ECONOMICS

BOOKS SANDEEP GARG ECONOMICS (HINGLISH)

DEMAND

Mcqs

1. Which of the following is an example of complementary goods ?

A. Tea and Coffee

B. Coke and Pepsi

C. Rice and Wheat

D. None of these

Answer: D
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2. The demand for normal good ______ with an increase in income of the

consumer.

A. Increases

B. Decreases

C. Remains same

D. Either increases or decreases

Answer: A

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3. Increase in price of substitude good leads to :

A. Expansion in Demand

B. Increase in Demand
 C. Decrease in Demand

D. Contraction in demand

Answer: B

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4. A, B, and C are three commodities, where A and B are complementary ,

whereas A and C are substitudes. With increase in price commodity A :

A. Demand of all the commodities A, B and C will fall

B. Demand of commodities A and B will fall, whereas demand of C will

rise

C. Demand of commodities A and C will fall, whereas demand of B will

rise

D. Demand of commodities B and C will fall, whereas demand of A will

rise
Answer: B

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5. When two or more goods are demanded simultaneously, it is known as

A. Joint Demand

B. Alternate Demand

C. Direct Demand

D. Composite Demand

Answer: A

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6. There will be a _______ in the demand curve of cars with an increase in

the price of petrol :

 A. Rightward shift

B. Upward Movement

C. Leftward shift

D. Downward Movement

Answer: C

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7. The demand curve for a commodity is generally drawn on the

assumption that :

A. Prices of substitute goods do not change

B. Tastes and preferences of the consumer remain the same

C. Income of the consumer remains the same

D. All of these

Answer: D
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8. Which one of these is not an example of substitude goods ?

A. Tea and Coffee

B. Coke and Pepsi

C. Ink pen and Ball pen

D. Bread and Butter

Answer: D

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9. Law of Demand states the ______ relationship between price of quantity

demanded.

A. Inverse

B. Positive
 C. Proportional

D. None of these

Answer: A

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10. Expansion in demand leads to :

A. Rightward shift in demand curve

B. Downward Movement along the demand curve

C. Upward Movement along the demand curve

D. None of these

Answer: B

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11. Which one of these is a determinant of individual demand ?

A. Size and composition of population

B. Season and weather

C. Distribution of Income

D. None of these

Answer: D

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12. Form the given demand schedule, determine the effect on demand

curve
Price (Rs.) 20 20

Demand (Units) 100 70

A. Rightward shift in demand curve

B. Left shift in Demand curve

C. Upward Movement along the demand curve

 D. Downward Movement along the demand curve

Answer: B

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13. Expansion in demand occurs due to :

A. Rise in price of the given commodity

B. Fall in price of the given commodity

C. Rise in price of substitute goods

D. Fall in price of complementary goods

Answer: B

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14. There is a sudden change in climatic conditions resulting in hot

weather. Assuming no change in the price of the cold drinks, it will lead to

A. Upward movement along the same market demand curve

B. Downward movement along the same market demand curve

C. Rightward shift in the market demand curve

D. Leftward shift in the market demand

Answer: C

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15. A movement along the demand curve for soft drinks is best described

as :

A. Increase in demand

B. Decrease in demand
 C. Change in quantity demanded

D. Change in demand

Answer: C

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16. If more is demanded at the same price or same quantity at a higher

price, this fact of demand is known as :

A. Extension of demand

B. Increase in demand

C. Contraction of demand

D. Decrese in demand

Answer: B

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17. Cross demand states the relationship between :

A. Demand of given commodity and price of related goods

B. Demand of given commodity and income of the consumer

C. Demand of given commodity and taste and preferences

D. None of these

Answer: A

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18. Which of the following is not an assumption of law of demand ?

A. Price of substitute goods do not change

B. Income of the consumers remain same

C. There is no change in tastes and preferences of the consumers

D. Price of the given commodity does not change.

Answer: D

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19. If change in price of good A affects the demand for good B, then :

A. A is a substitude of good B

B. A is a complement of good B

C. Both (a) and (b)

D. Either (a) or (b)

Answer: D

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20. In a typical demand schedule, quantity demanded :

A. Varies directly with price

 B. Varies proportionately with price

C. Varies inversely with price

D. Is independent of price

Answer: C

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21. Which of the following is a determinant of market demand ?

A. Income of the consumers

B. Season and weather

C. Price of related goods

D. All of the above

Answer: D

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22. Which of the following factors will lead to a leftward shift in the

demand curve :

A. Increase in income in case of inferior goods

B. Increase in income in case of normal goods

C. Increase in Population

D. Expectation of future increase in price

Answer: A

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23. Decrease in the price of the complementary goods leads to :

A. Upward movement along the same market demand curve

B. Downward movement along the same demand curve

C. Rightward shift in the demand curve

D. Leftward shift in the demand curve

Answer: C

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24. If price of good 'X' rises and it leads to a fall in demand for good 'Y',

then the two goods are :

A. Substitute goods

B. Complementary goods

C. Normal goods

D. Inferior goods

Answer: B

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25. Market demand curve is obtained by ______ summation of the

individual demand curves.

 A. Vertical

B. Horizontal

C. Both (a) and (b)

D. Neither (a) or (b)

Answer: B

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26. Ceteris paribus means :

A. Holding supply constant

B. Holding demand constant

C. Price being constant

D. Other factors being constant

Answer: D

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27. An increase in real income of a consumer induces him to buy more of

a commodity whose prices has fallen. This is known as :

A. Inducement Effect

B. Substitution Effect

C. Income Effect

D. Utility Effect

Answer: C

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28. Expansion of Demand is associated with :

A. Rise in Price, Rise in quantity demanded

B. Fall in Price, Fall in quantity demanded

C. Fall in Price, Rise in quantity demanded

 D. Rise in Price, Fall in quantity demanded

Answer: C

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29. If X and Y are Complementary Goods, then with increase in price of X :

A. Demand of X will decrease and demand of Y will increase

B. Demand of X will increase and demand of Y will decrease

C. Demand of X and Y will increase

D. Demand of X and Y will decrease.

Answer: D

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30. If Tea and Coffee are substitutes, a fall in the prices of Tea leads to :

(i) Rise in the demand for Tea

(ii) Fall in the demand of Tea

(iii) Fall in the demand for Coffee

(iv) Rise in the demand of coffee.

A. Both (ii) and (iv)

B. Both (i) and (iii)

C. Both (ii) and (iii)

D. Both (iii) and (iv)

Answer: B

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31. A except one of the following are assumed to remain same while

drawing an individual's demand curve for a product. Which one is it ?

 A. Tastes and Preferences of the individual

B. Monetary income

C. Price of the given product

D. Price of related goods

Answer: C

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32. With fall in price of a commodity, demand of the commodity increases

as it becomes relatively cheapter in comparision to other commodities.

This effect is known as :

A. Substitution Effect

B. Income Effect

C. Law of Demand Law of Diminishing Returns.

D.
Answer: A

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33. The demand function of a product X is given as : Dx = 12 - 2Px, where Px

stands for price. The demand at price of Rs. 2 will be :

A. 6

B. 8

C. 5

D. 10

Answer: B

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34. The demand function of a product X is given as : Dx= 12- 2px, where Px

stands for price. If an individual Y has a demand of 8 units, then market

price of the product is :

A. Rs. 4

B. Rs. 5

C. Rs. 3

D. Rs. 4.5

Answer: A

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35. The demand function of a productX is given : Dx = 12- Px, where Px

stands for price. If there are 5,000 costomers for the product, then

demand for the product at market price of Rs. 3 will :

A. 40000

B. 30000

C. 20000
 D. 16000

Answer: B

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36. Two commmodities A and B can be inferred as close substitudes of

each other if :

A. Rise in price of one leads to an increase in demand of other and

vice-versa

B. Rise in price of one leads to a decrease in demand of other and vice-

versa

C. Fall in price of one lead to fall in demand of other one, but not the

other way round

D. Rise in price of one lead to rise in demand of other one, but not the

other way round

Answer: A

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37. A goods can be considered a normal good if an increase in income of

the consumer causes ______ in demand of the given food.

A. Increase

B. No change

C. Decrease

D. less than proportionate increase

Answer: A

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38. Expansion and contraction in demand are caused by :

 A. Change in price of the given good

B. Change in income

C. Change in prices of related goods

D. Change in population

Answer: A

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39. When income of the consumer falls, the impact on price-demand curve

of an inferior good is : (choose the correct alternative)

A. Shifts to the right

B. Shift to the left

C. There is upward movement along the curve

D. There is downward movement along the curve

Answer: A
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40. If due to fall in the price of goofd X, demand for good Y rises, the two

goods are : (Choose the correct alternative)

A. Subsitutes

B. Complements

C. Not related

D. Competitive

Answer: B

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41. If with the rise in price of good Y, demand for goof X rises, the two

goods are : (Choose the correct alternatives)

A. Substitutes
 B. Complements

C. No related

D. Jointly demanded

Answer: A

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42. The demand curve of a good shifts from DD' to dd'

This shift can be caused by : (Choose the correct alternative)

 A. fall in the price of the good

B. rise in the price of the good

C. rise in the price of substitute goods

D. rise in the price of complementary goods

Answer: C

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43. An increase in the price of Coffee will have the following effect on the

demand curve of Tea :

A.
 B.

C.

D.

Answer: D

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44. The following movement in the demand curve is because of :

A. Increase in price of given commodity

B. Decrease in price of given commodity

C. Increase in price of substitute good

D. Decrease in price of complementary good

Answer: A
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45. What does the following diagram represents ?

A. Change in Demand

B. Change in Quantity Demanded

C. Both (a) and (b)

D. Neither (a) or (b)

Answer: B
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46. Which of the following represents market demand curve ?

A. D 1
D1

B. D 3
D3

C. D 2
D2

D. None of the above

Answer: B

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47. Which of the following diagram represent the situation of 'Expansion

in Demand' ?

A.

B.

C.
 D.

Answer: A

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48. The slope of demand curve is generally :

A. Negative

B. Positive

C. Constant

D. Either (a) or (b)

Answer: A

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 49. Any statement about demand for a good is considered complete only

when the following is/are mentioned in it (Choose the correct alternative)

A. Price of the good

B. Quantity of the good

C. Period of time

D. All of the above

Answer: D

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Short Answer

1. Explain three factors that can bring about an increase in the market

demand for a commodity.

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2. Define market demand. State the law of demand and the assumptions

behind it.

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3. Explain the effect of increase in income of the consumer on demand for

a good.

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4. State any 3 factors that cause an 'increase' in demand of a commodity

OR

Give any three factors that can cause a rightward shift of demand curve.

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5. Distinguish between 'change in demand' and change in quantity

demanded of a commodity.

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6. Differentiate between movement along demand curve and shift in

demand curve.

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7. What is meant by expansion is demand ? Explain it with the help of a

schedule and a diagram.

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8. Define the following terms : (i) Increase in demand , (ii) Decrease in

demand , (iii) Contraction in demand.

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9. Distinguish between expansion in demand and increase in demand

OR

Distinguish between 'decrease in demand' and increase in quantity

demanded of a commodity.

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10. Distinguish between 'decrease in demand' and 'decrease in quantity

demanded' of a commodity.

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11. Which changes can cause a leftward shift in the demand curve ? Also

state the change, which causes downward movement along the demand

curve ?

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12. Explain the effect of a rise in the prices of 'related goods' on the

demand for a good X.

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13. Goods X and Y are substitutes. Explain the effect of fall in price of Y on

demand for X.

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14. Explain the meaning of normal goods and inferior goods.

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15. Distinguish between a normal good and inferior good. Give example in

each case.
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16. Distinguish between complementary goods are substitude goods.

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17. What is 'market' demand ? State four factors causing 'increase' in

market demand.

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18. What happens to the demand of a good when consumer's income

change ?

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19. How does change in price of a substitute good affect the demand of

the given good ? Explain with the help of an example

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20. How does change in price of complementary good affect the demand

of the given good ? Explain with the help of an example

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21. Explain the effect of : (a) change in own price and (b) chane in price of

substitude on demand of a good.

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22. Distinguish between individual's demand and market demand. Name

the factors affecting demand for a good by an individual.

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Long Answer

1. Define demand. Explain why 4 factors that affect demand for a

commodity.

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2. Explain the law of demand with the help of an imaginary schedule and

diagram.

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3. Explain the causes behind law of demand

OR

Why is there an inverse relationship between the price of a commodity

and its quantity demanded ?

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4. Distinguish between : (a) individual demand and market demand , (b)

Change in demand and change in quantity demanded.

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5. Explain in brief, the various exceptions to law of demand

OR

Briefly discuss the various exceptions to law of demand

OR

Briefly discuss the various situations for positive relationship between

price and quantity demanded.

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6. Explain the causes of a rightward shift in demand curve of a commodity

of an individual consumer.
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7. Explain with the help of diagrams, the effect of the following changes

on the demand of a commodity : (i) Fall in the price substitude good , (ii)

Fall in the income of its buyer.

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8. Distinguish between an inferior good and a normal good. Explain the

effect of change in income on each, giving suitable examples.

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9. Explain with the help of diagrams, the effect of the following changes

on the demand of a commodity : (i) An unfavorable change in taste of the

buyer for the commodity , (ii) A fall in the income of its buyer, if the

commodity is inferior.
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10. Explain causes of leftward shift in demand curve of a commodity.

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11. A consumer consumes good 'X'. Explain the effects of all in the prices

of related goods on the demand of 'X'. Use diagrams showing demand for

good 'X' on the x-axis and is price on y-axis.

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12. Explain how do the following influece demand for a good : (i) Rise in

income of the consumer , (ii) Fall in prices of the related goods.

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 13. Explain the relationship between : (i) Prices of other goods and

demand for the given good , (ii) Income of the buyers and demand for a

good.

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14. Explain the effect of the change in the prices of related goods on the

demand for a given good.

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Unsolved Particles

1. From the following data regarding individual demand schedules of

households A, B and market demand schedule, prepare the demand

schedule of household C, assuming that there are only three households

in the market
Price Rs. Individual Demand (units) Market demand (units)
¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯
A B C

7 20 16 − 51

8 18 15 − 46

9 16 12 − 39

10 13 10 − 32

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2. Suppose there are 3 consumers in a particular market : A, B and C. Their

demand schedules are given in the following table. Prepare the market

demand schedule
Price (Rs.) Individual Demand (units)
¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯
A B C

1 60 30 70

2 40 25 65

3 32 18 50

4 25 15 30

5 18 0 22

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3. On the basis of information given in the following table, prepare the

demand schedules for three commodities :

Price (Rs.) Total Expenditure
¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯
A B C

2 6 6 6

3 6 4 7

4 6 4 8

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4. The demand function of a commodity x is given by QX = 20 − 3PX .

Find out the values of P , when corresponding values of Q are given as

X X

: 5, 8, 11 and 14.

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Example

1. There are 3 households : A, B and C in a market. From the following

table, calculate demand for household B at various levels of price :

Price Rs. Household A Household B Household C Market Demand

14 12 - 22 52

12 16 - 32 72

10 24 - 44 102

8 34 - 60 142

6 48 - 84 198

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2. Prepare the market demand schedule from the given demands of

individuals. (Assuming that there are only three individuals X,Y and Z in

the market)
Price Rs. Demand (X) Demand (Y) Demand (Z)

4 10 5 4

5 8 4 3

6 6 3 2

7 4 2 1

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3. The following table shows the expenditure, which Amit is willing to

spend on commondity 'x' at various levels of price. Prepare demand

schedule of Amit
Price (Rs.) 5 6 7 8 9

Expenditure (Rs.) 100 96 84 80 72

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4. The demand function of a commodity x is given by Qx = 12 − 2Px .

Prepare the demand schedule, if its price various from Rs 6 to Re. 1 :

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5. There are only 3 consumers (X, Y and Z) in a market and there demand

functions are given as : Q X

= 30 − 2P , QY = 40 − 3P , QZ = 50 − 4P

From the given individual demand functions, determine the market

demand function. Also, calculate the market demand at a price Rs. 10 per

unit.

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 6. With the help of demand function : , answer the
Qd = 40 − 5p

following questions :

(i) Calculate demand at price of Rs. 2 ,

(ii) Calcualte price, when demand will be 0 ,

(iii) Calculate demand, when price will be 0.

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Higher Order Thinking

1. Law of Demand is a Qualitative statement. Comment

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2. A new steel plant comes up in Jharkhand. Many people who were

previously unemployed in the area are now employed. How will this affect

demand curve for B.W. TV and Colour TV ?

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3. In order to encourage tourism in Goa, Indian Airlines reduces the air

fare to Goa. How will it affect market demand curve for air travel to Goa ?

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4. There are train and bus services between New Delhi and Jaipur.

Suppose that the train fare between the two cities comes down. How will

this affect demand curve for bus travel between the two cities ?

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5. How is the demand for a good affected by a rise in the prices of other

goods ? Explain

OR

Does a rise of other good have same effect on demand for a commondity

?
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6. What is the relation between good x and good y in each case, if with a

fall in price of x demand for good y (i) rises and (ii) falls ? Give reason.

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7. Categorise the following changes as expansion, contraction, increase or

decrease in demand (assuming the given commodity is a normal good) :

(i) When prices of a substitude rises

(ii) When price of the given commodity increases

(iii) When income of the consumers increases

(iv) When price of the given commodity is expected to fall in further

(v) When the given commodity becomes a fashion good

(vi) When there is sudden decrease in population due to an earthquake

(vii) When the price of the given commodity falls.

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8. Categorise the following diagrams as expansion, contraction, increase

or decrease in demand (assuming the given commodity is a normal good)

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9. Answer the following by filling in the blanks :

(i) The sum total of both the substitution and the income effect is called

the ______

(ii) If a fall in the price of one good raises the demand for another good,

the two goods are called ______

(iii) If demand for a commodity rises even without any change in its price,

then it is known as ______

(iv) In case of ______ goofd, demand rises with increase in income

(v) ______shows the tabular presentation of various quantities of a

commodity a consumer is willing the buy at different prices, during a

given period of time.

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10. What will be the impact of the following changes on the demand

curve of :

(i) Cars when there is an increase in price of petrol

(ii) Desktop Computers with increase in price of Laptops

(iii) Bread with increase in its price

(iv) Trousers due to change in preference in favour of Jeans

(v) Bajra for a poor person when income of such person rises

(vi) Coffee when price of tea falls

(vii) Petrol if its price is expected to rise in near further.

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11. Derive the law of demand from the single commodity equilibrium

condition ''Marginal utility = Price''.

OR

Derive the inverse relation between price of a good and its demand from

the single commodity equilibrium condition 'Marginal utility = Price'.

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12. Distinguish between an inferior good and a normal good. Is a good

which is inferior for one consumer also inferior for all the comsumers ?

Explain

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13. Give the meaning of ''inferior'' good and explain the same with th help

of an example.

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 14. Distinguish between demand by an individual consumer and market

demand of a good. Also state the factors leading to fall in demand by an

individual consumer.

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True And False

1. If a fall in price of Good X leads to a rise in demand for Good Y, then X

and Y are substitude goods.

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2. Increase in price of bulbs will shift its demand curve towards left.

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3. Demand of a given commodity can be specified irrespective of its price.

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4. A rise in price of tea will lead to an upward movement in the demand

curve of coffee.

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5. Due to fall in cost of making bicycles, its price has reduced. It will shift

the demand curve of bicycles towards right.

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6. Demand of a commodity may rise or fall even when price of the given

commodity remains constant.

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7. Demand curve of Pepsi will not shift with rise or fall in its price.

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8. Cross price effect occurs in case of substitude goods only

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9. Demand curve for automobiles shift towards right due to opening up

of a new automobile dealer in the town.

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10. A shift in demand curve of the given commodity may be caused by

change in any determinant of demand function.

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11. Expansion in demand leads to an upward movement along the same

demand curve

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12. Cross demand is positive in case of substitude goods.

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13. Market demand curve is obtained by vertical summation of individual

demand curves.

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14. Market demand curves is flatter than individual demand curves.

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15. Due to increase in one more member, the family expenditure on milk

increased. It is an example of extension in demand.

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16. The demand curve of a commodity may not obet the law of demand if

price of its substitude rises.

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17. In case of giffen goods, demand curve slope upwards.

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18. Consumer's taste and preferences must change in order to apply Law

of demand.

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19. Size and composition of population affect the demand for an

individual.

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20. Law of Demand indicates the direction and amount of change in

demand of a commodity due to change in its price.

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21. If a household buys more of a commodity due to rise in income, then

the given commodity must be an inferior one.

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22. If X and Y are substitutes of one another, then relationship between

the prices of good X and demand of good Y will be shown by a curve that

will slope upwards.

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23. Ceteris paribus' clause in the law of Demand means that the price of

the given commodity does not change.

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24. The exceptions to the law of demand may be true for an individual but

not for the whole market.

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25. If more is demanded at the same price or the same quantity is

demanded at a higher price, it is known as extension of demand.

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26. Cross demand tells the relationship between the price and demand

for a commodity.

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27. If the goods X and Y are substitudes, a rise in price of X will result in a

rightward shift in demand curve of Y.

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28. The demand for a commodity always increases with increase in the

price of other goods.

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29. The demand for a good increases with the increase in the income of

its buyer.

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Ncert Questions

1. Suppose there are two consumers in the market for a good and their

demand functions are as follows :

∗ d 1 (p) = 20 − p for any price less than or equal to 15, and d 1

(p) = 0 at

ant price greater than 15.

∗ d 2 (p) = 30 − 2p for any price less than or equal to 15 and d 1 (p) = 0

at any price greater than 15.

Find out the market demand function.

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2. Suppose there are 20 consumers for a good and they have identical

demand functions : d(p) = 10 − 3p for any price less than or equal to

10 10
and d 1 (p)0 at any price greater than . What is the market
3 3

demand funciton ?

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3. Consider a market where there are just two consumers and suppose

their demand for the good are given as follows :

Price (Rs.) Demand1 Demand2

1 9 24

2 8 20

3 7 18

4 6 16

5 5 14

6 4 12

Calculate the market demand for the good.

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4. What do you mean by a normal good ?

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5. What do you mean by an inferior good ? Give some examples

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6. What do you mean by substitudes ? Give examples of two goods which

are substitutes of each other.

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7. What do you mean by complements ? Give examples of two goods

which are complements of each other.

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Very Short
1. Define demand for a good

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2. Define market demand.

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3. Define substitude goods.

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4. What is meant by complementary goods ?

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5. If the demand for good Y increases as the price of good X increases,

how are the two goods related ?

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6. If the price of good X rises and this leads to a fall in the demand for

good Y, how are the two goods related ?

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7. How will an increase in the price of petrol affect the demand curve of

scooter ?

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8. When a good is called an 'inferior good' ?

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9. A rise in the income of the consumer of a good X leads to a fall in the

demand for that good. What is the good X called ?

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10. Define demand schedule or individual demand schedule.

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11. What is Law of demand ?

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12. Define change in quantity demanded.

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13. What is meant by expansion in demand ?

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14. When the demand for a good falls due to a rise in its own price, what

is the change in demand called ?

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15. Define 'change in demand'.

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16. What is meant by increase in demand ?

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17. When the demand for a good falls due to an unfavourable change in

the consumer's preferences, what is the change in demand called ?

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18. Give on example, when a consumer buys less of a commodity at the

same price

OR

Give one reason for a leftward shift in demand curve.

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19. Give one reason for a rightward shift in demand curve.

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20. Suppose that goof A is a substitude of good B. How will an increase in

the price of good B affect the demand curve of good A ?

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21. What is meant by the puchasing power of money ?

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22. What causes an upward movement along a demand curve of a

commodity ?

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23. In price of petrol is expected to increase in future, what will be effect

on its demand in the present period ?

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24. Give one reason for a shift in demand curve.

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25. What does a rightward shift of demand curve indicate ?

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26. What is the relation between price of a good and demand of its

complementary good ?

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27. Suggest any one economic meaure by which the government can

promote consumption of 'Khadi'

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28. What economic measure can the Government take to reduce demand

for commodity × which is harmful for health ?

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29. When does 'decrease' in demand take place ?

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30. Ceteris Paribus, if the government provides subsidies on electricity

bills, what would be the likely change in the market demand of desert

coolers ?

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31. When is a good considered a normal good ?

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