Theory of Demand and SupplyMCQPYQ - Dec 2020Question 27 of 125
All Questions

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

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option b — Very low price of a commodity

All Options:

  • AVariety of uses for that good
  • BVery low price of a commodity
  • CClose substitutes for that good
  • DHigh proportion of the consumer's income spent on it

Detailed Solution & Explanation

PYQ - Dec 2020

About This Chapter: Theory of Demand and Supply

Paper

Paper 4: Business Economics

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.

View Official ICAI Syllabus

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 Concepts to Understand

Elasticity of Demand

A measure of responsiveness of quantity demanded to a change in price.

Related Comparison Tables

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

More Questions from Theory of Demand and Supply

Demand for a commodity refers to:

Contraction of demand is the result of:

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

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

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:

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

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