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The law of demand is most directly a result of:

A. The law of comparative advantage

B. The law of diminishing returns

C. The principle of substitution

D. Economics of large scale production

Correct Answer : C.


The law of demand states negative relationship b/w quantity demanded and price and forms negative sloped demand curve. One of the reasons of negative sloped demand curve is the substitution effect (S.E) which states that as the price of a commodity raises then consumer decreases quantity demanded of that commodity and substitutes it with some other commodity.

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  1. Marginal cost is the cost:
  2. On a straight line demand curve, elasticity of demand at the midpoint is:
  3. The budget-line is also known as the:
  4. When total product increases at a decreasing rate:
  5. In case of monopoly, the price charged against the additional unit is:
  6. In monopolistic competition, the individual demand curve is also known as:
  7. An inferior good/ commodity is inferior for:
  8. In the case where two commodities are good substitutes then cross elasticity will be:
  9. At the shut-down point in perfect competition:
  10. An indifference curve slopes down towards right since more of one commodity and less of another result…
  11. If the supply and demand increases equally, the price will:
  12. The central problem of economics is:
  13. The concept of industry in monopolistic competition has been replaced by:
  14. Consumers Surplus can also be defined as:
  15. The monopolist often lead to exploitation of:
  16. If the supply curve is not a straight line but curvilinear, the elasticity on all points of the supply…
  17. In joint-profit maximization cartel, central agency sets the:
  18. If a person behaves against the laws of economics then:
  19. Competitors in monopolistic competition have full control over:
  20. The maximization of output subject to cost requires equilibrium at the:
  21. A demand curve which is horizontal and parallel to x-axis represents:
  22. Who formulated the Post-Keynsian Theory of Distribution and Growth?
  23. 7.The costs which the firms have to face in order to change the price tags of their products and services…
  24. Microeconomics is also known as:
  25. Elasticity of Substitution (s) is defined as:
  26. If regardless of changes in its price, the quantity demanded of a commodity remains unchanged, then…
  27. Of the following, which one is a characteristic of monopolistic competition?
  28. The price consumption curve (PCC) for commodity X is the locus of points of consumer equilibrium resulting…
  29. Market allocation fundamentally relies upon:
  30. An effective price ceiling usually results in: