price Elasticity of Demand is infinty in case of horizontal straight line demand curve.