Subject : Managerial Economics (MB0026 )

PART A
Q.1 function which shows the relationship
between quantity of output and the quantity of
input is
A) Product Function
B) b.Change Function
C) c.production function
D) d.System production
Q.2 Elasticity which tells how much the demand
will change with change in price is
A) Income elasticity of demand
B) Price Elasticity of demand Ans
C) Point elasticity of demand
D) Cross elasticity of demand
Q.3 Prediction of future demand based on current
conditions and calculations is
A) price forecasting
B) Output forecasting
C) Demand Forecasting
D) Production forecasting
Q.4 Specific characteristics of a market structure
are
A) Number and size of sellers
B) Number of size distribution of the buyer
C) Product difference
D) condition of entry amd exit




Q.5 Economics which is the study of aggregates
like aggregate demand, aggregate supply etc. is
A) Micro Science
B) Micro Study
C) Macro Economics
D) Managerial Economics
Q.6 The inverse relationship between price &
quantity demanded is
A) Law of Demand
B) Law of supply
C) Law of System
D) Law of Nature
Q.7 Average Revenue, AR =
A) Q / TR
B) TR + Q
C) TR / Q
D) TR * Q
Q.8 In _____ type of market structure, there are
large numbers of sellers selling slightly different
products close substitutes
A) Oligopolistic
B) Monopolistic
C) Commercial
D) Monosonistic
Q.9 Quantity which is always measured at cost
is
A) Demand
B) Desire
C) stock
D) Flow
Q.10 Capital Expenditure or purchasing of
equipment or machinery is
A) a.Income
B) b.Expenditure
C) c Investment
D) d.Income
Q.11 Total variable cost at each level of output
divide by the number of units produced is
A) Average fixed Costs
B) Average Variable cost Ans
C) average changing costs
D) Long run costs
Q.12 Private Investment is made by
A) a.government companies
B) b.private Companies ans
C) c.Public Companies
D) d.Change companies
Q.13 The short run cost curves are divided into
_____ and _____
A) AFC, AC
B) TFC, TVC
C) AFC, TVC
D) TFC, AC
Q.14 Cost which are incurred om
stationary,electricity bills and electricity are
A) a.Indirect costs
B) b.Direct Costs
C) c.material Costs
D) d.Private Costs
Q.15 Quantity which is always measured at a
given period of time is
A) Cash
B) Stock
C) Flow
D) System
Q.16 _____ is equal to the fixed cost at each level
of output divided by the number of units
produced
A) AC
B) AFC
C) SAVC
D) SAC
Q.17 Point where the firm has stopped incurring
losses but start to gain profits is called
A) a.gain point
B) b.change point
C) c.Break even point
D) d.Constant point
Q.18 _____ is again where the law of demand
does not work
A) Giffens goods
B) Ignorance effect
C) Status symbol
D) Speculation
Q.19 Charging the different prices to different
buyers for the same product is called
A) price monopoly
B) price Descrimination
C) Price design
D) Price system
Q.20 When price _____, there is contraction of
supply
A) Increases
B) Decreases
C) Either A) or B)
D) Both A) and B)
Q.21 _____ deals with aggregate economic activity
A) Managerial Economics
B) Macro Economics
C) Micro Economics
D) All of the above
Q.22 Control over investment must be combined
with _____ control and regulation of monopolies
and restrictive trade practices
A) Price
B) Import
C) Export
D) Foreign Trade
Q.23 Advertising Elasticity of Demand, Ea = _____
A) (Change in quantity demanded / Change in advertisement expenses) * (Original
advertisement expenses / Original quantity demanded)
B) (Change in quantity demanded * Change in advertisement expenses) * (Original
advertisement expenses * Original quantity demanded)
C) (Change in quantity demanded * Change in advertisement expenses) / (Original
advertisement expenses * Original quantity demanded)
D) (Change in quantity demanded / Change in advertisement expenses) / (Original
advertisement expenses / Original quantity demanded)
Q.24 _____ exists when there is a single seller or
producer
A) Oligopoly
B) Monopoly
C) Monopsony
D) Price Discrimination
Q.25 Percentage change in quantity supplied due to
the change in price is
A) a.Income elasticity
B) b.Price Elasticity Ans
C) c.Point elasticity
D) d.Base elasticity
Q.26 _____ lays more emphasis on the managerial
function in any business firm
A) Managerial Economics
B) Financial Management
C) Distribution
D) Business Economics
Q.27 Exceptions to the law of demand are-(4
Marks)
A) Giffens Goods
B) Ignorance effect
C) Status symbol
D) Speculation
Q.28 When the output increases in the same
proportion as the increase in the inputs it is
called
A) a.increasing returns to scale
B) b.Constant returns to scale. Ans
C) c..Decreasing returns to scale
D) d, Same returns to scale
Q.29 _____ are price takers as they cannot affect
the market price
A) Consumers
B) Producers
C) Firms
D) Suppliers
Q.30 The ultimate motive of any firm is maximise
its
A) a.sales
B) b.Returns
C) c.Profits
D) d.Revenue
Q.31 Any activity which transforms the input into
output is called
A) consumption
B) Distribution
C) Production
D) Distribution
Q.32 The factors affecting supply are-
A) Change in cost of Production
B) State of technology
C) Political Uncertainty
D) Natural Factors
Q.33 According to _____, consumer surplus is a
part of the benefit, which a person derives from
his environment or conjuncture
A) Henri Fayol
B) Cyert & March
C) Cournot
D) Marshall
Q.34 In the law of demands, factors such as
income, taste, fashion and preference etc., are
_____
A) Variable
B) Constant
C) Either A) or B)
D) None of the above
Q.35 When the income increases, the consumption
also increases and the increase in consumption is
_____ the increase in income
A) Less than
B) More than
C) Both A) and B)
D) Equal t o
Q.36 _____ is the part of managerial economics,
as a manager should have the knowledge of
various market structures and how price output is
determined under the different types of market
structure
A) Production Analysis
B) Production Structure
C) Market Analysis
D) Market Structure
Q.37 Economics relating to study of individual
consumer, producer, specific market etc. is
A) Macro economics
B) Mini Economics
C) Micro Science
D) Micro economics
Q.38 The relationship of price & quantity is shown
by
A) Positive relationship
B) Inverse relationship
C) Negative relationship
D) Direct Relationship
Q.39 Market structure where there is competition
between the few sellers who are producing the
close substitutes of the product is called
A) perfect Competition
B) Monopoly
C) Oligopoly
D) Monopsony
Q.40 Costs which are incurred even when the
output is zero is
A) a.variable costs
B) b.Change costs
C) c.Fixed Costs
D) d.Private costs
Q.41 Amount that is foregone to choose
anactivity over the next best alternative is
A) a.private cost
B) b.System Cost
C) c.Opportunity cost.
D) d.Public Cost
Q.42 _____ market structure exists when there
are few firms or sellers in the market and they
are selling close substitutes
A) Oligopoly
B) Monopoly
C) Monopsony
D) Price Discrimination
Q.43 The _____ includes, the cost incurred only on
getting the product advertised in newspaper,
magazine, radio and television
A) Advertisement Expenditure
B) Selling Cost
C) Marketing Cost
D) All of the above
Q.44 Wants which are backed by the purchasing
power is
A) Desire
B) Need
C) Requirement
D) demand
Q.45 Those goods which are consumed or utilised in
a short period is
A) Consumer Goods
B) b Perishable Goods Ans
C) c Desired goods
D) d Producer Goods
Q.46 Period which is long enough to change all
the factors of production is
A) a.Short run Period
B) b.System period
C) c.Long runPeriod
D) Rigid period
Q.47 _____ is the income received by the firm
A) Revenue
B) Sales
C) Demand
D) Finance
Q.48 In long run, there are no _____ factors
A) Fixed
B) Variable
C) Uneven
D) Changeable
Q.49 In Perfectly Inelastic curve, Ep = _____
A)
B) 0
C) > 1
D) < 1
Q.50 Whenever the firms reach the point that is
MR=MC, it is _____
A) Optimum Output Level
B) Optimum Production Level
C) Optimum Sales Level
D) Optimum Profit Level

Q.
51
Costs which change with change in output
are called as
A) a.Fixed Costs
B) b.Variable cost Ans
C) c.Social Cost
D) d.Underestimate costs
Q.
52
The economics which gives more importance
to managerial function of business firm.
A) Management economics
B) Managing Economics
C) Managerial Economics
D) Business economics
Q.112 Change in quantity demanded due to the
change in advertisement expenditure is
A) Promotional Elasticity
B) Income elasticity of demand
C) Point elasticity of demand
D) Relative elasticity of demand
Q.113 When the supply decreases due to cjange in
factors other than price it is called
A) Increase in Supply
B) Decrease in Supply ans
C) Change in Supply
D) Increase in supply
Q.114 The concept of inflationary gap was
introduced by _____
A) Keynes
B) Cartel
C) Joseph Schumpeter
D) R. G. Hawtrey
Q.115 _____ cost is the amount that is foregone in
choosing an activity over the next best
alternative
A) Opportunity
B) Explicit
C) Sunk
D) Incremental
Q.116 NDP Stand for_____
A) Network Domestic Product
B) National Domestic Product
C) National Domestic Price
D) Network Domestic Price
Q.117 Economics necessary to understand for
running any business is
A) Business Environment
B) Business Management
C) Business Economics-
D) Business Science
Q.118 ermanent loss of well being of the society
is
A) average weight loss
B) System weight loss
C) Dead Weight Loss
D) Design weight loss
Q.119 When the change in price of commodity
changes with the change in demand of related
commodity it is called
A) Income elasticity of demand
B) Point elasticity of demand
C) Cross elasticity of demand
D) Relative elasticity of demand
Q.120 _____ is nothing but the difference between
total revenue and total cost
A) Demand
B) Supply
C) Profit
D) Sales
Q.121 When the degree of price rise is not more
than 3% and not at all dangerous, the inflation is
said to be _____
A) Creeping
B) Walking
C) Running
D) Galloping
Q.122 _____ is an activity, which transforms the
input into output
A) Micro-Economics
B) Production
C) Invention
D) Assembly
Q.123 The price that matches the quantity
demanded and the quantity supplied is called
A) a.Equilibrium Condition
B) b.Equilibrium state
C) c.Equilibrium price .
D) d.Equilibrium state
Q.124 _____ cycle is a fluctuation of the economy
characterized by periods of prosperity followed by
periods of depression
A) Industry
B) Commerce
C) Business
D) Retail
Q.125 Price Elasticity of Demand, Ep = _____
A) (Change in quantity demanded / Change in price) * (Original price / Original
quantity demanded)
B) (Change in quantity demanded * Change in price) * (Original price * Original
quantity demanded)
C) (Change in quantity demanded * Change in price) / (Original price * Original
quantity demanded)
D) (Change in quantity demanded / Change in price) / (Original price / Original
quantity demanded)
Q.126 When the production is more than what can
be sold in the market it is called
A) Underproduction
B) Overproduction Ans
C) System production
D) surplus Production
Q.127 When there is single seller or producer of a
product or service it is called
A) perfect Competition
B) b Monopoly Ans
C) Monopolistic Competition
D) oligopoly
Q.128 When the seller charges different prices
from the consumers in the domestic market and
the sellers in the foreign market is is called as
A) First degree price discrimination
B) Second degree discrimination
C) third degree price descrimination
D) Sytem degree descrimination
Q.129 Fixed cost at each level divided by number
of Units produced is
A) Total Fixed Vosts
B) Variable costs
C) Average fixed cost
D) Matrix costs
Q.130 _____ regarded a modern firm as a complex
organization
A) Henri Fayol
B) Cyert & March
C) Cournot
D) Ernest Dale
Q.131 Tax on airline tickets are _____ tax
A) Indirect
B) Lump Sum
C) Ad Valorem
D) Value Added
Q.132 The price received by seller above the
sellers cost is
A) Consumers Surplus
B) Producers Surplus Ans
C) Change surplus
D) Demand surplus
Q.133 In shift in supply curve to right, the Y-axis
shows _____
A) Quantity supplied
B) Production
C) Price
D) None of the above
Q.134 _____ goal is related to demand of sales
management and sales decision
A) Sales
B) Market Share
C) Production
D) Inventory
Q.135 Change in the total product due to
additional unit of Variable factor employed is a
A) a.Average Product
B) b.total product
C) c.System product
D) d.Marginal product
Q.136 Features of the perfect competition are
A) large number of Buyers and sellers
B) Homogeneous products
C) Free entry and exit
D) Firms are price takers
Q.137 When the supply decreases due to the
decrease in the price it is called
A) Decrease in supply
B) Expansion of suply Ans
C) Contraction of supply
D) Decrease in Supply
Q.138 In the Supply Chain Curve, X-axis shows
_____
A) Quantity supplied
B) Production
C) Price
D) None of the above
Q.139 Ratio of change total consumption to change
in total income is
A) a.average propensity to consume
B) Changing propensity to consume
C) c.Marginal propensity to consume
D) d.Income propensity to consume
Q.140 Using goods and services for satisfying the
current wants is
A) a.Investment function
B) b.Income function
C) Consumption
D) d.Change function
Q.141 _____ has explained the expansion and
contraction through industrial innovation
A) Marshall
B) Cartel
C) Joseph Schumpeter
D) R. G. Hawtrey
Q.142 A price index which measures the average
level of prices of all goods and services that
make up the GDP is
A) a.GDP System
B) b.GDP value
C) c.GDP Inflator
D) d.GDP Changes
Q.143 Decisions taken in macro economics are
A) Decision relating to demand
B) Decision relating to cost & production
C) Decision relating to price & market
D) Decision relating to profit management
Q.144 Cost which are directly attributed to the
production of the partivular product is
A) a.Indirect Costs
B) b.sytem Costs
C) c.Direct Costs
D) d.Public costs
Q.145 The effect to maintain global energy
balance, where both the atmosphere and the
surface will warm until the outgoing energy
equals the incoming energy is called as _____
A) Consumption Effect
B) Extra Effect
C) Spillover Effect
D) Greenhouse Effect
Q.146 MPC = C / Y
A) Y / C
B) C / Y
C) C * Y
D) Y * C
Q.147 WPI Means
A) a.wholesale price table
B) b.Wholesale Price Index Ans
C) c.Wholesale product table
D) d.Wholesale pride table
Q.148 Startegy in which the firm charges low price
as compared already existing firms it is called
A) a.Penetration Strategy
B) b.skimming strategy
C) c.Approach strategy
D) d.Pricing strategy
Q.149 When the output doubles more than double
resulting in
A) a.Decreasing returns to scale
B) b.Constant returns to scale
C) c.Increasing returns to scale
D) d.same returns to scale
Q.150 The price of a commodity and its supply are
_____
A) Same
B) Different
C) Inter-related
D) Independent
Q.151 when seller is able to each unit of the
product at a different price it is called
A) Second degree Descrimination
B) First Degree Descrimination ans
C) Third degree Descrimination
D) Systematic Descrimination
Q.152 _____ is a type(s) of Collusive Oligopoly
A) Cartel
B) Price Leadership
C) Both A) and B)
D) Quota
Q.153 Difference between the total revenue and
total cost is called
A) Cost
B) b.Profit
C) c.Sales
D) d.Revenue
Q.154 Relationship between income(Y) and
consumption (C) is
A) Consumption Income ratio
B) production change ratio
C) Surplus ratio
D) Benefits ratio
Q.155 The relationship between consumption and
investment is shown by
A) a.Income principle
B) b.acceleration principle ans
C) c.System principle
D) d.Income principle
Q.156 The process which tells how much the
demand will change with the change in price to
demand is
A) Pattern of Demand
B) Elasticity of Demand Ans
C) Point elasticity of Demand
D) Ratio Elasticity
Q.157 _____cost is the cost which will not change
with output even if the output is zero
A) Total Fixed
B) Total Variable
C) Average Fixed
D) Average Short Run
Q.158 Inflation is a situation when _____ is high
as the demand is high
A) MEC
B) MTP
C) AFC
D) AC
Q.159 The total income of the firm by selling a
commodity at a price is
A) a.Total Revenue
B) b.total cost ans
C) c.Total changes
D) d.total design
Q.160 _____ is the study of human behaviour in
producing, distributing and consuming material
goods and services in the world of scarce
resources
A) Economics
B) Financial Management
C) Distribution
D) All of the above
Q.161 The various quantities which a seller is willing
and able to sell at a different price in the market
is
A) Demand
B) Supply Ans
C) Requirement
D) Expectation
Q.162 In Equilibrium under perfect condition, we
have a _____ demand curve
A) Horizontal
B) Vertical
C) Parabolic
D) Angular
Q.163 The equation of Trend Method in general
form is _____
A) Y = b - bx
B) Y = b + ax
C) Y = a - bx
D) Y = a + bx
Q.164 According to _____ flow of money supply is
the sole cause for business fluctuations
A) Keynes
B) Cartel
C) Joseph Schumpeter
D) R. G. Hawtrey


PART B
Q.1 If the retention ratio is _____, then there is
fear of job security for the manager; if the
distribution of profit is _____, the market price of
shares goes down and there is fear of take-over
A) High, High
B) Low, Low
C) High, Low
D) Low, High
Q.2 The True points for Economist Theory of
Firm are:
1. According to this, a firm is a transformation
unit, which converts input into output and while
doing so, tries to create surplus value
2. This theory of firm centers on the assumptio
A) 1-T, 2-T
B) 1-T, 2-F
C) 1-F, 2-T
D) 1-F, 2-F
Q.3 The Market Structure is determined by:
1. Price differentiation
2. Number of and size, distribution of the seller
3. Entry conditions
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.4 The True points of Second degree price
discrimination are:
1. It happens when the monopoly seller will
charge separate price in such a way that the
buyer is divided into different groups according to
the price elasticity of demand for
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.5 _____ means Economics necessary to be
understood for running any business whereas
_____ Economics lays more emphasis on the
managerial function in any business firm
A) Business, Managerial
B) Managerial, Business
C) Financial, Business
D) Corporate, Managerial
Q.6 The features of Long Run Equilibrium are:
1. In the long run, the firm, which is not even
getting normal profit, will shut down
2. In long run, under perfect competition the firm
incurs normal profit
3. There are no super normal profit
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.7 In Law of Demand, the points to be
assumed are:
1. Only price affects demand
2. All other factors such as income, taste, fashion
and preference etc., are constant
A) Only 1
B) Only 2
C) 1 and 2
D) None of the above
Q.8 _____ deals with aggregate economic
activity; _____deals with individual demand,
supply, income etc.; _____ helps the government
in making appropriate decision and choice dealing
with challenging issues like unemployment,
inflation an
A) Macro Economics, Micro Economics, Micro Economics
B) Macro Economics, Micro Economics, Macro Economics
C) Macro Economics, Macro Economics, Macro Economics
D) Micro Economics, Micro Economics, Macro Economics
Q.9 State the correct statement with respect to
Multiplier and Acceleration Principle
1. Multiplier shows the effect of consumption on
investment
2. Acceleration shows the effect of investment on
consumption
A) 1-T, 2-T
B) 1-T, 2-F
C) 1-F, 2-T
D) 1-F, 2-F
Q.10 Match the Sets
Set A
1. Market Structure
2. Conduct
Performance
Set B
a. It is determined by the structure of the
relevant market
b. It will determine the behaviour of the firm
c. Aspects of the firm will determine this
A) 1-a, 2-b, 3-c
B) 1-a, 2-c, 3-b
C) 1-b, 2-c, 3-a
D) 1-b, 2-a, 3-c
Q.11 The criticisms of Williamsons Managerial
Discretionary Theorem are:
1. The derivation of curves is not clear
2. This model does not include oligopolistic rivalry
and interdependence
3. Saying such factors such as profit, sales,
gr
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.12 When the price of a commodity A is Rs. 5/-
per unit, the quantity demanded is 20 units.
When the price of A rises from Rs. 5/- to Rs. 10/-
and the quantity demanded decreases from 10
units. Calculate the price elasticity of demand?
A) 0.5
B) -0.5
C) 0.65
D) 0.65
Q.13 The two types of pricing in the pioneering
stages are:
A) Skimming price and Low penetration pricing
B) Skimming price and High penetration pricing
C) Cost-plus pricing and Low penetration pricing
D) Cost-plus pricing and High penetration pricing
Q.14 _____ costs are the costs that are involved
in actual payment to the other parties whereas
_____ costs are the costs that are the value of
foregone opportunities and do not involve an
actual payment
A) Explicit, Implicit
B) Implicit, Explicit
C) Incremental, Marginal
D) Marginal, Incremental
Q.15 Which of the following equations are True?
1. TR = P * Q
2. AR= TR * Q
3. MR = TR / Q
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.16 Which of these situations are correct when
there is a price increase?
1. The farmers earn more income in inflation and
it is helpful for them to pay off debts during this
period
2. People who live on pension, interest on fixed
amou
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3
Q.17 _____ competition has all the features of
_____ competition and some more features
A) Perfect, Pure
B) Pure, Perfect
C) Monopoly, Oligopoly
D) Oligopoly, Monopoly
Q.18 Match the Sets
Set A
1. Technical Economies
2. Economies of in formation
3. Economies of By-Product
Set B
a. An industry is in a better position to set up
research laboratories as they are able to gather
large resources <br
A) 1-a, 2-b, 3-c
B) 1-a, 2-c, 3-b
C) 1-b, 2-c, 3-a
D) 1-b, 2-a, 3-c
Q.19 Macro economics helps to provide insight
into government policies such as:
1. Monetary policy
2. Fiscal policy
3. Distribution policy
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.20 The phases of Business Cycle are:
1. Expansion
2. Contraction
3. Recession
4. Revival or Recovery
A) 1 and 2
B) 3 and 4
C) 1, 2 and 3
D) 1, 2, 3 and 4
Q.21 State the True points with respect to the
cross elasticity of demand,
1. The cross elasticity of demand is positive,
when the commodities are substitutes
2. The cross elasticity of demand is negative,
when the commodities are complemen
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3
Q.22 State the True points with regards to Supply
1. Supply refers to various quantities of goods,
which a seller is willing and able to sell at a
different price in a given market at a particular
time, other things remaining constant
2. Su
A) 1-T, 2-T
B) 1-T, 2-F
C) 1-F, 2-T
D) 1-F, 2-F
Q.23 Inflation on the basis of causes are:
1. Demand pull
2. Cost pull
3. Time pull
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3
Q.24 Arrange the three stages in the law of
variable proportion in proper order:
A) Diminishing Returns, Increasing Returns, Negative Returns
B) Increasing Returns, Diminishing Returns, Negative Returns
C) Diminishing Returns, Negative Returns, Increasing Returns
D) Negative Returns, Diminishing Returns, Increasing Returns
Q.25 State the True points with regards to
Perfectly Inelastic Curve:
1. When the demand for the product is
independent of price, such demand remains
unaffected with any magnitude of change in price
2. The demand will not respond to change
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3
Q.26 State the True points with regards to Perfect
Competition where there are large number of
buyers and sellers:
1. If one of the producers produces more or less,
that will affect the market supply or the market
price
2. Even the buy
A) 1-T, 2-T
B) 1-T, 2-F
C) 1-F, 2-T
D) 1-F, 2-F
Q.27 Fill in the blanks
It is easy for sellers to restrict output and raise
price. This can be possible in _____
In the same lines buyers can gang up on sellers
and capture producers surplus. This is possible
in_____
A) Collusive Oligopoly and Monopoly; Monopsony
B) Monopsony and Monopoly; Collusive Oligopoly
C) Collusive Oligopoly and Monopsony; Monopoly
D) None of the above
Q.28 The correct formula for Short Run Average
Total Cost is _____
A) SATC = TFC / Q
B) SATC = TVC / Q
C) SATC = SAVC + SAFC
D) SATC = SAVC - SAFC
Q.29 The demand and supply for a commodity
depends on _____. The price that matches
quantity demanded and the quantity supplied is
the _____
A) Quantity, Equilibrium Quantity
B) Price, Equilibrium Quantity
C) Quantity, Equilibrium Price
D) Price, Equilibrium Price
Q.30 State the True points with respect to
National Income Deflators:
1. It is a price index, which covers all final goods
and services
2. It is the ratio of current price NDP to constant
price NDP
3. The goods basket entering the calcu
A) 1 and 2
B) 3 and 4
C) 1, 3 and 4
D) 1, 2, 3 and 4
Q.31 The Applications of consumer surplus are:
1. Cost benefit Analysis
2. Evaluating loss and benefit due to tax
3. Gains from subsidies
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.32 State the True points with regards to
Externalities:
1. External cost and benefits together are called
externalities
2. External cost are said to be the positive
externalities and external benefits are said to be
negative externali
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3
Q.33 The subjective or internal factors that affect
consumption function are:
1. Precaution motive
2. Foresight motive
3. Motive for independence
4. Standard of living
5. Status Motive
A) 1, 2 and 4
B) 2, 3 and 5
C) 1, 2 and 3
D) All of the above
Q.34 Which of these points are True with respect
to Monetary Policy in Inflation?
1. Inflation is faced at the prosperity phase when
MEC is high, rising prices, output and
employment
2. In such a situation, the rate of interest is
lower
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3
Q.35 The different types of lag in monetary
policies are:
1. Inside lag
2. Intermediate lag
3. Outside lag
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.36 Match the Sets
Set A
1. Experts opinion Survey Method
2. Survey of Consumer or Consumers Interview
Method
3. Collective Opinion Method
Set B
a. Useful only in a short period and is also based
on value judgment
b. Simp
A) 1-a, 2-b, 3-c
B) 1-a, 2-c, 3-b
C) 1-b, 2-c, 3-a
D) 1-b, 2-a, 3-c
Q.37 The objectives of import controls are:
1. Earning foreign exchange
2. Conserving the stock of raw material and final
products for internal consumption
3. Enforcing standard of quality and grading
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.38 The supply curve shifts when there is
change in quantity _____ due to any factor other
than price. This is when the supply curve shifts
entirely to _____
A) Supplied, Right
B) Purchased, Left
C) Supplied, Right or Left
D) Purchased, Right or Left
Q.39 The bases for Product Differentiation are:
1. Characteristic of the product
2. Condition surrounding the service of the
product
3. Condition surrounding the sales of the product
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Q.40 The practical significances of Multiplier are:
1. Public investment
2. Useful in planning employment policies
3. Forecasting demand in response to
government expenditure
4. Helps in explaining business cycles
A) 1, 2 and 4
B) 2, 3 and 4
C) 1, 2 and 3
D) All of the above


PART C
Q.1 Match the Sets
Set A
1. On the basis of causes
2. On the basis of time situation
3. On the basis of degree of price rise
Set B
a. Peace time inflation
b. War and post war inflation
c. Demand pull inflation
d. Cost push
A) 1-a,b ; 2-c,d ; 3-e,f
B) 1-c,d ; 2-a,b ; 3-e,f
C) 1-e,f ; 2-c,d ; 3-a,b
D) 1-e,f ; 2-a,b ; 3-c,d
Q.2 Match the Sets
Set A
1. Nature of commodity
2. Availability of substitutes
3. Number of uses
4. Durability of commodity
5. Consumers income
Set B
a. Coal, milk
b. The price elasticity is of more than one
c. Price e
A) 1-a, 2-b, 3-c, 4-d, 5-e
B) 1-a, 2-c, 3-e, 4-b, 5-d
C) 1-e, 2-b, 3-a, 4-d, 5-c
D) 1-e, 2-b, 3-c, 4-d, 5-a
Q.3 Match the Sets
Set A
1. Large number of buyers and sellers
2. Homogeneous product
3. Free entry and exit of firms
4. Firms are price takers
5. Perfect mobility of factors of production
Set B
a. Buyers cannot influence the p
A) 1-a, 2-b, 3-c, 4-d, 5-e
B) 1-a, 2-c, 3-b, 4-e, 5-d
C) 1-b, 2-c, 3-a, 4-d, 5-e
D) 1-a, 2-b, 3-c, 4-e, 5-d
Q.4 The characteristics of Business Cycle are:
1. The fluctuations are wave like movement and
are recurrent in nature
2. Business Cycle is characterized by waves of
expansion and contraction
3. There are two phases of business cycle
A) 1, 2, 3, 4
B) 3, 4, 5, 6
C) 1, 2, 5, 6
D) All of the above
Q.5 Match the Sets
Set A
1. First degree price discrimination
2. Second degree price discrimination
3. Third degree price discrimination
Set B
a. When the seller will be divided into sub-market
and charge different price depending
A) 1-e,f ; 2-c,d ; 3-a,b
B) 1-c,d ; 2-a,b ; 3-e,f
C) 1-a,b ; 2-e,f ; 3-c,d
D) 1-c,d ; 2-e,f ; 3-a,b
Q.6 State the True points with respect to Dead
Weight Loss:
1. A Dead Weight Loss is a permanent loss of
well being of the society
2. It occurs when equilibrium for a commodity is
not Pareto Optimal
3. Monopoly leads to lack of economi
A) 1, 2, 3, 4
B) 2, 3, 4, 5
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5
Q.7 Match the Sets
Set A
1. Monetary Policy
2. Credit Policy
Set B
a. Can affect allocation of bank credit
b. Is of greater significance
c. Controls total volume of money in maintaining
stability in purchasing power of money <b
A) 1-a,b ; 2-c,d
B) 1-a,c ; 2-b,d
C) 1-d,b ; 2-c,a
D) 1-c,d ; 2-a,b
Q.8 The features of Monopolistic Market
Structure are:
1. Large number of buyers and sellers
2. Product differentiation
3. Advertisement and selling cost
4. Free entry and free exit of the firms
5. Firms are price takers
A) 1, 2, 3, 4
B) 1, 2, 3, 4
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5
Q.9 The different types of goals of a firm are:
1. Supply goal
2. Inventory goal
3. Sales goal
4. Markets share goal
5. Profit goal
A) 1, 2, 3 and 5
B) 2, 3, 4 and 5
C) 1, 3, 4 and 5
D) 1, 2, 3, 4 and 5
Q.10 Match the Sets
Set A
1. Precaution motive
2. Foresight motive
3. Motive for independence
4. Standard of living
5. Status Motive
Set B
a. Every individual has a strong feeling to
prepare for unseen emergencies
b. Eve
A) 1-a, 2-b, 3-c, 4-d, 5-e
B) 1-b, 2-a, 3-c, 4-d, 5-e
C) 1-a, 2-e, 3-d, 4-c, 5-b
D) 1-e, 2-b, 3-a, 4-d, 5-c
Q.11 A few characteristics by which Market
Structures can be categorized are:
1. Number and size of producers
2. Number of size distribution of buyer
3. Product Difference
4. Condition of Entry and Exit
A) 1 and 2
B) 1, 2 and 4
C) 2, 3 and 4
D) 1, 2, 3 and 4
Q.12 Consumers create negative externalities by
purchasing and consuming certain commodities
and services like:
1. Creating noise pollution from using the car
stereos
2. Smoking and alcohol
3. Crime acts
4. Chemical factory throwing
A) Except 3 and 4
B) Except 4
C) Except 5
D) Except 4 and 5
Q.13 Match the Sets
Set A
1. Evolutionary method
2. Substitution method
3. Growth pattern
4. Opinion polling method
Set B
a. Demand for cooler can be estimated from the
demand for fans
b. This method has wide use
c. To g
A) 1-a, 2-b, 3-c, 4-d
B) 1-d, 2-b, 3-c, 4-a
C) 1-a, 2-c, 3-b, 4-d
D) 1-d, 2-c, 3-b, 4-a
Q.14 Decisions that a manager need to take can
be classified into:
1. Decision relating to demand
2. Decision related to cost
3. Decision relating to price
4. Decision relating to profit management
5. Macro economic factor
A) 1, 2, 3, 4
B) 1, 2, 3, 4
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5
Q.15 The criticisms in Marris Growth Maximization
Model are:
1. This model does not tell anything about how
the prices are determined; it only assumes that
the price is given
2. They ignore interdependence in oligopoly
market structure
A) 1, 2, 3 and 4
B) 3, 4, 5 and 6
C) 1, 2, 5 and 6
D) All of the above
Q.16 The Survey Methods of Demand Forecasting
are:
1. Experts Opinion Survey
2. Consumers Interview
3. Trend Method
4. Regression Method
5. Leading Indicator
6. Simulation Equation
A) 1, 2, 3, 4
B) 3, 4, 5, 6
C) 1, 2, 5, 6
D) All of the above
Q.17 Match the Sets
Set A
1. Economies of Scale
2. Economies of Scope
Set B
a. Applied to efficiencies connected to increase
and decrease in scale of production
b. Shows the change in output of single product
c. Indicates the su
A) 1-a,b,c,d ; 2-e,f,g,h
B) 1-e,b,c,d ; 2-a,f,g,h
C) 1-a,f,c,d ; 2-e,b,g,h
D) 1-a,b,g,d ; 2-e,f,c,h
Q.18 Production function is studied in _____ ways
1. Law of variable proportion
2. Returns to scale
3. Economies of scale
4. Economies of price
5. Economies of scope
A) 1, 2, 3, 4
B) 1, 2, 3, 5
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5
Q.19 State the True points with respect to Lags
In Fiscal Policy:
1. Fiscal Policy has lags both inside and outside
lag
2. Inside lag of fiscal policy is longer than
monetary policy, but has shorter outside lag
3. Any significant change
A) 1, 2, 3, 4
B) 3, 4, 5, 6
C) 1, 2, 5, 6
D) All of the above
Q.20 The different types of Cost are:
1. Opportunity cost
2. Explicit and Implicit cost
3. Sunk, incremental cost and marginal cost
4. Direct and Indirect cost
5. Fixed and Variable cost
A) 1, 2, 3, 4
B) 1, 2, 3, 5
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5
Q.21 Match the Sets
Set A
1. Imposition of taxes
2. Property rights
3. Selling right to create externality
4. Direct government regulation
Set B
a. The gains in the external cost should be
weighed by the cost to the consumers of
A) 1-a, 2-b, 3-c, 4-d
B) 1-c, 2-a, 3-b, 4-d
C) 1-d, 2-c, 3-a, 4-b
D) 1-a, 2-c, 3-b, 4-d
Q.22 The factors which influence the entry of a
firm in an industry are:
1. For a firm to produce efficiently, what should
be the size of the firm
2. How much investment is required to start the
operation
3. If it fails after entering t
A) 1, 2, 3, 4
B) 2, 3, 4, 5
C) 1, 2, 4, 5
D) 1, 2, 3, 4, 5
Q.23 The factors responsible for inflation in
developing countries are:
1. Developing countries need a lot of expenditure
in developing projects, but these projects are
financed by deficit financing which results to
increase in the money s
A) 1, 2, 3, 4
B) 3, 4, 5, 6
C) 1, 2, 5, 6
D) All of the above
Q.24 Different types of Price Leaderships are:
1. Price leadership of low cost firm
2. Leadership by dominant firm
3. Cartel leadership
4. Barometric leadership
5. Aggressive price leadership
A) 1, 2, 3, 4
B) 2, 3, 4, 5
C) 1, 2, 4, 5
D) 1, 2, 3, 4, 5
Q.25 Different types of Elasticity of Demand are:
1. Price Elasticity of Demand
2. Income Elasticity of Demand
3. Cross Elasticity of Demand
4. Advertisement Elasticity of Demand
5. Market Elasticity of Demand
A) 1, 2, 3, 4
B) 1, 2, 3, 5
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5
Q.26 Exceptions to the Law of Supply are:
1. To clear the stock the seller may sell even
when the prices are low, but it usually happens in
the short run
2. Change in technology affects the cost of
production and the supply is influenced in
A) 1 and 3
B) 1, 3 and 4
C) 2 and 4
D) 1, 2, 3 and 4
Q.27 The various Macro Economic Ratios are:
1. Consumption Income
2. Saving Income
3. Capital Output
4. Capital Labour
5. Value Added Labour
6. Capital Added Output
7. Input-Output
8. Cash Reserve
9. Cash Income
10. Labo
A) Except 1 and 2
B) Except 5 and 6
C) Except 8 and 9
D) Except 10, 11 and 12
Q.28 The limitations to Acceleration Principle are:
1. No excess capacity
2. Contractionary money policy
3. Availability of resources
4. Nature of demand
5. Surplus capacity
A) 1, 2, 3, 4
B) 2, 3, 4, 5
C) 1, 3, 4, 5
D) 1, 2, 3, 4, 5