Demand Analysis & Consumer Theory

JKSSB Panchayat Account Assistant · General Economics · 16 practice questions with answers and explanations: 3 Easy, 7 Medium, 6 Hard.

Sample questions

Sample Easy question 1

Cars and petrol are examples of:

  1. Complementary goods
  2. Veblen goods
  3. Substitute goods
  4. Free goods
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Answer: A. Complements are used together; a rise in petrol prices tends to reduce the demand for cars.

Sample Medium question 2

If the price of coffee rises, what happens to the demand curve for tea?

  1. It shifts to the left
  2. Movement down along the same curve
  3. It shifts to the right
  4. It does not change
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Answer: C. A rise in the price of a substitute increases demand for tea at every price, shifting its demand curve rightward.

Sample Hard question 3

A good whose quantity demanded rises when its price rises, because it is a staple for poor households, is called a:

  1. Normal good
  2. Complementary good
  3. Giffen good
  4. Luxury good
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Answer: C. Giffen goods are a strongly inferior staple where the income effect outweighs the substitution effect, an exception to the law of demand.

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