CA Foundation Paper 4

Theory of Supply MCQ

Chapter 2 • 113 Questions from ICAI Study Material

Questions

113

Est. Time

85 min

Exam Weight

15-18%

Source

ICAI Book

Sample Questions: Theory of Supply

Preview 8 of 113 MCQs from Chapter 2

1. Demand for a commodity refers to:

A) desire backed by ability to pay for the commodity.
B) need for the commodity and willingness to pay for it
C) the quantity demanded of that commodity at a certain price.
D) the quantity of the commodity demanded at a certain price during any particular period of time. ✓

2. Contraction of demand is the result of :

A) decrease in the number of consumers.
B) increase in the price of the good concerned. ✓
C) increase in the prices of other goods.
D) decrease in the income of purchasers.

3. All but one of the following are assumed to remain the same while drawing an individual’s demand curve for a commodity. Which one is it?

A) The preference of the individual.
B) His monetary income.
C) Price of the commodity ✓
D) Price of related goods.

4. Which of the following pairs of goods is an example of substitutes?

A) Tea and sugar. THEORY OF DEMAND AND SUPPLY
B) Tea and coffee. ✓
C) Pen and ink.
D) Shirt and trousers.

5. In the case of a straight line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be:

A) 0
B) 1 ✓
C)
D) 2

6. The Law of Demand, assuming other things to remain constant, establishes the relationship between:

A) income of the consumer and the quantity of a good demanded by him.
B) price of a good and the quantity demanded. ✓
C) price of a good and the demand for its substitute.
D) quantity demanded of a good and the relative prices of its complementary goods.

7. Identify the factor which generally keeps the price-elasticity of demand for a good low:

A) Variety of uses for that good.
B) Very low price of a commodity ✓
C) Close substitutes for that good.
D) High proportion of the consumer’s income spent on it.

8. Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a good demanded is smaller than the percentage fall in its price:

A) Equal to one.
B) Greater than one.
C) Less than one. ✓
D) Zero.