Demand in economics refers to
A Desire for a commodity
B Desire backed by willingness and ability to pay
C Mere need for a good
D Quantity supplied at a price
Demand is not just desire; it must be supported by willingness and purchasing power at a given price during a specific time period.
Which of the following is NOT an element of demand?
A Desire for the good
B Willingness to buy
C Ability to pay
D Profit motive
Demand consists of desire, willingness, and ability to pay. Profit motive is relevant for producers, not consumers.
Demand for a commodity is always expressed with reference to
A Time only
B Price only
C Price and time
D Income only
Demand is defined at a particular price and during a given time period, making both elements essential.
Which determinant of demand causes a movement along the demand curve?
A Change in income
B Change in taste
C Change in price of the commodity
D Change in population
A change in the price of the commodity itself leads to expansion or contraction of demand, shown as movement along the demand curve.
The law of demand states that
A Price and demand move in the same direction
B Demand remains constant
C Price and demand move in opposite directions
D Demand is independent of price
According to the law of demand, other things remaining constant, demand falls when price rises and rises when price falls.
The law of demand assumes
A Change in income
B Change in tastes
C Constant related goods prices
D Change in population
The law of demand holds under the assumption of ceteris paribus, including constant income, tastes, and prices of related goods.
Which of the following explains the inverse relationship between price and demand?
A Law of supply
B Income effect and substitution effect
C Law of diminishing returns
D Cost of production
Income and substitution effects together explain why demand falls when price rises and increases when price falls.
The substitution effect implies that
A Consumers buy more when income rises
B Consumers substitute cheaper goods for costlier ones
C Demand remains unchanged
D Utility remains constant
When the price of a good rises, consumers shift to relatively cheaper substitutes, reducing demand for the costlier good.
The income effect of a price fall for a normal good leads to
A Decrease in demand
B No change in demand
C Increase in demand
D Backward bending demand
A fall in price increases real income, encouraging consumers to buy more of a normal good.
Which of the following is NOT a determinant of demand?
A Consumer income
B Price of related goods
C Cost of production
D Tastes and preferences
Cost of production affects supply, not demand. Demand depends on income, tastes, prices of related goods, etc.
An increase in consumer income will increase demand for
A Inferior goods
B Giffen goods
C Normal goods
D Necessities only
Demand for normal goods increases as consumer income rises.
Demand for an inferior good decreases when
A Price falls
B Price rises
C Income increases
D Taste improves
Inferior goods are consumed less as income increases because consumers shift to better-quality substitutes.
Which of the following goods has a direct relationship between income and demand?
A Inferior goods
B Normal goods
C Giffen goods
D Free goods
Demand for normal goods increases with an increase in income, showing a positive income-demand relationship.
A rise in price of tea increases demand for coffee because they are
A Complementary goods
B Inferior goods
C Substitutes
D Luxury goods
Tea and coffee are substitutes; an increase in the price of one increases demand for the other.
Complementary goods are those which
A Are demanded jointly
B Compete with each other
C Are inferior
D Have no relation
Complementary goods like car and petrol are used together, so demand for one depends on the other.
Which factor causes a rightward shift of demand curve?
A Increase in price
B Decrease in income
C Increase in population
D Increase in price of the good
An increase in population raises the number of consumers, shifting the demand curve rightward.
A decrease in demand is represented by
A Rightward shift
B Leftward shift
C Upward movement
D Downward movement
A decrease in demand due to non-price factors causes the demand curve to shift leftward.
Expansion of demand refers to
A Rightward shift of demand curve
B Leftward shift of demand curve
C Increase in demand due to price fall
D Increase in demand due to income rise
Expansion of demand occurs when quantity demanded increases due to fall in the price of the good itself.
Contraction of demand occurs due to
A Increase in income
B Fall in price
C Rise in price
D Change in taste
Contraction of demand means reduction in quantity demanded due to rise in price of the commodity.
Which situation leads to a shift in demand curve?
A Change in price of the commodity
B Change in quantity demanded
C Change in income
D Movement along curve
Changes in income cause an increase or decrease in demand, shifting the entire demand curve.
The demand curve slopes downward mainly because of
A Law of supply
B Income effect
C Substitution effect
D Both income and substitution effects
The combined operation of income and substitution effects explains the downward slope of the demand curve.
Which of the following violates the law of demand?
A Normal goods
B Inferior goods
C Giffen goods
D Substitute goods
Giffen goods show a direct relationship between price and quantity demanded, violating the law of demand.
A Giffen good is typically
A A luxury good
B A normal good
C A staple inferior good
D A free good
Giffen goods are inferior staple goods where income effect outweighs substitution effect.
Which of the following is an exception to the law of demand?
A Necessaries
B Inferior goods
C Giffen goods
D Substitute goods
Giffen goods are a classic exception where demand rises with increase in price.
The demand for prestige goods increases with rise in price because
A Income effect dominates
B Substitution effect dominates
C Higher price increases status value
D Goods become inferior
Prestige or Veblen goods gain social status value as price rises, increasing demand.
Speculative demand arises due to
A Habit
B Expectations of future price changes
C Change in income
D Law of diminishing utility
Speculative demand occurs when consumers expect future price rise and buy more now.
Fear of shortage leads to
A Decrease in demand
B No change in demand
C Increase in demand at higher prices
D Perfectly elastic demand
Fear of shortage causes panic buying, increasing demand even at higher prices.
Which of the following explains exception due to ignorance?
A Consumers believe higher price means lower quality
B Consumers believe higher price means better quality
C Consumers prefer cheaper substitutes
D Consumers maximize utility
Ignorant consumers may associate higher price with better quality, increasing demand when price rises.
In case of a Giffen good, the income effect is
A Equal to substitution effect
B Less than substitution effect
C Greater than substitution effect
D Zero
For Giffen goods, negative income effect outweighs substitution effect, reversing the law of demand.
Which good shows positive price elasticity of demand?
A Normal goods
B Inferior goods
C Giffen goods
D Necessaries
Giffen goods show positive price elasticity because demand rises when price increases.
Movement along the demand curve occurs due to
A Change in income
B Change in taste
C Change in population
D Change in price
Price change causes movement along the same demand curve, not a shift.
A leftward shift of demand curve indicates
A Expansion of demand
B Contraction of demand
C Decrease in demand
D Increase in demand
Leftward shift reflects decrease in demand due to non-price factors.
Which factor shifts demand curve for a normal good to the right?
A Decrease in income
B Increase in income
C Increase in price
D Fall in population
Increase in income raises demand for normal goods, shifting curve rightward.
The demand curve shifts rightward when
A Price rises
B Quantity demanded falls
C Taste improves in favor of the good
D Supply increases
Favorable change in tastes increases demand, shifting the demand curve rightward.
Demand curve remains unchanged when
A Income changes
B Taste changes
C Price changes
D Population changes
Price change leads to movement along the curve, not a shift.
Which of the following is NOT an exception to the law of demand?
A Giffen goods
B Prestige goods
C Necessaries
D Speculative goods
Necessaries generally obey the law of demand, though demand may be inelastic.
Law of demand assumes that
A Consumer income changes
B Consumer taste changes
C Consumer income remains constant
D Population changes
The law of demand assumes constant income, tastes, and related goods prices.
Demand curve is downward sloping because
A Marginal utility increases
B Marginal utility decreases
C Total utility decreases
D Price remains constant
Law of diminishing marginal utility explains the downward slope of the demand curve.
Which good is least responsive to price change?
A Luxury goods
B Substitutes
C Necessaries
D Comfort goods
Necessaries have inelastic demand as they are essential for life.
If price rises and demand also rises, the good is
A Normal
B Inferior
C Giffen
D Substitute
Giffen goods show direct relationship between price and quantity demanded.
Which demand concept is purely hypothetical?
A Market demand
B Individual demand
C Effective demand
D Potential demand
Potential demand refers to maximum possible demand and is theoretical in nature.
Market demand is the
A Demand of one consumer
B Sum of individual demands
C Demand of government
D Demand at equilibrium
Market demand is obtained by horizontally summing individual demand curves.
An increase in price of complementary good will
A Increase demand
B Decrease demand
C Not affect demand
D Increase quantity demanded
Complementary goods are used together, so price rise of one reduces demand for the other.
Which demand curve is perfectly elastic?
A Vertical line
B Downward sloping line
C Horizontal line
D Upward sloping line
Perfectly elastic demand is represented by a horizontal demand curve.
A perfectly inelastic demand curve is
A Horizontal
B Vertical
C Downward sloping
D Backward bending
Perfectly inelastic demand is shown by a vertical line, where quantity demanded remains constant.
Demand curve slopes downward mainly due to
A Law of supply
B Increasing marginal utility
C Law of diminishing marginal utility
D Law of returns
As more units are consumed, marginal utility falls, requiring lower price to induce demand.
Demand schedule shows relationship between
A Income and demand
B Price and supply
C Price and quantity demanded
D Taste and demand
Demand schedule tabulates quantities demanded at different prices.
Individual demand curve shows demand of
A All consumers
B One consumer
C One firm
D Government
Individual demand curve reflects quantity demanded by a single consumer at different prices.
Which of the following causes decrease in demand?
A Fall in income for inferior goods
B Increase in population
C Rise in income for normal goods
D Improvement in taste
For inferior goods, fall in income increases demand; hence rise in income reduces demand.
The law of demand is based on the assumption of
A Change in income
B Ceteris paribus
C Change in taste
D Change in population
The law of demand operates under the assumption that other factors remain constant.