VIDYA SAGAR

CAREER INSTITUTE LIMITED

CPT Minor Test – 4 (Part – B) Series 2

Instruction: Maximum Marks: 100

1. Use HB Pencil to fill ovals for correct answer. Time : 2 Hours
2. Each question carry one mark. Date : 28.11.2014
3. Negative marking .25 marks
4. No negative marking for unattempted questions.

___________________________________________________
1. Which of the following is considered production in economics?
(a) Tilling of soil
(b) Singing a song before friends
(c) Preventing a child from falling into a manhole on the road
(d) Painting a picture for pleasure

2. The following is not the characteristic of Land:

(a) Land varies in fertility and uses
(b) Land is highly immobile
(c) The supply of land is perfectly elastic from the point of view of the economy
(d) The supply of land is perfectly inelastic from the point of view of the economy

3. A firm's production function :

(a) shows how much output and the level of input required for the firm to maximize profits.
(b) establishes the minimum level of output that can be produced using the available resources.
(c) shows the maximum output that can be produced with a given amount of inputs with available
technology.
(d) shows labour force which is employed

4. what is a production process?

(a) technical relationship between physical inputs and physical output.
(b) relationship between fixed factors of production and variable factors of production.
(c) relationship between a factor of production and the utility created by it.
(d) relationship between quantity of output produced and time taken to produce the output.

Use Table to answer questions 5

Hours of Labour Total Output Marginal Product
0 --- ----
1 200 200
2 --- 160
3 480 ----
5. What is the total output when 2 hours of labour are employed?
(a) 160 (b) 200
(c) 360 (d) 400

6. If the marginal product of labour is below the average product of labour. It must be true that :
(a) Marginal product of labour is negative (b) Marginal product of labour is Zero
(c) Average product of labour is falling (d) Average product of labour is negative
7. You are given the following data:
Output Total Costs
0 0
1 15
2 28
3 38
4 46
5 54
The above data is an example of:
(a) decreasing returns to scale. (b) constant returns to scale.
(c) increasing returns to scale. (d) positive fixed costs.

8. --------------is an implicit cost of production.

(a) Wages of the labour. (b) Charges for electricity.
(c) Interest on owned money capital. (d) Payment for raw material.

Read the following paragraph and answer questions 9

Nicole owns a small pottery factory. She can make 1,000 pieces of pottery per year and sell them for
Rs.100 each. It costs Nicole Rs 20,000 for the raw materials to produce the 1,000 pieces of pottery.
She has invested Rs 100,000 in her factory and equipment: Rs 50,000 from her savings and Rs 50,000
borrowed at 10 per cent. (Assume that she could have loaned her money out at 10 per cent, too.)
Nicole can work at a competing pottery factory for Rs 40,000 per year.

9. The economic profit at Nicole's factory is:

(a) Rs. 75000 (b) Rs. 35000
(c) Rs 80000 (d) Rs 30000

10. Suppose that a sole proprietor is earning total revenue of Rs. 1,20,000 and is incurring explicit cost
of Rs. 90,000. If the owner could work for another company for Rs. 50,000 a year, we would
conclude that:
(a) The firm is incurring an economic profit
(b) The firm is incurring an economic loss
(c) Total economic cost is Rs 2,10,000
(d) The firm is earning economic profit of Rs. 30,000

Use Table to answer questions 11

Output (O) 0 1 2 3 4 5 6
Total Cost (TC): Rs.240 Rs.330 Rs.410 Rs.480 Rs.540 Rs.610 Rs.690

11. The marginal cost of the sixth unit of output is:

(a) Rs.133 (b) Rs.75
(c) Rs.80 (d) Rs.450

12. If a firm's average variable cost curve is rising, its marginal cost curve must be:
(a) constant. (b) above the total cost curve.
(c) above the average variable cost curve. (d) all of the above.

13. Average fixed cost can not be:

(a) Less than one (b) One
(c) Zero (d) Greater than one
Use the following data to answer questions 14
Output Total Cost
0 240
1 330
2 410
3 480
4 540
5 610
6 690
14. The Average fixed cost of 2 units of output is:
(a) Rs. 80 (b) Rs. 85
(c) Rs 120 (d) Rs. 205

15. Total cost in the short run is classified into fixed costs and variable costs. Which one of the following
is a variable cost?
(a) Cost of raw materials (b) Cost of equipment
(c) Interest payment on past borrowings (d) payment of rent of building

16. Which of the following is incorrect?

(a) The shape of the average cost and marginal cost curve is 'U'
(b) The AR and MR curves of a firm under perfect competition are parallel to X-axis.
(c) At Equilibrium AR = MR
(d) At Equilibrium MC = MR

17. Secular period is also known as:

(a) very short period (b) short period
(c) very long period (d) long period

18. Relationship between AR, MR and Price elasticity of demand is

(a) MR = AR + [e -1/e] (b) MR = AR x [e -1/e]
(c) AR = MR x [e -1/e] (d) MR = AR x [e/e -1]

19. A firm encounters its "shutdown point" when:

(a) Average total cost equals price at the profit-maximising level of output
(b) Average variable cost equals price at the profit-maximising level of output.
(c) Average fixed cost equals price at the profit-maximising level of output.
(d) Marginal cost equals price at the profit-maximising level of output.

20. An increase in demand and an increase in supply will:

(a) affect equilibrium quantity in an indeterminate way and price will decrease.
(b) affect price in an indeterminate way and quantity will decrease.
(c) affect price in an indeterminate way and quantity will increase.
(d) affect equilibrium quantity in an indeterminate way and price will increase.

21. The market of computers is not in equilibrium, then which of the following statements is definitely
true?
(a) The prices of computer will rise
(b) The prices of computer will fall
(c) The prices of computers will change, but not enough information is given to determine the
direction of the change
(d) None of the above
22. Price-taking firms, i.e., firms that operate in a perfectly competitive market, are said to be “small”
relative to the market. Which of the following best describes this smallness?
(a) The individual firm must have fewer than 10 employees.
(b) The individual firm faces a downward-sloping demand curve.
(c) The individual firm has assets of less than Rs.20 lakh.
(d) The individual firm is unable to affect market price through its output decisions.

23. An individual firm in a perfectly competitive market faces a demand curve which is:
(a) downward sloping. (b) relatively inelastic.
(c) perfectly elastic. (d) upward sloping.

24. Under perfect competition price of the product:

(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limit by individual firm
(d) None of the above

25. A condition needed for a perfectly competitive industry to exist is that:

(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors.
(d) There are no obstacles to the free mobility of resources.

26. Excess capacity is not found under ------------------.

(a) Monopoly (b) Monopolistic competition
(c) Perfect competition. (d) Oligopoly

27. The degree of monopoly power is measured in terms of difference between

(a) Marginal cost and the price (b) Average cost and average revenue
(c) Marginal cost and average cost (d) marginal revenue and average cost

28. Dumping involves

(a) selling at a price in another market which is lower than the price or cost in your home market
(b) price discrimination between the two markets
(c) surplus production at lower cost
(d) none of the above

29. Monopolistic competition differs from perfect competition primarily because:

(a) in monopolistic competition, firms can differentiate their products.
(b) in perfect competition, firms can differentiate their products
(c) in monopolistic competition, entry into the industry is blocked.
(d) in monopolistic competition, there are relatively few barriers to entry.

30. Price discrimination is related to:

(a) time (b) size of the purchase
(c) income (d) any of the above

31. Product differentiation is the most important feature of

(a) Monopolistic competition (b) Monopoly
(c) Oligopoly (d) Perfect Completion
32. Which of the following statements about price and marginal cost in competitive and monopolized
markets is true?
(a) In competitive markets, price equals marginal cost; in monopolized markets, price exceeds
marginal cost.
(b) In competitive markets, price equals marginal cost; in monopolized markets, price equals
marginal cost.
(c) In competitive markets, price exceeds marginal cost; in monopolized markets, price exceeds
marginal cost.
(d) In competitive markets, price exceeds marginal cost; in monopolized markets, price equals
marginal cost.

33. In monopolistic competition excess capacity in the firm__________

(a) Always Exists (b) Sometimes Exists
(c) Never Exists (d) None of the above

34. One characteristic not typical of oligopolistic industry is:

(a) horizontal demand curve
(b) too much importance to non-price competition
(c) price leadership
(d) a small number of firms in the industry

35. Which of the following statements is correct?

(a) price rigidity is an important features of monopoly
(b) Selling costs are possible under perfect competition.
(c) Under perfect competition factors of production do not move freely as there are legal
restrictions.
(d) An industry consist of many firms

36. If a firm's revenues just cover all its opportunity costs, then:
(a) economic profit is maximum. (b) economic profit is zero.
(c) total revenues equal its explicit costs. (d) total revenues equal its implicit costs.

37. Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs
of production are $1,500,000 and the implicit costs of production are $300,000. The firm has an
accounting profit of:
(a) $500,000 and an economic profit of $200,000
(b) $400,000 and an economic profit of $200,000
(c) $300,000 and an economic profit of $400,000
(d) $200,000 and an economic profit of $500,000

38. The law of diminishing returns only applies in cases where:

(a) there is increasing scarcity of factors of production
(b) the price of extra units of a factor is increasing
(c) there is at least one fixed factor of production.
(d) capital is a variable input.

39. If there are external economies, as demand increases:

(a) output decreases in the long run. (b) the price falls in the long run
(c) the price rises in the long run. (d) firms exit from the industry in the long run.

40. The following are key features of a monopoly except:

(a) diseconomies of scale (b) no close substitutes.
(c) influence over price (d) barriers to entry
41. Formula of MC is :
(a) TCn -TCn-1 (b)
(c) TVCn -TVCn-1 (d) All of the above

42. Modern firms are facing which shape of LAC curve due to change in the technology:
(a) U (b) Flat
(c) L (d) S

43. Which stage of production also known as economic absurdity:

(a) 1st stage (b) 2nd stage
(c) 3rd stage (d) Both (a) & (c)

44. When MR = 10, MC = 10 then :

(a) Normal profit (b) Super Normal profit
(c) Maximum profit (d) No profit, No loss

45. Who gives three degree of price discrimination :

(a) Marshal . (b) Sweezy
(c) Pigou (d) Hicks

46. Labour power depends upon

(a) Physical Strength (b) Education
(c) Motivation to work (d) All of above

47. Cobb-Douglas Production function was studied on:

(a) American Manufacturing Industries (b) British Industries
(c) American Agricultural Labours (d) British Agricultural Labours

48. Cost of toils and efforts in production of commodity is known as:

(a) Direct Cost (b) Indirect Cost
(c) Real Cost (d) Liquidated Cost

49. Ideal Output is associated with minimum of:

(a) LAC Curve (b) LMC Curve
(c) SAC Curve (d) SMC Curve

50. ‘Dumping’ comes under which degree of price discrimination -

(a) First degree (b) Second degree
(c) Third degree (d) Fourth degree

51. Evaluate
(a) (b)
(c) (d) None of these

52.
(a) 0 (b) 5
(c) 2 (d) None of these
53 (p > q) is evaluated as :

(a) (b)
(c) (d) None of these

54. is equal to________

(a) 0 (b) 1
(c) -1 (d) ∞

55. Evaluate
(a) (b) -n
(c) n (d) None of these

56. A function on R is defined as following

f(x) = x + 2 where x < 1
= 4x - 1 when 1 ≤ x < 3
= x² + 5 when x ≥ 3 then f(x) =
(a) 3 (b) 2
(c) 0 (d) Does not exit

57. A function f(x) defined as follows f(x) = x + 1 when x ≤ 1

= 3 - px when x > 1
The value of p for which f(x) is continuous at x = 1 is :
(a) - 1 (b) 1
(c) 0 (d) None of these

58. f(x) =

Then f(x) is :
(a) Continuous at x = 5 (b) Discontinuous at x = 5
(c) Undefined at x = 5 (d) None of the above

59. Differentiate ex / logx

(a) ex (x log x - 1) (b) ex (x log x + 1)
(c) (d) None of these

60. Differentiate y w.r.t. x when y=(x2- 2x) (x2+ 1)

(a) 4x³+6x2-2x+2 (b) 4x2-6x + 2
(c) 4x³- 6x2+2x-2 (d) None of these.

61. If y = (2x4 + 3x³ - 5x + 6)-1/3 then dy / dx is :

(a) (-1/3) (2x4 + 3x³ - 5x + 6)- 4/3 (8x³ + 9x² - 5) (b) (1/3) (2x4 + 3x³ - 5x + 6)- 4/3(8x³ + 9x² - 5)
(c) (1/3) (2x4 + 3x³ - 5x + 6)4/3 (8x³ + 9x² - 5) (d) None of these

62. If y = x10 + 5 log 3x + 6e2x + 10 then dy / dx is equal to

(a) 10x9+15x +12e2x (b) 10x9+ + 12e2x
(c) 10x9+ + 6e2x (d) None of these
63. Find the second differential coefficient of y = x2 log x
(a) x + 2x log x (b) 3 + 2 log x
(c) 31ogx (d) 2x log x

64. is equal to :
x
(a) x logx + k (b) +k
x
(c) +k (d) x +c

65. dx is equal to:

(a) + log |x + |+ c (b) + log |x - |+ c
(c) - log |x + |+ c (d) None of these

66. Use integration by parts to evaluate and the answer is :

(a) x2 e3x/3 - 2x e3x /9 + 2 e3x /27 + k (b) x2 e3x- 2x e3x+ 2 e3x + k
(c) e3x/3 - x e3x /9 + 2e3x + k (d) None of these

67. is equal to
(a) log 2-1 (b) - (2 log 2-2)
(c) 2 log 2 - 1 (d) 0

68. If f' (x) = 3x2 - 2 / x3, f (1) = 0 and f (x) = …………..

(a) x3/3 - x2 - 2 (b) x3 + x2 +2
(c) x3 + x-2 - 2 (d) None of these

69. If = 405, then value of n is equal to

(a) 4 (b) 6
(c) 5 (d) 7

70. f(x)= , if x ≠ 2 :
f(x) = if x = 2 then at x = 2 the function is :
(a) Continuous (b) Discontinuous
(c) Cannot be determine (d) None of these

71. If y = [(1 - x)/x]² then dy / dx is :

(a) 2(x-3 + x-2) (b) 2(-x-3 + x-2)
(c) 2(x-3 - x-2) (d) None of these

72. Integrate w.r.t. x, (x² - 1)²

(a) x5/5 - (2/3) x³ + x + k (b) x5/5 + (2/3) x³ + x + k
(c) x5/5 + (3/2) x³ + x + k (d) None of these

73.
(a) n (b) n(n+1)/2
(c) (n+1) (d) n(n+1)
74. Let f(x)= for x ≠ 4
= 10 for x = 4
Which options is true for given function:
(a) limit f(x) does not exit
(b) limiting value of f(x) for x 4 is not equal to its function value f(4)
(c) f(x) is not defined at x = 4
(d) None of these

75. x² - 2x + 10 has minimum at x =

(a) 2 (b) -1
(c) 1 (d) -2

76. The quartile deviation of a normal distribution with mean 10 and SD 4 is :

(a) 0.675 (b) 67.50
(c) 2.70 (d) 3.20

77. 50 per cent of a certain product have weight 60 Kg or more whereas 10 per cent have weight 55 Kg
or less. On the assumption of normality, what is the variance of weight ? Given Ø (1.28) = 0.90.
(a) 15.25 (b) 9.00
(c) 16.00 (d) 22.68

78. For a random variable x, the probability density function is given by :

f(x) = for - <x<

Identify the distribution and find its mean and variance:
(a) 4, 0.707 (b) 2, 0.707
(c) 4, 1/2 (d) 2, 1/2

79. x and y are independent normal variables with mean 100 and 80 respectively and standard
deviation as 4 and 3 respectively. What is the distribution of (x + y) ?
(a) Mean = 180, SD = 7 (b) Mean = 180, SD = 25
(c) Mean = 180, SD = 5 (d) Mean = 180, SD = 49

80. For a normal distribution with mean 2 and variance 9, find the value of x such that the probability of
the interval (2, x) is 0.4115. [P(0 < Z < 1.35) = 0.4115]
(a) 7.05 (b) 6.05
(c) 8.05 (d) None of these

81. A discrete random variable x follows uniform distribution and takes the values 6, 9,10, 11, 13
The probability of P(x = 12) is
(a) 1/5 (b) 3/5
(c) 4/5 (d) 0

82. The law of Statistical Regularity says that :

(a) Sample drawn from the population under discussion possesses the characteristics of the
population
(b) A large sample drawn at random from the population would posses the characteristics of the
population
(c) A large sample drawn at random from the population would possess the characteristics of the
population on an average
(d) An optimum level of efficiency can be attained at a minimum cost
83. If a random sample of size 2 with replacement is taken from the population containing the units 3, 6
and 1, then the samples would be :
(a) (3, 6), (3, 1), (6, 1)
(b) (3, 3), (6, 6), (1, 1)
(c) (3, 3), (3, 6), (3, 1), (6, 6), (6, 3), (6, 1), (1, 1), (1, 3), (1, 6)
(d) (1, 1), (1, 3), (1, 6), (6, 1), (6, 2), (6, 3), (6, 6), (1, 6), (1, 1)

84. A simple random sample of size 10 is drawn without replacement from a universe containing 85
units. If the mean and SD, as obtained from the sample, are 90 and 4 respectively, what is the
estimate of the standard error of sample mean :
(a) 0.58 (b) 1.26
(c) 0.67 (d) 0.72

85. The ratio of the no. of elements possessing a characteristic to the total no. of elements in the
population is known as
(a) population proportion (b) population size
(c) both (a) & (b) (d) none of these

86. According to Neyman's allocation, in stratified sampling :

(a) Sample size is proportional to the population size and population SD
(b) Sample size is proportional to the sample SD
(c) Sample size is proportional to the sample variance
(d) Population size is proportional to the sample variance

87. The sample mean is :

(a) An MVUE for population mean
(b) A consistent and efficient estimator for population mean
(c) A sufficient estimator for population mean
(d) All of above

88. The difference between sample S.D and the estimate of population S.D is negligible if the sample
size is
(a) small (b) moderate
(c) sufficiently large (d) none

89. A random sample of size 17 has 52 as mean. The square of standard deviation of sample is 160. The
99% confidence limits for the mean are :
[Given t0.01,15=2.60, t0.01,16=2.58 t0.01,17=2.57 t0.005,15=2.95 t0.005,16=2.92 t0.05,17=2.90]
(a) [43, 6] (b) [45, 59]
(c) [42.77, 61.23] (d) [48, 56]

90. A random sample of a group of people is taken and 120 were found to be in favour of liberalizing
licensing regulations. If the proportion of people in the population found in favor of liberalization
with 95% confidence lies between 0.683 and 0.817, then the number of people in the group is :
(a) 140 (b) 150
(c) 160 (d) 175

91. A random sample of 100 days shows an average daily sale of Rs. 1000 with a standard deviation of
Rs. 250 in a particular shop. Assuming a normal distribution, find the limits which have a 95%
chance of including the expected per day.
(a) [Rs. 950, Rs. 949] (b) [Rs. 951, Rs. 1049]
(c) [Rs. 950, Rs. 1149] (d) None
92. A pathologist wants to determine on the basis of sample study, the mean time required to complete
a certain analysis so that the mean may remain with ± 3 days of the true mean. As per the available
record, the population variance is 81 days, what must be the size of the sample for his study?
(Take value of z corresponding to 98% confidence interval to be 2.33)?
(a) 36 (b) 49
(c) 81 (d) 64

93. The IQ's of army volunteers in a given year are normally distributed with Mean = 110 and Standard
Deviation = 10. The army wants to give advance training to 20% of those recruits with the highest
scores. What is the lowest I.Q. Score acceptable for the advanced training? The value of Z for the
area 0.3 = 0.84
(a) 0.84 (b) 118.4
(c) 138.4 (d) 115.4

94. The mean monthly expenditure of a batch of students is Rs. 100 with standard deviation Rs. 20. If
the expenditure is normally distributed find the minimum expenditure of those 10% of the students
whose expenditure is the highest. Given Ø (1.28) = 0.90.
(a) Rs. 150 (b) Rs. 125.60
(c) Rs. 125.80 (d) None of these

95. Marks obtained by a number of students are assumed to be normally distributed with mean 65 and
variance 25. If 3 students are taken at random what is the probability that exactly two of them will
have marks over 70? [Given Ø (0.84) = 0.80]
(a) 0.07 (b) 0.08
(c) 0.06 (d) None of these

96. The ages of workers in a large plant, with a mean 50 years and standard deviation of 5 years, are
assumed to be normally distributed. If 20% of the workers are below a certain age, find that age :
(a) 45.8 years (b) 43 years
(c) 46.8 years (d) None of these

97. If the standard Error is ½ , and the parameter of Normal population given to S.D = 4 then, find the
sample size?
(a) 1024 (b) 16
(c) 64 (d) 36

98. A researcher wishes to estimate the mean of a population by using sufficiently large sample. The
probability is 0.95 that the sample mean will not differ from the true mean by more than 25% of the
standard deviation. How large sample should be taken?
(a) 72 (b) 62
(c) 42 (d) 32

99. Let the five numbers 3, 4, 5, 6, 7 constitute a universe. Select all samples of size three and compute
the mean of the sample means. The value thus obtained is:
(a) 3 (b) 4
(c) 5 (d) 6

100. A sample of 25 units from an infinite population with standard deviation 10 results into a total score
of 450. The mean of the sampling distribution is:
(a) 45 (b) 50
(c) 18 (d) 1.8