In the context of elasticity, the demand for a necessary good with no close substitutes is likely to be: MCQ with Answer and Explanation

Question
In the context of elasticity, the demand for a necessary good with no close substitutes is likely to be:
A. Perfectly elastic
B. Unitary elastic
C. Relatively inelastic
D. Highly elastic
Answer: Option C
Solution (By JKSSB Mock Tests)
Necessities with few or no close substitutes tend to have inelastic demand because consumers cannot easily reduce consumption when price rises.
This question belongs to: Economy GK Economy Set 1
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Practice More Economy Set 1 Questions

Question #1
The 'Consumer Price Index for Industrial Workers' is compiled by the Labour Bureau and is used for:
A. calculating inflation for urban consumers
B. stock market index
C. dearness allowance and wage revisions
D. GDP deflator
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Correct Answer: Option C

Explanation:
CPI-IW is used for dearness allowance and wage revisions.
This question belongs to: Economy GK Economy Set 1
Question #2
The 'Goods and Services Tax' on security services is:
A. 12%
B. 28%
C. 18%
D. 5%
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Correct Answer: Option C

Explanation:
Security services attract 18% GST.
This question belongs to: Economy GK Economy Set 1
Question #3
Which of the following is NOT a type of tax based on the impact on income distribution?
A. Regressive tax
B. Ad valorem tax as a distribution classification
C. Proportional tax
D. Progressive tax
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Correct Answer: Option B

Explanation:
Ad valorem is a classification based on the method of assessment (percentage of value). Based on impact on distribution, taxes are progressive, proportional or regressive.
This question belongs to: Economy GK Economy Set 1
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