Q1. Under perfect competition, the equilibrium price of the commodity is determined by:

  • Demand for the commodity alone
  • Supply of commodity alone
  • Both demand and supply
  • The government

Ans. Both demand and supply

Q2. In the situation of market equilibrium

  • Market demand = market supply
  • Market demand > market supply
  • Market demand < market supply
  • None of these

Ans. Market demand = market supply

Q3. In a situation of excess supply, market price tends to

  • Rise
  • Fall
  • Remain constant
  • None of these

Ans. Fall

Q4. If demand for a product falls, the equilibrium price will:

  • Fall
  • Rise
  • Either of the two
  • Neither of the two

Ans. Fall

Q5. What will be the effect on equilibrium price if supply is decreased without any change in demand?

  • No change in price
  • Price will fall
  • Price will rise
  • None of these

Ans. Price will rise

Q6. A fall in input price would cause:

  • Fall in equilibrium price an rise in quantity
  • Rise in equilibrium price and fall in quantity
  • Fall in equilibrium price as well as quantity
  • Rise in equilibrium price as well as quantity

Ans. Fall in equilibrium price and rise in the quantity

Q7. Supply being perfectly inelastic, what will be the effect of increasing or decreasing demand on price and equilibrium?

  • Price increase or decrease respectively
  • No effect on equilibrium quantity
  • Both (a) and (b)
  • None of these

Ans. Both (a) and (b)

Q8. When will an increase in supply bring down the price, leaving the quantity demanded unchanged?

  • When demand for the commodity is perfectly elastic
  • When demand for the commodity is perfectly inelastic
  • When demand for the commodity is less elastic
  • When demand for the commodity is more elastic

Ans. When demand for the commodity is perfectly inelastic

Q9. What would the price ceiling lead to when the maximum price is fixed lower than the equilibrium price?

  • Excess demand
  • Excess supply
  • Deficient demand
  • None of these

Ans. Excess demand

Q10. The market supply curve of perishable goods is a vertical straight line parallel to Y-axis. It happens in which of the following periods?

  • Long period
  • Short period
  • Very short period
  • All of these

Ans. Very short period

Q11. The minimum assured price offered by the government to the farmers for the purchase of their output is called:

  • Ceiling price
  • Equilibrium price
  • Support price
  • Market price

Ans. Support price

Q12. Decrease in the number of consumers causes:

  • Equilibrium price to rise
  • Equilibrium price to fall
  • No change in equilibrium price
  • None of these

Ans. Equilibrium price to fall

Q13. An increase in the income of the buyers (in case of an inferior good) will cause:

  • Fall in equilibrium price and quantity
  • Rise in equilibrium price and quantity
  • Fall in equilibrium price an quantity to rise
  • Rise in equilibrium price and quantity to fall

Ans. Fall in equilibrium price and quantity

Q14. When both the demand and supply curves shift to include an increase in demand and supply in the same proportion:

  • Only equilibrium price remains unchanged
  • Only equilibrium quantity remains unchanged
  • Equilibrium price remains unchanged but equilibrium quantity decreases
  • Equilibrium price remains unchanged but equilibrium quantity increases

Ans. Equilibrium price remains unchanged but equilibrium quantity increases

Q15. Which of the following statements is correct, in the case of excess demand?

  • Market supply will be less than market demand
  • Equilibrium price and equilibrium quantity will increase
  • Both (a) and (b)
  • Neither (a) nor (b)

Ans. Both (a) and (b)

Q16. At Px = ₹ 5, demand for Good- X is 3 units and supply of Good-X is 20 units, it is the situation of:

  • Excess demand
  • Excess supply
  • Equilibrium
  • None of these

Ans. Excess demand

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Goverment Budget