1. The book ‘Principles of Economics’ was written by:
Correct : B. Marshall
2. Average revenue is :
Correct : B. TR / No. of units sold
3. A hypothesis is a :
Correct : D. A proposition the validity of which is to be tested
4. In the classical system, the basic economic problems are solved by:
Correct : B. Price mechanism
5. Growth definition of economics was concerned with:
Correct : D. Economic growth
6. A market:
Correct : B. Does not necessarily refer to a meeting place between buyers and sellers
7. The average fixed cost is obtained by :
Correct : A. TFC / Q
8. Average Revenue curve under monopoly is :
Correct : B. Downward slopping
9. _______ investigations examine an individual’s relationship with and interaction in
society
Correct : D. Social science
10. In the 19th century _________ argued that ideas pass through three rising stages
namely, Theological, Philosophical and Scientific.
Correct : A. Auguste Comte
11. _________ is distinctive for much greater use of mathematics than the other social
sciences, a development made possible by the development of a concept of utility
Correct : C. Economics
12. The most important founder of German sociology, __________ , was keenly
interested in maintaining the relationship between economics and sociology.
Correct : B. Max Weber
13. International Social Science Associations were founded under the auspices
of___________
Correct : A. UNESCO
14. ________ social science discipline deals with the integration of different aspects of
the Social Sciences, Humanities, and Human Biology
Correct : D. Anthropology
15. Mannheim defines ________as the sum of those methods by which a society tries to
influence human behavior to maintain a given order.
Correct : A. Social control
16. Implicit costs are:
Correct : C. "Payments" for self-employed resources.
17. Which would be an implicit cost for a firm? The cost:
Correct : D. Of wages foregone by the owner of the firm.
18. If a firm's revenues just cover all its opportunity costs, then:
Correct : B. Economic profit is zero.
19. Suppose a firm sells its product at a price lower than the opportunity cost of the
inputs used to produce it. Which is true?
Correct : D. The firm may earn accounting profits, but will face economic losses.
20. The short run is a time period in which:
Correct : D. Some resources are fixed and others are variable.
21. When the total product curve is falling, the:
Correct : B. Marginal product of labor is negative.
22. When marginal product reaches its maximum, what can be said of total product?
Correct : C. Total product is increasing if marginal product is still positive
23. Variable costs are:
Correct : C. Costs that change with the level of production.
24. Which is not a fixed cost?
Correct : D. A worker\s wage of Rs. 15 per hour
25. If you know that with 8 units of output, average fixed cost is Rs. 12.50 and average
variable cost is Rs. 81.25, then total cost at this output level is:
Correct : C. Rs. 750.
26. With fixed costs of Rs. 400, a firm has average total costs of Rs. 3 and average
variable costs of Rs. 2.50. Its output is:
Correct : C. 800 units.
27. The reason the marginal cost curve eventually increases as output increases for the
typical firm is because:
Correct : C. Of the law of diminishing returns.
28. If the short-run average variable costs of production for a firm are rising, then this
indicates that:
Correct : C. Marginal costs are above average variable costs.
29. If a more efficient technology was discovered by a firm, there would be:
Correct : D. A downward shift in the MC curve.
30. A firm encountering economies of scale over some range of output will have a:
Correct : B. Falling long-run average cost curve.
31. When a firm doubles its inputs and finds that its output has more than doubled, this is
known as:
Correct : A. Economies of scale.
32. The larger the diameter of a natural gas pipeline, the lower is the average total cost of
transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:
Correct : A. Economies of scale.
33. If all resources used in the production of a product are increased by 20 percent and
output increases by 20 percent, then there must be:
Correct : C. Constant returns to scale.
34. Which of the following statements describes the presence of diminishing returns.
Holding at least one factor constant …....
Correct : B. The marginal product of a factor is positive but falling.
35. Which of the following statements describes increasing returns to scale:
Correct : C. Increasing inputs by 1/4 leads to an increase in output of 1/3.
36. Economies of scale exist if:
Correct : B. As the amount of capital increases, the cost of producing per unit falls
37. Whenever marginal product is declining with increasing use of an input,
Correct : D. Total product is increasing at a decreasing rate as input use increases.
38. Whenever marginal product is increasing with increasing use of an input,
Correct : B. Total product is increasing at an increasing rate
39. When average product is at a maximum, marginal product is
Correct : C. Equal to average product
40. Whenever average product is declining, with increases in input usage,
Correct : B. Total product is declining with increases in input
41. The total product curve may initially show output increasing at an increasing rate as
more labour is hired because of the:
Correct : D. Increase in marginal physical product.
42. If labour is the only variable resource and its marginal physical product falls as more
workers are hired:
Correct : A. The law of diminishing marginal returns is at work.
43. When both average and total product are greater than zero, and marginal product
equals average product, then total product:
Correct : B. Is positive and rising.
44. Costs incurred only when production occurs are known as:
Correct : C. Variable costs.
45. Which of the following is irrelevant for rational decision making?
Correct : A. Total variable cost (TVC)
46. A curve that can never be “U” shaped is the:
Correct : C. Average fixed cost curve.
47. Diminishing marginal returns are most compatible with:
Correct : B. Advantages from specialization.
48. If average variable costs fall as output grows:
Correct : C. Total cost must also be declining.
49. In economic theory the costs of a firm
Correct : B. Includes implicit as well as explicit outlays
50. The short run as the term is used in connection with the theory of the firm is a
period of time:
Correct : A. Too short for the firm to vary all its inputs
51. If the long run average cost curve for a typical firm in an industry is downward
sloping to the right it becomes difficult to sustain the assumption of
Correct : B. Perfect competition
52. Marginal costs and average variable costs are equal when
Correct : D. Average variable cost is a minimum
53. Theory of demand examines the behaviour of the--------
Correct : A. Consumer
54. The want satisfying power of a commodity:
Correct : B. Utility
55. Utility is the concept which is:
Correct : B. Subjective
56. Change in utility resulting from one unit change in consumption is called:
Correct : C. Marginal Utility
57. When Total Utility is maximum, Marginal Utility is :
Correct : A. Zero
58. When Marginal Utility is negative, Total Utility:
Correct : A. Declines
59. Saturation point is the point where:
Correct : B. MU = 0
60. Measurable utility is the postulate of:
Correct : A. Neo-Classical school
61. Which of the following is Gossen’s first law:
Correct : A. Law of Diminishing Marginal Utility
62. In the case of a free good, the consumer will be in equilibrium when:
Correct : B. MU = 0
63. Change in demand due to a change in the price of related good :
Correct : A. Cross demand
64. The Price and quantity relationship for an inferior good is:
Correct : B. Inverse
65. In the case of normal goods, the quantity demanded varies inversely with:
Correct : A. Price of good
66. Which of the following is a cardinalist approach to demand analysis:
Correct : A. Marshallian utility analysis
67. The convexity of an indifference curve shows:
Correct : A. Diminishing MRS
68. A movement from one point to another along an indifference curve makes the satisfaction:
Correct : C. Unaltered
69. In the case of an indifference curve
Correct : B. dU/dX = dU/dY
70. An Indifference Curve to the right of another represents combinations which are:
Correct : B. Preferable
71. As moving from left to right through an indifference curve, the MRS of X for Y
Correct : C. Decreases
72. The slope of an indifference curve represents:
Correct : C. MRSx,y
73. In the case of perfect complementaries, the MRS between goods is:
Correct : A. Zero
74. In a combination of X and Y, if price of Y alone changes, the X intercept will :
Correct : C. Not be changed
75. At the point of tangency of an indifference curve with a budget line:
Correct : A. MRSxy =Px/Py
76. Commodities bought in larger quantities when income rises are called:
Correct : A. Normal goods
77. The curve showing the quantity of a good that would be purchased at various income
levels:
Correct : C. Engel Curve
78. Change in demand due to change in relative price alone is called:
Correct : B. Substitution effect
79. Substitution Effect is:
Correct : A. Always negative
80. If income effect works in the same direction to that of substitution effect, the good is a:
Correct : A. Normal good
81. If income effect works in the direction opposite to that of substitution effect, the good is not:
Correct : C. Normal good
82. Introspection is not the basis of :
Correct : C. Revealed Preference Hypothesis
83. The ordering of combinations on an indifference curve is:
Correct : A. Weak
84. Strong ordering is a distinguishing feature of the theory given by:
Correct : C. Samuelson
85. Father of Economics:
Correct : C. Adam Smith
86. The Wealth of Nations is the work of:
Correct : C. Adam Smith
87. Indifference Approach is related with:
Correct : B. J.R. Hicks
88. Which one of the following is an example of close substitute:
Correct : A. Tea and Coffee
89. The addition to the total revenue by the sale of an additional unit is:
Correct : D. Marginal revenue
90. Which cost is to be incurred by a firm even if output is zero:
Correct : B. Fixed cost
91. The marginal utility theory is contributed by:
Correct : A. Marshall
92. The factor earning of entrepreneur is:
Correct : D. Profit
93. The Scarcity definition of Economics is the contribution of:
Correct : C. Lionel Robbins
94. Average Revenue is equal to:
Correct : A. Price
95. Total Revenue is the maximum when Marginal Revenue is ----------
Correct : D. Zero
96. Market economy is also known as:
Correct : B. Capitalist economy
97. If the demand curve is linear and negatively sloped, the marginal revenue curve has a
slope:
Correct : A. Negative
98. Other things remaining the same, the quantity of a product demanded increases with -----
in price.
Correct : B. Decrease
99. For complementary goods, the cross elasticity of demand:
Correct : B. Negative
100. Relation between price of a commodity and demand for another commodity is measured by: