Find the correct statement/statements.
(A) Goods which are consumed together are called complementary goods.
(B) The market demand curve can be derived as a vertical summation of the individual demand curves.
(C) Price elasticity of demand is a measure of the responsiveness of the demand for a good to changes in its price.
(D) If the consumer's preferences change in favor of a good, the demand curve for such a good shifts leftward.
Choose the correct answer from the options given below:
Economics MCQ Solution: Correct Economic Statements
This question asks to identify the correct statements regarding fundamental economic concepts related to demand and consumer behavior. Let's analyze each statement:
Analyzing Complementary Goods Statement (A)
Statement (A) defines complementary goods as items consumed together. This is accurate. Complementary goods are products that are often used jointly. For example, cars and gasoline, or printers and ink cartridges, are complements. If the price of one complement rises, the demand for the other tends to decrease, causing its demand curve to shift leftward.
Statement (A) is correct.
Deriving the Market Demand Curve (B)
Statement (B) suggests that the market demand curve is derived by vertically summing individual demand curves. This is incorrect. The market demand curve represents the total quantity demanded by all consumers in the market at various price levels. It is obtained by summing the quantities demanded by each individual consumer *at each specific price*. This process is called the horizontal summation of individual demand curves.
Vertical summation is typically used when aggregating supply from individual producers.
Statement (B) is incorrect.
Understanding Price Elasticity of Demand (C)
Statement (C) defines price elasticity of demand as the measure of how responsive the quantity demanded of a good is to a change in its price. This is the standard definition. It quantifies the percentage change in quantity demanded resulting from a one percent change in price.
A high elasticity means demand is very responsive to price changes, while a low elasticity means it is less responsive.
Statement (C) is correct.
Demand Curve Shifts and Preferences (D)
Statement (D) claims that if consumer preferences change in favor of a good, its demand curve shifts leftward. This is incorrect. A change in consumer preferences that makes a good more desirable leads to an increase in demand. An increase in demand is represented by a rightward shift of the demand curve. Conversely, if preferences shift against a good, the demand curve would shift leftward (a decrease in demand).
Statement (D) is incorrect.
Conclusion: Identifying Correct Statements
Based on the analysis, statements (A) and (C) are correct economic principles.
Therefore, the correct option is the one that includes only statements (A) and (C).
Important Questions from Simple Applications of Tools of Demand and Supply
- With the shifting demand curve leftward, arrange the following statement in sequential order.
(A) At any given price, demand is less.
(B) Excess supply will be there.
(C) Some producers will decrease the prices of commodity.
(D) At new equilibrium, quantity and price will be less.
Choose the correct answer from the options given below: - The relation between the consumer's optimal choice of the quantity of a good and its price is called ?
