Economics · Commerce Accountancy

Microeconomics and Pricing

1,413 Questions

Microeconomics and pricing analyze market structures, consumer utility, marginal cost, and strategic pricing models like predatory pricing. These foundational economic concepts are regularly featured in civil services and state administrative examinations. Solve these practice questions to understand market equilibrium, demand elasticity, and competitive firm behavior.

Market equilibrium pricingIncome elasticity of demandMarginal cost conceptsUtility functions analysisPredatory pricing strategiesOligopoly market structures

Microeconomics and Pricing Questions

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Elasticity of supply depends upon ________.

  1. nature of the commodity

  2. production technology

  3. future outlook of prices

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Elasticity of supply is affected by many factors, including the nature of the commodity, production technology, and future price expectations.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

If a dealer is prepared to supply 1000 sets of a 29" Colour TV if the price is Rs. 12,000 per set, however if at Rs. 15,000, the dealer is prepared to supply on 1250 sets of TV the elasticity of supply is ________.

  1. 1

  2. 2

  3. 0.75

  4. 1.4
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Elasticity = (% change in Q) / (% change in P). % change in Q = (250/1000) = 25%. % change in P = (3000/12000) = 25%. Elasticity = 25/25 = 1.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Which of these does not affect elasticity of supply?

  1. Size of population

  2. Disposal income of consumer

  3. Consumers taste and preference

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Factors like population size, disposable income, and consumer preferences affect the demand side, not the supply side elasticity.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

A supply curve passing through the origin will have elasticity _______.

  1. less than 1

  2. more than 1

  3. just one

  4. zero
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A linear supply curve passing through the origin has a constant elasticity of 1 (unitary elastic) because the percentage change in quantity is always equal to the percentage change in price.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Which of these will have highly inelastic supply curve ___________.

  1. perishable goods

  2. consumer durable goods

  3. items of elite class consumption

  4. all of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Perishable goods have highly inelastic supply because they cannot be stored for long periods, so producers must sell them regardless of price changes.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Very short period is the market condition where the supply remains perfectly ___________.

  1. elastic

  2. inelastic

  3. unity elastic

  4. elasticity less than 1
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the very short period, producers cannot adjust their production levels to price changes because time is insufficient to change inputs. Therefore, the quantity supplied remains fixed regardless of price, making supply perfectly inelastic.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Very short period is the market condition where the supply remain perfectly____.

  1. elastic

  2. inelastic

  3. unity elastic
  4. elasticity is less than $1$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This appears to be a duplicate or near-duplicate of question 485797. In the very short period or market period, supply remains perfectly inelastic because producers have no time to adjust production. The goods available for sale are fixed, and new production cannot occur instantaneously regardless of price changes.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Unitary elasticity of supply means _________.

  1. ${ E } _{ s }>1$
  2. ${ E } _{ s }<1$
  3. ${ E } _{ s }=1$
  4. ${ E } _{ s }=0$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Unitary elasticity means that the percentage change in quantity supplied is exactly equal to the percentage change in price, resulting in an elasticity coefficient of 1.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

A horizontal supply curve parallel to the quantity axis (X-axis) implies that the elasticity of supply is _______.

  1. zero

  2. infinity

  3. equal to one

  4. greater than zero but less than infinity
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A horizontal supply curve indicates that at a specific price, the quantity supplied can be infinite. This represents perfect elasticity, where elasticity is infinity.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Relatively elastic supply means ________.

  1. ${ E } _{ s }>1$
  2. ${ E } _{ s }<1$
  3. ${ E } _{ s }=\infty$
  4. ${ E } _{ s }=0$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Relatively elastic supply occurs when the percentage change in quantity supplied is greater than the percentage change in price, meaning elasticity is greater than 1.