CBSE Class 12 Economics Demand Worksheet

CBSE Class 12 Economics Worksheet - Demand. CBSE issues sample papers every year for students for class 12 board exams. Students should solve the CBSE issued sample papers to understand the pattern of the question paper which will come in class 12 board exams this year. The sample papers have been provided with marking scheme. It’s always recommended to practice as many CBSE sample papers as possible before the board examinations. Sample papers should be always practiced in examination condition at home or school and the student should show the answers to teachers for checking or compare with the answers provided. Students can download the sample papers in pdf format free and score better marks in examinations. Refer to other links too for latest sample papers.

Important Points for Demand Class 12 Economics

Demand Revision Notes

Deficient Demand : When AD falls short of AS at full employment, it is called deficient demand. Deficient Demand = AD < AS (at full employment level).

Reasons for Deficient Demand :
(i) Reduction in supply of currency,
(ii) Increase in Bank Rate,
(iii) Increase in Taxes,
(iv) Reduction in Public Expenditure,
(v) Increase in Propensity to Save,
(vi) Decline in Export Demand.

Effects of Deficient Demand :
(i) Fall in production level,
(ii) Fall in price level
(iii) Increase in unemployment.

Excess Demand : Excess demand refers to a situation when aggregate demand exceeds aggregate supply corresponding to full employment. AD > AS (at full employment level)

Reasons for Excess Demand :
(i) Increase in public expenditure,
(ii) Reduction in taxes,
(iii) Deficit financing,
(iv) Extension of credit facilities,
(v) Increase in investment demand,
(vi) Increase in propensity to consume
(vii) Increase in export demand.

Effects of Excess Demand :
(i) Decrease in unemployment,
(ii) Increase in production level, and
(iii) Increase in price level.

Cyclical Fluctuations : In real life, Aggregate demand does not match Aggregate Supply. Consequently economy faces economic fluctuations like : Depression → Recovery → Full employment → Propensity → Recession → Again depression and process goes on.

There are four important ways to correct excess and deficient demand :
(i) Fiscal Policy,
(ii) Monetary Policy,
(iii) Foreign Trade Policy,
(iv) Other Measures.

Fiscal Policy : Government measures related to public expenditure, taxation and public debt are referred as fiscal measures and the policy related to these measures is called Fiscal Policy.

Instruments of Fiscal Policy : Public expenditure, taxation, public debt and deficit financing.

Monetary Policy : A policy, which controls the money supply, credit availability and its cost is termed as monetary policy. Central Bank of the country frames this policy and ensures its execution.

Measures of Monetary Policy :
(i) Quantitative : Bank Rate, Open Market Operations, Minimum Reserve Ratio and Liquidity Ratio.
(ii) Qualitative : Margin requirement of loans, Rationing of credit, Direct action and Moral pressure.

 TOPIC - Demand

I Terms: Define

(1) Demand

(2) Effective Demand

(3) Demand Curve

(4) Demand schedule

(5) Law of Demand

(6) Demand function

(7) Determinants of demand

(8) individual or household demand

(9) Market demand

(10) Substitute goods (with e.g.)

(11) Complementary goods (with e.g.)

(12) Cross price effects (with e.g.)

(13) Inferior goods

(14) Normal goods

(15) Shift of demand curve

(16) Movement along a demand curve

(17) Increase in demand

(18) Decrease in demand

(19) Extension of demand

(20) Contraction of demand

II Differentiate between:-

(1) Normal / Inferior good

(2) substitutes / Complements

(3) movement along / shift of demand curve

(4) Increase / expansion in demand 

(5) increase / decrease in demand

(6) individual / market demand

(7) Demand schedule / demand curve

III Long answer questions:-

1. Explain the Law of Demand.

2. Explain the determinants of Demand. (hint: w.r.t. individual demand, market demand and both)

3. Why does demand curve slope downwards? (OR Why does a household demand more at lower price?)

4. Why does a household demand more (or less) at the same price?

5. How are the following determined: (Use graphic of numerical eg)

(i) Market demand curve for a good x

(ii) Market demand schedule for a good x.

6. What are the assumptions of Law of Demand.

IV Applicative Questions:

1. Discuss the effect of following changes on demand for CNG. (Use diagram wherever possible)

(i) Price of CNG rises.

(ii) Price of diesel (& petrol) rises

(iii) RTV vans become more expensive.

(iv) Advertisements by a famous filmstar /cricketer to promote preservation and conservation of environment.

(v) Consumer’s income falls.

Demand MCQs with Answers

Question. Which of the following can be regarded as law of Demand?
(a) Ceteris Paribus, if Price of a product rises, its quantity demanded will fall
(b) Higher the Income, greater is the expenditure
(c) Taxes have no relation with the benefits which a person derives from the State
(d) None of the above
Answer: A

Question. In a Demand Curve, the Vertical Axis will be —
(a) Quantity Demanded
(b) Price of the Product
(c) Income Levels of Consumer
(d) Any of the above
Answer: B

Question. The segregation between Income Effect and Substitution Effect is adequately explained by —
(a) Cardinal Approach
(b) Ordinal Approach
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: B

Question. Which of the factors does not cause Increase in Demand?
(a) Rise in the price of Substitute Goods
(b) Fall in price of this product
(c) Increase in population
(d) Increase in Income Levels of Buyers
Answer: B

Question. Which of the following statement best describes the Substitution Effect?
(a) When the price of a product rises, Consumers stop consuming the product.
(b) When the price of a product rises, Consumers tend to substitute it with a relatively expensive product
(c) When the price of a product rises, Consumers tend to substitute it with a relatively inexpensive product
(d) When the price of a product fails, consumers tend to substitute in with a more expensive product
Answer: C

Question. Which of these is a variable factor in the Law of Demand?
(a) Consumers' Income Level
(b) Economic Conditions of Boom / Recession
(c) Quality of the Product
(d) Price of the Product
Answer: D

Question. When the price of a Commodity falls, the Consumer
(a) Can buy the same quantity of the commodity with lesser money
(b) Can buy more of the same commodity with the same money
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. Which of the following results in a shifting of the Demand Curve?
(a) Increase in the tax on cigarettes leading to their fall in demand
(b) Slashing of ad rates by a television channel resulting in a rise in the number of ads
(c) Rise in the electricity harges leading to lesser consumption
(d) All of these
Answer: D

Question. A movement along the Demand Curve for soft drinks is best described as —
(a) Increase in Demand
(b) Decrease in Demand
(c) All of the above
Answer: C

Question. Conspicuous Goods —
(a) Are an exception the Law of Demand
(b) Follow the Law of Demand
(c) Either (a) or (b)
(d) Neither (a) nor (b)
Answer: A

Question. Increase in Demand leads to —
(a) Inward shift of the Demand Curve
(b) Outward shift of the Demand Curve
(c) Upward movement on the same Curve
(d) Downward movement on the same Curve
Answer: B

Question. In case of Contraction of Demand, there is a —
(a) Inward shift of the Demand Curve
(b) Outward shift of the Demand Curve
(c) Upward movement on the same Curve
(d) Downward movement on the same Curve
Answer: C

Question. When the price of a product falls, its Demand increases because —
(a) New Consumers start buying the product
(b) Existing Consumers buy more quantities of the product
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. The condition "other things being equal" in the Law of Demand denotes —
(a) Price of related goods remaining constant
(b) Income Levels remaining constant
(c) Tastes and Preferences remaining constant
(d) All of the above
Answer: D

Question. In the case of a Giffen Good, the Demand Curve will be
(a) Horizontal
(b) Downward—sloping to the right
(c) Backward falling to the left
(d) Upward—sloping to the right
Answer: C

Question. Change in demand due to change in price is known as
(a) Change in demand
(b) Change in quantity demanded
(c) Income demand
Answer: B

Question. A Decrease in Demand can result from —
(a) Increase in Market Price
(b) Decrease in Income
(c) Increase in the Price of Substitutes
(d) Decrease in the Price of Complements
Answer: B

Question. In case of Giffen Goods, Demand Curve will slope —
(a) Upward
(b) Downward
(c) Horizontal
(d) Vertical
Answer: A

Question. An Inferior Commodity is one which is consumed in smaller quantities when the income of consumer —
(a) Becomes nil
(b) Remains the same
(c) Falls
(d) Rises
Answer: D 

Question. Decrease in Demand is caused by —
(a) Change in Buyer Preferences and Tastes against this commodity
(b) Re—distribution of income away from Consumers who favour this commodity
(c) Decrease in population
(d) All the above
Answer: D

Question. The Law of Demand, assuming other things to remain constant, establishes the relationship between —
(a) Income of the Consumer and the quantity of a good demanded by him
(b) Price of a good and the quantity demanded
(c) Price of a good and the demand for its Substitute
(d) Quantity demanded of a good and the relative prices of its complementary goods
Answer: B

Question. Giffen Goods are goods which —
(a) Are considered inferior by Consumers
(b) Occupy a substantial place in the Consumer's budget
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. Rise in the price of Substitute Goods leads to
(a) Increase in Demand
(b) Decrease in Demand
(c) Expansion of Demand
(d) Contraction of Demand
Answer: A

Question. If regardless of changes in its price, the quantity demanded of a product is unchanged, then, Demand Curve for that product will be —
(a) Horizontal
(b) Vertical
(c) Positively Sloped
(d) Negatively Sloped
Answer: B

Question. Giffen Goods are —
(a) Conspicuous Goods
(b) Normal Goods
(c) Conspicuous Necessities
(d) Inferior Goods
Answer: D 

Question. Under which of the following situations the Law of Demand will not operate?
(a) Conspicuous Goods
(b) Giffen Goods
(c) Absolute Necessities
(d) All of the above
Answer: D

Question. When we say that the Demand for a commodity depends upon the money income of the Consumer, we are referring to —
(a) Income Effect
(b) Substitution Effect
(c) Demonstration Effect
(d) Utility Effect
Answer: A

Question. In case of Expansion and Contraction of Demand, the Demand Curve —
(a) Shifts to the right
(b) Shifts to the left
(c) Remains the same
(d) None of the above
Answer: C

Question. When Consumers feel that if the commodity is expensive, that it has got more utility, we are referring to —
(a) Inferior Goods
(b) Normal Goods
(c) Conspicuous Goods
(d) Giffen Goods
Answer: C

Question. Rise in quantity demanded of a product as a result of reduction in price is known as —
(a) Change in Demand
(b) Contraction of Demand
(c) Expansion of Demand
(d) Alteration of Demand
Answer: B

Question. Other things being equal, a fall in the price of complementary good will cause the of the other to rise.
(a) Price
(b) Supply
(c) Demand
(d) Utility
Answer: C

Question. In case of Contraction of Demand, the quantity demanded —
(a) Increases
(b) Decreases
(c) Becomes zero
(d) Becomes constant
Answer: B

Question. Which of the factors does not cause Decrease in Demand?
(a) Fall in the price of Substitute Goods
(b) Rise in price of this product
(c) Decrease in population
(d) Decrease in Income Levels of Buyers
Answer: B

Question. Expansion of Demand is associated with —
(a) Rise in Price, Rise in quantity demanded
(b) Fall in Price, Fall in quantity demanded
(c) Fall in Price, Rise in quantity demanded
(d) Rise in Price, Fall in quantity demanded
Answer: C

Question. Which of the following is not an exception to the Law of Demand?
(a) Conspicuous Goods
(b) Normal Goods
(c) Conspicuous Necessities
(d) Giffen Goods
Answer: B

Question. Why does the Law of Demand operate?
(a) Income Effect
(b) Substitution Effect
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. Contraction of Demand is associated with —
(a) Rise in Price, Rise in quantity demanded
(b) Fall in Price, Fall in quantity demanded
(c) Fall in Price, Rise in quantity demanded
(d) Rise in Price, Fall in quantity demanded
Answer: D

Question. If the demand for Petrol remains the same even after the increase in petrol prices, it means Petrol is a —
(a) Normal Good
(b) Necessity
(c) Luxury Good
(d) Inferior Good
Answer: B

Question. Under which of the following situations the Law of Demand will not operate?
(a) Price Change expected by Consumer
(b) Consumer's lack of knowledge about prices
(c) All of the above
Answer: C

Question. Change in Demand as a result of the factors other than Price is known as —
(a) Shift in Demand
(b) Increases and Decrease in demand
(c) Change in Demand
(d) All of these
Answer: D

Question. In which of the following cases, does a shift in demand take place?
(a) Fall in demand for cigarettes, as a result of increased taxes
(b) Rise in the demand for two wheelers due to decrease in the sales tax
(c) Decline in electric power consumption due to rise in the power charges
(d) Decline in the sales of Diwali crackers due to sudden rains and floods
Answer: D

Question. Change in demand, as a result of the factors other than price is known as —
(a) Demand Fluctuation
(b) Contraction / Expansion of Demand
(c) Demand Shrinking
(d) Shift in Demand
Answer: D

Question. As per the Law of Demand, if the Price of a commodity , its Demand .......
(a) Increases, Decreases
(b) Increases, Increases
(c) Decreases, Increases
(d) Both (a) & (c)
Answer: D

Question. Under the Law of Diminishing Marginal Utility, Consumers continue buying till Price equals Marginal Utility. Hence at lower prices —
(a) Higher quantities will be demanded
(b) Lower quantities will be demanded
(c) No quantities will be demanded
(d) All of the above
Answer: A

Question. Expansion and Contraction of demand for a product occurs as a result of changes in —
(a) Price of the Commodity
(b) Factors other than Price
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: A

Question. Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?
(a) There is an increase in quantity demanded of apples and in supply of apples.
(b) There is an increase in the demand and supply of apples.
(c) There is an increase in the demand for apples and a decrease in supply of apples.
(d) There is an increase in the demand for apples and an increase in the quantity supplied
Answer: D

Question. In case of Shift in Demand, remains constant.
(a) Income of Consumers
(b) Tastes and Preferences of Consumers
(c) Price of the Product
(d) Quality of the Product
Answer: C

Question. Decrease in Demand leads to —
(a) Inward shift of the Demand Curve
(b) Outward shift of the Demand Curve
(c) Upward movement on the same Curve
(d) Downward movement on the same Curve
Answer: A

Question. Conspicuous goods are also called as:
(a) Veblen
(b) Snob
(c) Prestigious
(d) All of the above
Answer: D

Question. Shift in demand does not take place due to —
(a) Change in the price of the product
(b) Change in the tastes and preferences
(c) Change in consumer habits
(d) Change in population
Answer: A

Question. An Increase in Demand can result from —
(a) Decline in Market Price
(b) Increase in Income
(c) Reduction in the Price of Substitutes
Answer: B

Question. Increase in Income Levels of Buyers leads to —
(a) Increase in Demand
(b) Decrease in Demand
(c) Expansion of Demand
(d) Contraction of Demand
Answer: A

Question. Since Consumers continue buying till Price equals Marginal Utility, if the price of a product is lower, the Consumer will attain equilibrium —
(a) At a lower quantity level
(b) At a higher quantity level
(c) At zero quantity level
(d) All of the above
Answer: B

Question. Giffen Goods are those goods —
(b) Which have a high income elasticity of demand
(c) Which are in short supply
(d) None of these
Answer: A

Question. Demand of a commodity depends upon ....... .
(a) price
(b) income
(c) price of related good
(d) All of these

Answer: D

Question. The demand of which type of goods do not decrease with increase in their price?
(a) Comforts
(b) Conspicuous goods
(c) Necessities
(d) Both (b) and (c)

Answer: D

Question. Giffen paradox is an exception of ...... .
(a) Law of Demand
(b) Law of Supply
(c) Law of Production
(d) Law of Utility

Answer: A

Question. In case of inferior goods like bajra, a fall in its price tends to ...... .
(a) make the demand remain constant
(b) reduce the demand
(c) increase the demand
(d) change the demand in an abnormal way

Answer: B

Question. Expansion and contraction in demand are caused by ...... .
(a) change in the income of buyer
(b) change in the taste and preference of the buyer
(c) change in the price of the commodity
(d) change in the prices of related goods

Answer: C

Question. The demand function of a product X is given as D_x = 30 − 4 P, where P is the price of the product. The demand at price of Rs 4 will be ...... .
(a) 20
(b) 12
(c) 14
(d) 10

Answer: C

Question. Movement along the demand curve is also known as
(a) change in demand
(b) change in quantity demanded
(c) change in demand of related goods
(d) None of the above

Answer: B

Question. Which of the following commodities will be demanded, even if the prices have gone up very high?
(a) Luxury
(b) Status symbol
(c) Prestige
(d) All of the above

Answer: D

Question. If the price of any complementary good rises, then ..... .
(a) demand curve shifts to left
(b) demand curve shifts to right
(c) demand curve moves downward
(d) demand curve moves upward

Answer: A

Question. Which of the following is/are determinants of demand?
(a) Price of the good
(b) Income of the consumer
(c) Price of related goods
(d) All of the above

Answer: D

Question. Law of demand is a ....... .
(a) quantitative statement
(b) qualitative statement
(c) Both (a) and (b)
(d) hypothetical

Answer: B

Question. If price of sugar increases, the demand for tea will ...... .
(a) decrease
(b) increase
(c) not affected
(d) None of these

Answer: A

Question. What will be the impact of fall in income of a consumer on the demand for an inferior good?
(a) Rise in demand
(b) Fall in demand
(c) Demand remains constant
(d) None of the above

Answer: A

Question. Movement along the demand curve is also known as
(a) change in demand
(b) change in quantity demanded
(c) change in demand of related goods
(d) None of the above

Answer: A

Question. Which of the following is/are components of change
in quantity demanded?
(i) Increase in demand
(ii) Decrease in demand
(iii) Contraction in demand
(iv) Expansion in demand
Choose from the options given below
(a) (i) and (iii)
(b) (ii) and (iv)
(c) (i) and (ii)
(d) (iii) and (iv)

Answer: D

Question. Which of the following statements is true?
(a) Market demand curve is the vertical summation of individual demand curves
(b) Market demand curve is the horizontal summation of individual demand curves
(c) Market demand curve is steeper than individual demand curves
(d) None of the above

Answer: B

Question. If demand is parallel to X-axis, what will be the nature of elasticity?
(a) Perfectly elastic
(b) Inelastic
(c) Elastic
(d) Highly elastic

Answer: A

Question. ...... measures the change in demand of a commodity due to change in its own price.
(a) Elasticity of demand
(b) Price elasticity of demand
(c) Income elasticity of demand
(d) Cross elasticity of demand

Answer: B

Question. Which of the below statements is true about elasticity of demand?
(a) The units are used to measure price but not used to measure quantity
(b) The units are used are to measure price and quantity
(c) The units are used to measure quantity but not used to measure price
(d) Neither the units are used to measure price nor to measure price

Answer: D

Question. When percentage change in quantity demanded is more than the percentage change in price of the commodity, it is said to be
(a) less than unitary elastic demand
(b) unitary elastic demand
(c) more than unitary elastic demand
(d) perfectly elastic demand

Answer: C

Question. Price elasticity of demand is ....... in number because price and quantity demanded are inversely related.
(a) positive
(b) negative
(c) constant
(d) prime

Answer: B

Question. Which of the following is/are components of change in demand?
(i) Increase in demand
(ii) Decrease in demand
(iii) Contraction in demand
(iv) Expansion in demand
Choose from the options given below
(a) (i) and (iii)
(b) (ii) and (iv)
(c) (i) and (ii)
(d) (iii) and (iv)

Answer: C

Question. Which of the following are an example of derived demand?
(a) Car and Petrol
(b) Tea and Coffee
(c) Building and Brick
(d) None of these

Answer: C

Question. Price elasticity of demand of a good is (−) 0.75, calculate the percentage fall in its price that will result in 15% rise in its demand.
(a) 11.25%
(b) 5%
(c) 15%
(d) 20%

Answer: C

Question. When Price Elasticity of Demand (E ) d is equal to infinity (¥), this refers to
(a) perfectly elastic demand
(b) perfectly inelastic demand
(c) unitary elastic demand
(d) more than unitary elastic demand

Answer: A

Question. Price elasticity of demand is calculated as
(a) ΔQ/ΔP. P/Q
(b) ΔP/ΔQ. Q/P
(c) % Δ QD/% ΔP
(d) Both (a) and (c)

Answer: D

Question. If a 10% rise in price of Good X leads to 20% fall in its quantity demanded, its elasticity of demand is
(a) elastic
(b) inelastic
(c) unitary elastic
(d) perfectly inelastic

Answer: A

Question. If the price elasticity of demand is 2, a 10 percent increase in the price will result in a ……… decrease in its quantity demanded.
(a) 5%
(b) 10%
(c) 20%
(d) 25%

Answer: C

Question. The price elasticity of demand ranges between
(a) –1 to 0
(b) 0 to 1
(c) 0 to nfinity
(d) Negative infinity to infinity

Answer: C

Question. What will be the elasticity of demand if price and total expenditure moves in the opposite direction using total outlay method?
(a) Perfectly elastic
(b) Perfectly inelastic
(c) Elastic
(d) None of these

Answer: C

Question. If the price elasticity of demand ranges between 0 and less than 1, demand is
(a) inelastic
(b) elastic
(c) perfectly elastic
(d) unit elastic

Answer: A

Question. Marginal utility curve of a consumer is also his
(a) indifference curve
(b) total utility curve
(c) supply curve
(d) demand curve

Answer: D

Question. Which of the following statements is/are not true about elasticity of demand?
(i) Demand curve for a perfectly elastic demand is horizontal line parallel to X-axis
(ii) Demand curve for a perfectly inelastic demand is vertical line parallel to Y-axis
(iii) Demand for luxury goods is highly inelastic
Choose from the options given below
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) Only (iii)

Answer: D

Question. What will be elasticity of demand on a linear demand curve at the point using geometric method?
(a) Perfectly elastic
(b) Perfectly inelastic
(c) Unitary elastic
(d) None of these

Answer: C

Question. What will be elasticity of demand on a linear demand curve below the point using geometric method?
(a) Perfectly elastic
(b) Perfectly inelastic
(c) Inelastic
(d) None of these

Answer: C

Question. What will be the elasticity of demand if price changes and total expenditure remains constant using total outlay method?
(a) Perfectly elastic
(b) Perfectly inelastic
(c) Unit elastic
(d) None of these

Answer: C

Question. When demand for a good depends upon the demand for the other, it is known as
(a) joint demand
(b) composite demand
(c) derived demand
(d) None of the above

Answer: C