Managerial Economics

1. Government can increase the domestic supply of food grain by way of larger _____________: o Exports o Imports o Price controls o Taxes

2. An individuals demand for commodity is generally determined by factors such as:**

o o o Price of the product Taste & Habits Desire

o Income

3. Macro economics aggregates are:**

o o o o National Income Total Investments Employment Business cycles

4. Gross profit is used for payment of:**

o o o o Remuneration to factors of production Depreciation Maintenance Charges Capital Expenditure

5. Aggregate supply function is positively sloped curve that becomes perfectly inelastic subsequently:
o o True False

6. Price elasticity of demand is measured by using which of the following formula? * o % change in quantity demanded / % change in price o % change in price / % change in quantity demanded o % change in price of good A / % change in quantity of good B o % change in income / % change in price

7. General forecasts > Total Picture of the demand

Specific Forecasts > Forecasts of each of the product Capital Goods > Derived Demand Durable Goods > Demand can be postponed o Perishable goods o Derived Demand o Forecasts of each of the product o Demand can be postponed o Forecasts for each market o Total Picture of the demand

8. With improvement in technology, with the given inputs, the level of output:*
o o o o increases decreases remains constant remains unchanged

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9. Opportunity cost is the:* o Explicit cost o Implicit cost

o o Variable Cost Future cost

10. The traditional concept of equilibrium of a firm is:* o Break- even point o Production function o Cross function o Price fixation

11. The term elasticity of demand, when used without qualifications is commonly referred to as price
elasticity of demand: o False o True

12. Types of income elasticity of demand:**

o o o o Perfect income elasticity of demand Negative income elasticity of demand Zero income elasticity of demand elasticity of demand

13. Disinvestment > Sale of government shareholding

Dual Pricing > Charging two different prices from rich and poor Deficit Financing > Increase supply of money Fiscal deficit > Gap between public expenditure and public revenue o o o o o o Sale of government shareholding Gap between public expenditure and public revenue Increase supply of money Charging two different prices from rich and poor One buyer and one seller Revenue income minus revenue expenditure

14. Cost plus pricing method assumes that cost can be allocated to: * o o o o Individual Products Complementary Products Composite Products Substitute Products

15. Demand is determined by: **

o o o o Price of the product Relative prices of other goods Tastes & Habits Slope of the curve

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16. Managerial economics _____________:

o o o o Helps in demand forecasting Does not believe in empirical validity Takes only a birds eye view and ignores the economic problems at large Supply of inputs

17. It is assumed that units of variable factor are divisible into _____________ units:
o o o o heterogeneous homogeneous extraordinary different

18. The other approaches to pricing are: **

o o o o Intuitive Pricing Experimental Pricing Imitative Pricing Average Cost Pricing

19. PDS helps to hold the prices _____________:

o o o o Down Up Stable Constant

20. Demand for a commodity depends on one factor:

o o True False

21. Fiscal Policy involves variations in :**

o o o o Public Expenditure Taxation Expenditure by firms Household expenses

22. Demand for a commodity depends on the relative price of its _____________:
o o o o Substitute goods Necessary Goods Luxury Goods Complimentary Goods

23. Effect of increase in consumers income on the demand for inferior goods is measured by __________:
o o Income elasticity of demand Price elasticity of demand Cross Price controls

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None of the above

24. Managerial Economics consists of the use of economic modes of thought to analyse business situations, was said by: * o o o o Prof Hauge Prof Joel Dean M C Nair & Meriam Prof Mansfield

25. Expected costs are based on the _____________ of production and prices:
o o o o Intuition Forecasts Empirical Experience

26. Substantial reduction in the cost of production of a firm because of the use of improved and up-to-date
machinery is an example of economy known as: * o Commercial o Managerial Financial o Technical

27. Market mechanism dies not ensure _____________:

o o o o Full employment Equilibrium Disguised Unemployment Frictional employment

28. Cash Reserve Ratio is a tool of monetary control:

o o True False

29. One of the monetary measures _____________:

o o o o Variations in CRR Variations in Public expenditure Variations in Public Revenue Deficit Financing

30. Equilibrium is the stage of : **

o o o o Maximum Satisfaction Balance No Change Imbalance

31. AFC is the per unit fixed cost of production which is calculated _____________:
o o o o AFC = TFC / Units of output ATC = TFC / Units of output AFC = TVC / Units of output AFC = TFC / Units of input

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32. Total cost of production is: **

o o o o The some of Total fixed cost, and Total Variable cost Average variable cost

33. Sample of test market is selected under experimental pricing:

o o True False

34. Output of product depends upon the: *

o o o o Cost of production Fixed inputs cost only Cost of the capital only Cost of techniques used only

35. Advertising forms an integral part of decision making and _____________:

o o o o Forward planning Employment of labours Distribution Competition

36. What fails to provide full employment? * o Market mechanism o Government o Exports o Duopoly

37. Managerial economics is the hybrid of management and economics:

o o True False

38. Labour unions negotiate with the government regarding:**

o o o o Increase in wage rate Increase in remuneration Increase in the retirement age Decrease in workload

39. Exception of the law of diminishing returns is: *

o o

o
o

Old methods of cultivation New methods of cultivation Additional employment of Labour Production of new goods

40. Demand forecasts for a period of more _____________ years are based on Time-series Analysis:
o o o 1 to 2 2 to 3 3 to 4

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4 to 5

41. Economists usually consider three important kinds of elasticity of demand:

o o False True

42. In India in recent past prices have risen on account of rise in the prices of edible oil, pulses, tea &
sugar: o True o False

43. Right to information is one of the rights of consumer under the consumer protection act , 1986:
o o True False

44. National income is studied as a part of macro economics:

o o True False

45. The supply is always referred to in relation to: *

o o o o Price & time Income & Expenditure Inflation production

46. Prof. J M Keynes wrote a book on: ** o Employment o Interest o Money o Consumer Surplus

47. Investment for production depends on:*

o o o o Factor prices Output prices market place

48. Elasticity of demand has huge practical significance:

o o o In formulation of price policy In studying growth trends In employment generation

o In tax fixation

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1. An economic problem is such that it is faced by a simple hutman as well as a movie star:
o o True False

2. Under Perfect competition each seller makes __________ profit in the long run:
o o o o Normal Abnormal Supernormal Zero

3. A market in which any firm has little ability to influence market prices is called: *
o o o o Systematic market Competitive market Comprehensive market Monopoly market

4. Over years it has been observed that the relation between plan and non plan expenditure is that: *
o o o o Former is grater than later Later is greater than former Both are equal The relation keeps changing

5. Public goods carry features such as principle of:

o o o o Non exclusion Indivisibility Exclusion Divisibility

6. Keynes established a _____________ relationship between income and consumption:

o o o Direct Indirect cyclical Tedious

7. Perfect Competition > Equilibrium Price > Market Period > Long Run> o o o o o o Administered price mechanism Non Perishable goods Automatic price mechanism Large number of producers Perishable goods Demand & Supply

8. Marginal efficiency of capital is estimated taking into account: **

o o o Prospective yield from a particular asset Supply price of that asset Marginal productivity of Labour

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Liquidity preference function

9. Features of short run period are: **

o o o o Supply of goods can be adjusted to the demand to some extent Supply and demand determine the price Some factors can be changed All factors can be changed

10. When Supply increases, demand remaining the same, the equilibrium price _____________:
o o o o Falls rises remains same rises slightly

11. The traditional concept of equilibrium of a firm is: *

o o o o Break-even point Production function Cost function Price Fixation

12. Use of roads by masses is an example of a public good:

o o True False

13. Inflation has an effect on: **

o o o o Production Distribution Social Relations Political Instability

14. Principle of _____________ is associated with Private goods:

o

o
o o

Non exclusion Exclusion Divisibility Division

15. Changes in demand curve occurs: **

o o o o Due to festival On account of growth in population Some other factors Due to change in supply

16. An example of private good could be: *

o o o o Television Roads Bridges Door Darshan Network

17. Charging different prices to different customer for the same product is called _____________:

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o o o o

Price discrimination Product differentiation Product Homogeneity Price Uniformity

18. IN the long run perfect competition the firms makes: *

o o o o Super normal profits Abnormal Profits Normal profits Excess profits

19. A monopolist is a price taker:

o o False True

20. It is necessary to collect the information regarding the expected expenditure of the consumers in order
to: *

o Expand the infrastructure of the firm

o o o

To find out about their economic condition Anticipate expected sales Avoid random samples

21. While deciding price, cost plus pricing method considers fixed and variable cost and a certain
percentage of profit: o True o False

22. _____________ production function assumes constant returns to scale:

o o o o Law of variable proportion Laws of returns to scale Cobb Doglaus Linear homogeneous

23. Features of monopoly are: **

o o o o Single producer Barriers to entry No close substitute to the product Perfectly elastic demand curve

24. Area specific demand forecasts give the forecasts: *

o o o o About the total product of the firm About each of the products produced by the firm Of total marketability For each of the market for the firms product.

25. All the buyers and sellers operating under perfect competition have perfect knowledge of
_____________: o Market conditions o Sellers income Other buyers income

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competition

26. Which one of the following is an essential condition for monopoly to exist: *
o o o o Product homogeneity Large no. of buyers and sellers Govt. interventions Barriers to entry of firms

27. The real cost of production is called as _____________:

o o o Opportunity Cost Variable Cost Average Cost

o Accounting Cost

28. A tubular statement of price =demand relationship explains: ** o The amount of commodity demanded o Both Individual and market demand o Slope of demand curve o Only individual demand

29. The concept of effective demand is: *

o o o Aggregate expenditure in the economy Aggregate income in the economy Availability of goods per unit of time Demand without consumption gap

o
o o

30. Cash reserve ration is a tool of monetary control:

True False

31. In perfect competition firm gets super normal profit when: *

o o o o AR = AC AR > AC AR < AC None of the above

32. Opportunity cost is the: * o Explicit cost o Implicit cost

o o Variable cost Future cost

33. The total output of all commodities in a country over a specific period, usually taken in a year, is called
Net National Product: o True o False

34. Private goods are indivisible:

o False

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True

35. Cost Plus pricing > Objective approach to pricing

Going Rate Pricing > Emphasizes market conditions Marginal Cost Pricing > Different from incremental cost pricing Intuitive Pricing > Psychological and subjective approach to pricing o Psychological and subjective approach to pricing Objective approach to pricing Ignores Demand Different from incremental cost pricing Ignores supply Emphasizes market conditions

o
o o o o

36. Demand for a commodity depends on the relative price of its _____________:
o o o o Substitute goods Necessary goods Luxury Goods Complimentary goods

37. The period of great depression was between 1914 and 1918:
o o False True

38. Perfect elastic demand curve is _____________:

o o o o Horizontal Vertical Downward sloping Upward sloping

39. Labour unions negotiate with the government regarding: **

o o o Increase in the wage rate Increase in the retirement age Decrease in the workload

o Increase in the remuneration

40. Law of variable proportion and laws of returns to scale are covered under the linear homogeneous
production function: o True o False

41. The degree of elasticity determines the shape and slope of the _____________:
o o o o Demand curve Supply curve Engel curve Average revenue curve

42. The theory of production function can also explain the possibility of : *
o o Disguised employment Disguised unemployment

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o o

employment unemployment

43. Public goods could be: **

o o o o Roads Bridges Public Parks Cable television

44. Where there exists a close substitute in the relevant price range, its demand will tend to be inelastic:
o o False True

45. One of the monetary measures _____________:

o o o o Variations in CRR Variations in Public expenditure Variations in Public Revenue Deficit Financing

46. Total cost of production is: **

o o o o The Some of Total fixed cost, and Total variable cost Average Variable cost

47. Externalities could also be: **

o o o o Positive Negative Neutral Biased

48. Following are the methods of deciding selling price:

o o o AVC method MC Pricing Profit Based pricing

o Full cost Pricing

*********************************************** ***********************************************

1. Micro economics studies the: **

o o o Elasticity of demand Marginal Revenue Marginal cost

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Economic growth

2. Under perfect competition there are large number of buyers and few sellers:
o o True False

3. One of the important determinants of supply: *

o o

o
o

Willingness of seller Willingness of buyer Price & quantity demanded Supply & quantity demanded

4. Maximum quantity of output that can be produced from any chosen quantities of various :*
o

o
o o

Labourers Inputs goods Managers

5. Economics is a science which studies: **

o o o o Human Behaviour Wants and ends Alternative uses of limited Means Organisational Behaviour

6. Aggregate Supply function represents:

o o o o Cost of production Supply price Demand price Cost of labour

7. VAT > Value Added Tax

Administered prices> State Trading corporation> New Industrial Policy> o 1991 o 1998 o Value Added Tax o Responsibility of importing and distributing edible oil o Value Assessment Tax o Cost plus a stipulated margin of profit

8. Elasticity of demand of salt can be represented _____________: o e=0

o o o e=1 e<1 e>0

9. Perfectly competitive market has: **

o Large number of buyers and sellers

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o o o

Free entry & exit Single producer Barriers to entry

10. Aggregate demand function is a positively sloped curve:

o o True False

11. Under the decreasing returns to scale, the marginal output curve slopes _____________:
o o o o horizontal Vertical downward Upward

12. Yamaha produces two wheelers such as: **

o o o o RX 100 RX 135 RX 500 RX 235

13. The law of constant returns to scale is depicted by the marginal output curve which is_____________:
o o o o horizontal vertical downward sloping Upward sloping

14. Joint demand includes: **

o o o o Complementary goods Two or more goods consumed together Change in price of one good affects demand for the other good Substitutes for each other

15. Production on a small scale is, found to be:*

o o o o Disadvantageous Advantageous normal abnormal

16. The total number of firms under pure competition always remains:*
o o o o optimum minimum very less very large

17. Fiscal policy involves variations in : **

o o o o Public expenditure Taxation Expenditure by firms Household expenses

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18. If all factors are doubled, and output increases by more than double, then the returns to scale are:*
o o o o increasing decreasing constant negative

19. Origin of macro could be attributed to the writings of :*

o o o o J M Keynes Piero Srafa Wilfred Pareto Ragner Nurkse

20. Individual demand schedule: **

o o o o o Is in tabular format Shows the prices of goods Shows the quantities of a commodity purchased Shows the relation between slope of the curve and demand Show how to distribute profit

21. Economic of income and employment are major fields of micro economics:
o o False True

22. Cable network provided by local cable operators is a private good:

o o True False

23. MP is less then AP, when AP is _____________:

o o o o decreasing increasing constant Zero

24. The supply curve of labour is always: *

o o o o Upward sloping Downward sloping Backward Bending rightward Bending

25. The intersection of market demand and supply curve determines _____________:
o o o o Market Price Selling Price Abnormal Price Administered Price

26. Marginal Product is less than average product, then AP is :*

o o Decreasing Increasing

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o o

Constant Negative

27. Good example of monopsony market could be:*

o o o o Purchase of vegetables by buyers Purchase of Shaktiman trucks by the Indian Military Indian Railways Purchase of petrol by two wheel users

28. Going rate pricing method can not be used as a _____________ policy:
o o o o Long run Short Run Medium term Intermidiate

29. Price discrimination is possible when there are _____________:

o o o o Legal sanctions motivations encouragements desires

30. _____________ involves transformation of inputs into output:

o o o o Art of production Transportation mechanisation Industrialisation

31. Percentage method > Percentage change in quantity demanded / percentage change in
price Point elasticity method >? Q / ?P X P / Q Total outlay method > Total Revenue = price per unit X quantity demanded Point geometric method > L/U o o o o o o Total Revenue = price per unit X quantity demanded Percentage change in quantity demanded / percentage change in price ?Q / ?P X ?P / ?Q U/L ?Q / ?P X P / Q L/U

32. Actions of any single buyer or seller, in a competitive market will : *

o o o o Cause a noticeable change in price of product Have a little effect on price of the product Have no impact on the market price Change the market equilibrium

33. When we excessively employ only one factor in the production of a certain commodity, we reach a
stage when the marginal product of that factor _____________: o Zero

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o o o

Highest Minimum Positive

34. If the increase in all factors leads to a less than proportionate increae in output, then the return to
scale are:* o Constant o Decreasing increasing o negative

35. The products sold by different sellers under pure competition are _____________:
o o o o homogeneous heterogeneous lower quality both homogeneous & heterogeneous

36. Sample of test markets is selected under experimental pricing:

o o true false

37. The stage of negative returns comes in when: *

o o o o TP TP TP TP decreases, MP negative, AP decreases increases, MP Zero, AP decreases increases, MP Zero, AP increases increases, MP increases, AP increases

38. Profit means different things to different people. o False o True

39. Equal distribution of income leads to:**

o o o o More market demand It influences market demand More consumption Less consumption

40. Non price competition could involve:

o o o o Giving gift articles Taking crossword contest Reducing prices of product Increases prices of product

41. It is assumed that units of variable factor are divisible into _____________ units:
o o o o heterogeneous homogeneous extraordinary different

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42. Assumption of free entry and exit is essential for a competitive market firm to be a price taker o False o True

43. All goods that are a social necessity may not be _____________ from the view point of production:
o o o o Profitable Acceptable Efficient Recommended

44. Keynes in 1936 wrote the general theory of output and income:
o o False True

45. Managerial economics deals with: **

o o o o Personnel Management Capital budgeting Price system Resource Allocation

46. Effective demand is a point where aggregate demand is equal to aggregate supply:
o o True False

47. Externalities could be:

o o o o Internal External Foreign Alien

48. Keynes prescribed macro economics as a policy oriented science dealing with unemployment and
inflation: o True o False

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