Theory of Demand and Supply

20 Practice MCQs available for CA Foundation

Paper

Paper 4: Business Economics

Exam Weightage

10%

Key Topics

Law of Demand/Supply, Elasticity, Consumer Behavior

One of the most important chapters in the entire CA Foundation Economics paper. It covers the Law of Demand, Law of Supply, Elasticity of Demand (Price, Income, and Cross), Consumer Behavior (Cardinal and Ordinal approaches), and the concept of Consumer Surplus. Understanding demand and supply curves and their shifts is essential for grasping market dynamics.

Exam Strategy Tip

Master the difference between 'Change in Demand' (shift) and 'Change in Quantity Demanded' (movement). This distinction alone can secure 3-5 marks. Also practice Elasticity numerical calculations.

Key Terms

Supply

Total amount of a good available to consumers.

Comparison Tables

Change in Demand vs Change in Quantity Demanded: 5 Marks Guaranteed

All 20 Questions

21

Demand for a commodity refers to:

22

Contraction of demand is the result of:

23

All but one of the following are assumed to remain the same while drawing the demand curve for a commodity. Which one is it?

24

Which of the following pairs of goods is an example of substitutes?

25

In the case of a straight line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be:

26

The Law of Demand, assuming other things to remain constant, establishes the relationship between:

27

Identify the factor which generally keeps the price-elasticity of demand for a good low:

28

If the price of Coffee increases, the demand for Tea will:

29

Which of the following is an exception to the law of demand?

30

Elasticity of demand for salt is:

31

The concept of elasticity of demand was developed by:

32

Cross elasticity of demand between tea and coffee is:

33

When the price of a substitute of commodity X falls, the demand for X:

34

Supply is a concept:

35

Expansion of supply occurs due to:

36

Which of the following is not a determinant of demand?

37

The slope of demand curve is generally:

38

If demand decreases and supply remains constant, equilibrium price will:

39

Giffen goods are:

40

Market demand is the sum of:

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