1. A utility function shows the relation between …..
Correct : A. the amount of goods consumed and a consumer utility.
2. _______ is known as father of economics
Correct : C. adam smith
3. The famous book on economics “An Enquiry into the Nature and Cause of Wealth of
Nation” was written by
Correct : D. adam smith
4. Welfare (neo classical) definition of economics is given by
Correct : D. alfred marshall
5. If the income elasticity of demand is that one, the good is a
Correct : B. luxury
6. The income elasticity of demand is negative for a
Correct : D. inferior good
7. What effect is working when the price of a good falls and consumers tend to buy it
insteadof other goods
Correct : B. substitution effect
8. “A rupee tomorrow is worth less than a rupee today” relates to
Correct : B. discounting principle
9. Basic economic tools of managerial economics does not include
Correct : D. none of these
10. ……..
principle is closely related to the marginal costs and marginal revenue of economic theory
Correct : C. incremental principle
11. Analysis of long run and short run affects of decisions on revenue as well as costs is bas
ed on
Correct : A. principle of time perspective
12. Two goods that are used jointly to provide satisfaction are called
Correct : C. complementary goods
13. Demand curve slopes downwards because of
Correct : D. all of the above
14. If the income and substitution effect of a price increase works in the same direction the
good whose price has changed is a
Correct : C. normal goods
15. Which of the following is not a survey method of demand forecasting
Correct : C. barometric method
16. Which of the following is not a method of demand forecasting
Correct : A. trend projection method
17. Which one is not a property of isoquant
Correct : D. positive slope
18. In which production function, the degree of homogeneity is always one
Correct : C. linear homogeneous production function
19. Which of the following is a short run law
Correct : A. law of diminishing returns
20. Which of the following is not a variable input
Correct : C. equipment
21. Which cost is more useful for decision making
Correct : A. opportunity cost
22. Which cost are recorded in books of accounts
Correct : D. explicit cost
23. Fixed cost per unit increases when
Correct : A. volume of production decreases
24. Variable cost per unit
Correct : B. varies with the volume of production
25. Firms in an oligopoly
Correct : B. can each influence the market price
26. Product differentiation is an important feature of
Correct : B. monopolistic competition
27. ……… refers to the quantity of a good or service that producers are willing and able to
sell during a certain period under a given set of conditions
Correct : A. supply
28. ………. for a product is a statement of the relation between the quantity supplied and all
factors affecting that quantity
Correct : C. market supply function
29. Which is/are determinants of Supply…….
Correct : C. cost of production
30. …………a statement in the form of a table that shows the different quantities of a commodity
that a firm or a producer offers for sale in the market at different prices.
Correct : A. supply schedule
31. ……….. a schedule that depicts the supply by an individual firm or producer of a commodity
in relation to its price
Correct : C. individual supply schedule
32. …………… is the degree of responsiveness of supply to changes in the price of a good
Correct : B. elasticity of supply
33. Business Economics is also known as………….
Correct : D. all the above
34. An input should be so allocated that the value added by the last unit is the same in all
cases.
Correct : B. equi-marginal principle
35. The principle reasons behind economic problems
Correct : D. all of the above
36. Managerial utility function is expressed as:
Correct : C. u = f (s, m, i)
37. The value of an entrepreneur’s resources that she uses in production are known as:
Correct : D. implicit costs.
38. Inflation is:
Correct : C. an increase in the overall price level.
39. A recession is:
Correct : C. a period during which aggregate output declines
40. Opportunity cost means
Correct : B. the highest-valued alternative forgone.
41. ______ is economic theory used in business whereas ______ is economics theory used
in business and non-business organization
Correct : B. business economics, managerial economics
42. Managerial economics is also called
Correct : D. all of the above.
43. Want satisfying power of commodity is called
Correct : B. utility
44. In economics, desire backed by purchasing power is known as
Correct : B. demand
45. The demand has three essentials ‐ Desire, Purchasing power and ………..
Correct : D. willingness to purchase
46. .………… means an attempt to determine the factors affecting the demand of a
commodity or service and to measure such factors and their influences
Correct : C. demand analysis
47. .………… is known as the ‘first law in market”
Correct : C. law of demand
48. Demand = Desires + …………… + Willingness to pay
Correct : D. purchasing power
49. Law of demand shows the functional relationship between _______ and quantity
demanded
Correct : C. price
50. Basic assumptions of law of demand include
Correct : C. the commodity should not confer any distinction.
51. Generally demand curve have …………
Correct : A. negative slope
52. The change in demand due to change in price only, where other factors remaining
constant, it is called……….
Correct : D. both extension and contraction
53. When the quantity demanded of a commodity rises due to a fall in price, it is called
Correct : A. extension
54. When the quantity demanded falls due to a rise in price, it is called
Correct : D. contraction
55. The Giffen goods are ………. Goods
Correct : A. inferior goods
56. Higher the price of certain luxurious articles, higher will be the demand, this concept is
called
Correct : B. veblen effects
57. Demand for milk, sugar, tea for making tea, is an example of
Correct : C. joint demand
58. Perfect elasticity is known as
Correct : B. infinite elastic
59. In the case of perfect elasticity, the demand curve is
Correct : B. horizontal
60. In a perfectly competitive market, individual firm
Correct : A. cannot influence the price of its product
61. Perfect competition is characterized by
Correct : D. all the above
62. The market with a single producer
Correct : D. monopoly
63. Selling cost is the feature of the market form
Correct : B. monopolistic competition
64. The product under monopolistic competition are
Correct : A. differentiated with close substitute
65. In business cycle concept, the period of “long wave” is of;
Correct : B. 50 years
66. In economics …….. means ‘a state of rest ‘or ‘stability’
Correct : B. equilibrium
67. Selling at a lower price in export market and at a higher price at home market is called
Correct : B. dumping
68. A fall in the price of a commodity leads to
Correct : C. a rise in the consumer’s real income
69. An exceptional demand curve is one that slopes
Correct : D. upward to the right
70. Which one is not an exception to the Law of Demand?
Correct : A. normal good
71. Demand for a commodity is elastic when it has:
Correct : C. many uses
72. When the demand curve is a rectangular hyperbola, it represents:
Correct : B. unitary elastic demand
73. The horizontal demand curve for a commodity shows that its demand is:
Correct : A. perfectly elastic
74. When an individual’s income falls (while everything else remains the same), his demand
for an inferior good:
Correct : B. decrease
75. A fall in the price of a commodity whose demand curve is a rectangular hyperbola causes
total expenditure on the commodity to:
Correct : C. remains unchanged
76. The utility may be defined as:
Correct : D. the power of a commodity to satisfy wants
77. The utility of a commodity is:
Correct : C. its relative scarcity
78. Marginal utility curve of a given consumer is also his:
Correct : C. demand curve
79. The relationship between demand for a commodity and price, ceteris paribus, is:
Correct : A. negative
80. A demand curve which takes the form of horizontal line parallel to quantity axis
illustrates elasticity which is:
Correct : D. less than one
81. Consider a demand curve which takes the form of a straight line cutting both axes.
Elasticity at the mid-point of the line would be:
Correct : B. one infinite
82. The elasticity of demand for a product will be higher:
Correct : A. the more available are substitutes for that product
83. In case of Giffen goods, demand curve will slope:
Correct : C. upward
84. Cross elasticity of demand between tea and sugar is:
Correct : D. negative
85. If the percentage increase in quantity of a commodity demanded is its price, the
coefficient of price elasticity of demand is:
Correct : C. less than 1
86. If the quantity of a commodity demanded remains unchanged as its price changes, the
coefficient of price elasticity of demand is
Correct : D. zero
87. Unitary elasticity of demand is:
Correct : B. equal to one
88. The real business cycle theory is most closely related to
Correct : C. the classical theory
89. In the real business cycle model, business cycles are
Correct : D. all of the above
90. Real business cycle proponents argue that
Correct : C. macroeconomics should be based on the same assumptions as microeconomics
91. Implicit costs are:
Correct : C. "payments" for self-employed resources.
92. The law of diminishing returns only applies in cases where:
Correct : C. there is at least one fixed factor of production.
93. When the total product curve is falling, the:
Correct : B. marginal product of labour is negative.
94. 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
95. Variable costs are:
Correct : C. costs that change with the level of production.
96. 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.
97. 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.
98. If a more efficient technology was discovered by a firm, there would be:
Correct : D. a downward shift in the mc curve.
99. The firm's short-run marginal-cost curve is increasing when:
Correct : B. marginal product is decreasing.
100. A firm encountering economies of scale over some range of output will have a: