1. When a firm doubles its inputs and finds that its output has more than doubled, this is
known as:
Correct : A. economies of scale.
2. 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.
3. 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.
4. Surplus is a condition of:
Correct : A. excess supply
5. The effect on sales of an increase in price is a decrease in:
Correct : B. demand
6. The quantity of product X supplied can be expected to rise with a fall in:
Correct : B. price of x
7. Firms under perfectly competitive markets generally are
Correct : A. price makers
8. The concept of product differentiation was introduced by
Correct : D. chamberlin
9. The architect of the theory of monopolistic competition
Correct : D. chamberlin
10. The concept of monopsony was invented by:
Correct : D. mrs. j. robinson
11. A cost that has already been committed and cannot be recovered known as:
Correct : A. sunk cost
12. ------------ is situation of severely falling prices and lowest level of economic activities
Correct : D. depression
13. ------------ is situation with increased investment and increased price
Correct : C. boom
14. A graph indicating different combination of inputs with different level of output is
called
Correct : D. iso-quant map
15. Iso-cost line indicate the price of
Correct : B. inputs
16. Modern definition is also called as
Correct : A. Growth definition
17. Economics was classified into micro and macro by
Correct : A. Ragnar Frisch
18. Who is regarded as a father of Business Economics
Correct : A. Joel Dean
19. Decision making and ‐‐‐‐‐‐‐‐are the two important functions of executive of business firms
Correct : A. Forward planning
20. “ A rupee tomorrow is worth less than a rupee today” relates to
Correct : B. Discounting principle
21. ………….is micro economic theory
Correct : B. Price theory
22. Macro economic theory is also called as
Correct : C. Income theory
23. Allocation of available resources among alternatives is based on the principle
Correct : C. Equi‐marginal principle
24. The techniques of optimization include
Correct : D. All of the above
25. Which one is not a characteristics of managerial economics
Correct : C. Positive science
26. Which is the characteristics of managerial economics
Correct : D. Deals with practical aspects.
27. ………….is economic theory used in business whereas ……….is economics theory used in business and
non business organization
Correct : B. Business economics, managerial economics
28. Which of the following is not included in functions of managerial economists
Correct : D. None of the above
29. Which of the following is included in specific functions of managerial economists
Correct : D. All of the above
30. Which of the following is not a function of managerial economists
Correct : D. Supervision and control
31. Which of the following is not a function of managerial economist
Correct : D. None of these
32. Basic economic tools of managerial economics include
Correct : D. All of the above
33. ………..principle is closely related to the marginal costs and marginal revenue of economic theory
Correct : C. Incremental principle
34. Analysis of long run and short run affects of decisions on revenue as well as costs is based on
Correct : A. Principle of time perspective
35. “…………in economics means demand backed up by enough money to pay for the goods demanded”
Correct : D. Demand
36. The demand has three essentials‐ Desire, Purchasing power and ………..
Correct : D. Willingness to purchase
37. ………… 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
38. ………… is known as the ‘first law in market”
Correct : C. Law of demand
39. Demand =Desires+ …………… +willingness to pay
Correct : D. Purchasing power
40. Law of demand shows the functional relationship between ………….and quantity demanded
Correct : C. Price
41. The relationship between price and quantity demanded is
Correct : B. Inverse
42. …………….means relationship between demand and its various determinants expressed mathematically
Correct : D. Demand function
43. D = f (P, Y, T, Ps, U),where the letter U stands for
Correct : D. Consumer expectation & others
44. In the above function, the letters Ps stands for
Correct : C. Price of substitutes
45. In the above function, the letter Y stands for
Correct : B. Income of consumers
46. In the above function, the letter T stands for
Correct : D. Taste and preference of consumers
47. Basic assumptions of law of demand does not include
Correct : C. Prices of other goods should change.
48. The change in demand due to change in price only, where other factors remaining constant, it is
called……….
Correct : D. Both extension and contraction
49. When the quantity demanded of a commodity rises due to a fall in price, it is called
Correct : A. Extension
50. When the demand changes due to changes in other factors, like taste and preferences, income, price
of related goods etc... , it is called
Correct : C. Shift in demand
51. In the case of …………… Consumer may moves to higher or lower demand curve
Correct : C. Shift in demand
52. Higher the price of certain luxurious articles, higher will be the demand, this concept is called
Correct : B. Veblen effects
53. Demand for milk, sugar, tea for making tea, is an example of
Correct : C. Joint demand
54. Demand for electricity is an example of
Correct : A. Composite demand
55. Demand for tyres depends on demand of vehicles, the demand for tyres called as
58. Which of the following is not an exception to the downward sloping of demand curve
Correct : D. Income effect
59. The concept of Elasticity of Demand was introduced by
Correct : A. Alfred Marshall
60. Price Elasticity of demand =
Correct : D. All the above
61. When a small change in price leads to infinite change in quantity demanded, it is called
Correct : A. Perfectly elastic demand
62. Quantity remains the same whatever the change in price, this is the case of
Correct : B. Perfectly inelastic demand
63. In the case of ………… a small change in price leads to very big change in quantity demanded
Correct : C. Relative elastic demand
64. In case of …….. quantity demanded changes less than proportionate to changes in price
Correct : D. Relative inelastic demand
65. When the change in demand is exactly equal to the change in price, it is called
Correct : D. Unitary elastic demand
66. Ep = 0 in the case of ‐‐‐‐‐‐‐‐‐‐‐elasticity
Correct : B. Perfectly inelastic demand
67. Perfect elasticity is known as
Correct : B. Infinite elastic
68. in the case of perfect inelasticity, the demand curve is
Correct : A. Vertical
69. EP =………….in the case of relatively elastic demand
Correct : B. >1
70. EP = ………in case of relatively inelastic demand
Correct : D. <1
71. In the case of unitary elastic demand, the shape of demand curve is
Correct : C. Rectangular hyperbola
72. Unitary elasticity of demand mean
Correct : D. EP = 1
73. ……… shows the change in quantity demanded as a result of a change in consumers’ income
Correct : C. Income elasticity
74. For the commodities like salt, sugar etc.,the income elasticity will be
Correct : A. Zero
75. when income increases, quantity demanded falls, it is
Correct : C. Negative income elasticity
76. An increase in income may lead to an increase in the quantity demanded, it is
Correct : A. Positive income elasticity
77. A positive income elasticity may be
Correct : D. Any of the above
78. The proportionate change in the quantity demanded of a commodity in response to change in the price
of another related commodity is called
Correct : C. Cross elasticity
79. Tea and coffee are
Correct : B. Substitute goods
80. Car and petrol are
Correct : A. Complimentary goods
81. If the commodities are substitute in nature, cross elasticity will be
Correct : B. Positive
82. If the commodities are complimentary, cross elasticity will be
Correct : A. Negative
83. The responsiveness of demand due to a change in promotional expenses is called
Correct : D. Above b or c
84. Which one is the method for measurement of elasticity
Correct : D. All the above
85. Outlay method of measurement of elasticity is also called as
Correct : B. Expenditure method
86. …….method measures elasticity between two points
Correct : D. Arc Method
87. Demand for necessary goods (salt, rice, etc,) is……….and demand for comfort and luxury good is
Correct : B. Inelastic, elastic
88. ……………..is the process of finding current values of demand for various values of prices and other
determining variables.
Correct : A. Demand Estimation
89. Tools and techniques for demand estimation includes;
Correct : D. All o the above
90. ………… is an “objective assessment of the future course of demand”
Correct : D. Demand forecasting
91. ………….demand forecasting is related to the business conditions prevailing in the economy as a whole
Correct : A. Macro level
92. ……………… demand forecasting is prepared by different trade association in order to estimate the
demand for particular industries products
Correct : B. Industry level
93. ……………forecasting is more important from managerial view point as it helps the management in
decision making with regard to the firms demand and production.
Correct : C. Firm level
94. Purposes of Short term Demand forecasting includes;
Correct : D. All the above
95. Purposes of Short term Demand forecasting doesn’t includes;
Correct : D. None of these
96. Purposes of Short term Demand forecasting doesn’t includes;
Correct : D. Planning of a new unit or expansion of existing unit
97. Purposes of long term Demand forecasting doesn’t includes;
Correct : D. Deciding suitable price policy
98. Purposes of long term Demand forecasting includes
Correct : D. Planning of a new unit or expansion of existing unit
99. Survey method of demand forecasting includes
Correct : D. All the above
100. …………Method is also known as Sales‐ Force –Composite method or collective opinion method