Daily Current Affairs Quiz: November 20, 2025

Answer: B [The price will increase]
Explanation:

Option (a) is incorrect: An increase in demand does not cause prices to fall. With more buyers competing for the same limited supply, sellers can charge higher prices, not lower.

Option (b) is correct: When demand rises and supply remains constant, the equilibrium price shifts upward. Buyers compete for scarce goods, pushing the price higher.

Option (c) is incorrect: Prices only remain unchanged if both demand and supply are constant. Since demand increases here, equilibrium changes, so the price cannot stay the same.

Option (d) is incorrect: There is no economic principle suggesting that prices first hold steady and then drop when demand rises. Instead, the immediate and sustained effect is upward pressure on prices.

Answer: D [All four]
Explanation:

Statement 1 is correct: Price elasticity of demand shows how sensitive a good’s quantity demanded is to a change in its own price, indicating whether consumers respond strongly or weakly to price variations.

Statement 2 is correct: When price elasticity is less than 1, percentage change in quantity demanded is smaller than the percentage change in price, meaning consumers are relatively unresponsive. Hence, demand is classified as price inelastic.

Statement 3 is correct: Cross elasticity of demand measures how the quantity demanded of one product changes following a price change in another product, helping identify substitutes, complements, or unrelated goods.

Statement 4 is correct: Income elasticity of demand reflects how demand for a good changes with variations in consumer income, helping classify products as normal, inferior, luxury, or necessity goods.

Answer: A [Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I]
Explanation:

Statement I is correct: The law of supply states that producers are willing to supply more of a product when its price rises, assuming other factors remain constant, because higher prices make increased production more attractive.

Statement II is correct: Higher prices raise potential profits, giving producers a stronger incentive to expand production. This motivates firms to increase output and supply more goods in the market.

Statement-II correctly explains Statement-I, because the reason producers supply more at higher prices is the profit incentive.

Answer: C [Only three]
Explanation:

Statement 1 is correct: Movement along the demand curve happens only when the price of the same commodity changes. All other factors remain constant, so the consumer response is shown as expansion or contraction along the existing curve.

Statement 2 is correct: A shift in the demand curve occurs when non-price determinants change. These factors alter overall demand at every price level, causing the curve to shift rightward or leftward.

Statement 3 is correct: Changes in income, tastes, preferences, prices of substitutes and complements, expected future prices, and number of consumers influence overall demand, shifting the entire demand curve instead of moving along it.

Statement 4 is incorrect: Expectations about future income do influence current demand. If consumers anticipate higher future income, they may increase present spending; if they expect lower income, they reduce current demand.

Answer: A [A decrease in the price of cocoa beans leads to a decrease in the quantity of cocoa beans offered by farmers.]
Explanation:

Option (a) is correct: This scenario directly reflects the Law of Supply, which states that when the price of a good falls, producers supply less; and when price rises, they supply more, assuming other factors remain constant.

Option (b) is incorrect: This describes the effect of expected future prices, which shifts supply rather than showing a movement along the supply curve. It is not an example of the Law of Supply.

Option (c) is incorrect: This situation illustrates a technology-driven fall in production costs, causing a supply curve shift. It does not show how the quantity supplied responds to a price change of the same good.

Option (d) is incorrect: This reflects increased demand for corn due to a government mandate. The rise in corn production responds to demand shifts, not to a change in corn’s own price.