For an inferior good, the income effect of a price fall: MCQ with Answer and Explanation

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For an inferior good, the income effect of a price fall:

A. does not affect quantity demanded

B. decreases quantity demanded

C. always equals the substitution effect

D. increases quantity demanded

Answer: Option B

Solution (By JKSSB Mock Tests)

For an inferior good, a price fall raises real income, and the income effect causes the consumer to buy less of the good.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'International Poverty Line' of the World Bank is currently set at:

A. USD 5.50 per day

B. USD 2.15 per day in 2017 PPP

C. USD 10 per day

D. USD 1.00 per day

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Correct Answer: Option B

Explanation:
The World Bank's international poverty line is USD 2.15 per day in 2017 PPP.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'India Trade Promotion Organisation' is responsible for:

A. stock trading

B. organizing trade fairs and promoting exports

C. collecting taxes

D. regulating banks

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Correct Answer: Option B

Explanation:
ITPO organizes trade fairs and promotes India's external trade.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a type of elasticity of demand?

A. Price elasticity, income elasticity and cross elasticity

B. Only cost elasticity

C. Only supply elasticity

D. Only production elasticity

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Correct Answer: Option A

Explanation:
The main types of demand elasticity are price elasticity of demand, income elasticity of demand and cross elasticity of demand.

This question belongs to: Economy GK Economy Set 1

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