Question 1

For complementary goods, the cross elasticity of demand:

Accepted Answer

For complementary goods, the cross elasticity of demand is negative because as the price of one good increases, the demand for its complement decreases, and vice versa.

Question 2

If the amount of the commodity purchased remains unchanged when the price of another commodity changes, the cross elasticity of demand between them will be:

Accepted Answer

Cross elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good. If the quantity demanded remains unchanged with a change in the price of another good, the cross elasticity of demand is zero, indicating no relationship between the two goods.

Question 3

A market:

Accepted Answer

A market does not necessarily refer to a physical meeting place between buyers and sellers. It can also be virtual or digital, encompassing any arrangement that facilitates the exchange of goods, services, or information between parties.

Question 4

Wear and tear of capital due to constant use means:

Accepted Answer

Depreciation is the correct term for the wear and tear of capital goods due to their constant use over time. It represents the reduction in the value of physical assets as they are used in the production process.

Question 5

Primary sector includes:

Accepted Answer

The primary sector involves the extraction and production of raw materials, such as agriculture, mining, and fishing. Agriculture is a part of the primary sector as it involves the production of raw materials from the earth, such as crops and livestock.

Question 6

In India, the current base year is:

Accepted Answer

The base year for India's GDP calculation was updated to 2004-05.

Question 7

Wages and prices are ----------, according to the Classicals.

Accepted Answer

Classical economics posits that wages and prices are flexible, adjusting to changes in supply and demand to reach equilibrium.

Question 8

Say's Law of market was proved wrong by:

Accepted Answer

Say's Law, which posits that supply creates its own demand, was largely discredited by the economic realities of the Great Depression, which showed that demand could significantly lag behind supply, leading to widespread unemployment and unused capacity.

Quiz 2: Economics Terminology: Markets, Equilibrium, Supply,cost ,demand and Elasticity