Introduction Managerial Economics generally refers to the integration of economic theory with business practice.

While economics provides the tool which explain various concepts such as demand, supply, price, competition etc. Managerial economics applies these tools to the management of business, in this sense managerial economics is also understood to refer to business economics or applied economics. Managerial economics lies on the border line of management and economics. It is a hybrid of two disciplines and it is primarily an applied branch of knowledge. Management deals with principles which help in decision making under uncertainty and improve effectiveness of organisation. Economics on the other hand provides a set of propositions for optimum allocation of scare resources to achieve the desired objectives. Definitions of managerial economics Nature of Managerial Economics: It is true that managerial economics aims at providing help in decision making by firms. For this purpose it draws heavily on the prepositions of micro economic theory. Note that micro economics studies the phenomenon at the individuals level and behavior of consumers, firms. The concepts of micro economics used frequently in managerial economics are elasticity, marginal cost, managerial revenue, market structure and their significance in primary policies. Some of these concepts however provide only the logical base and have to be modified in practice. Micro economics assists firms in forecasting. Note that micro economics theory studies the economy at the aggregative level and ignores the distinguishing features of individual observations. For example micro economics indicates the relationship between the Magnitude of Investment and Level of equilibrium al Income Level of National Income and Level of Employment Level of Consumption and National Income etc. INTRODUCTION Managerial Economics generally refers to the integration of economic theory with businesspractice. While economics provides the tools which explain various concepts such as Demand,Supply, Price, Competition etc. Managerial Economics applies these tools to the managementof business. In this sense, Managerial Economics is also understood to refer to businesseconomics or applied economics.Managerial Economics lies on the border line of management & economics. It is a hybrid oftwo disciplines and it is primarily an applied branch of knowledge. Management deals withprinciples which help in decision making under uncertainly and improve effectiveness oforganization. Economics on the other hand provides a set of propositions for optimum allocationof scarce resources to achieve the desired objectives.

1.Definitions of Managerial Economics1. Prof. Spencer Sigelman : Managerial Economics deals with integration of economictheory with business practice for the purpose of facilitating decision making and forwardplanning by management. 2. Prof. Hague : Managerial Economics is concerned with using logic of economics,mathematics & statistics to provide effective ways of thinking about business decisionproblems. 3. Prof. Joel Dean : The purpose of Managerial Economics is to show how economicanalysis can be used in formulating business polices. Managerial Economics 2 4. Prof. Mansfield : Managerial Economics attempts to bridge the gap between the purelyanalytical problems that intrigue many economic theories and the problems of policiesthat the management must face. 5. Mc Nair and Meriam : Managerial economics consists of the use of economic modesof thought to analyse business situations.The definitions given above highlight the following The definitions given above highlight the following points :i)Economic theory provides the basis for the decision making process.ii)There is some difference between the generalizations based on abstraction and actualpractices.iii)Besides economic theory, mathematics & statistics help in decision-making.iv)An attempt is made to arrive at generalizations regarding business policies.v)Since decisions have repercussions on the working of firms in future, and most firmsenvisage to continue operations over a period of time, forward planning becomes animportant element.The problem of decision making arises whenever a number of alternatives are availableFor example :What should be the price of the product?What should be the size of the plant to be installed? How many workers should be employed?What kind of training should be imparted to them?What is the optimal level of inventories of finished products, raw materspare parts, etc.?The significance of a good system of forward planning can be appreciated from the fact that ithelps in selecting the plant to be installed and it is not possible to change its capacity as andwhen required. Also different production process require different skills which have to be provided.Similarly, based on the long-term plans, funds have to be arranged : either procured fromoutside or retained out of the earnings of the firm.Economics provides the solution to some of these problems to enable the firm to achieve itsobjective. For example, the demand for a product is influenced by factors such

as (i) thedistribution of income, (ii) prices of related products, and (iii) data on demand at some futurepoint of time facilitates the task of forward planning. Similarly, the theoretical explanation ofthe problem of input-mix (the ratio in which machines, men and other resources are to beemployed) is provided by production function along with the prices of inputs. This indirectlyfacilitates the choice regarding the technique of production to be employed and the plant to beinstalled. The propositions of economics, however, require to be modified keeping in mind the constraintsof availability of requisite data and the time at the decision-maker. 2.Nature of Managerial Economics : 1.It is true that managerial economics aims at providing help in decision-making by firms.For this purpose, it draws heavily on the propositions of micro economic theory. Notethat micro economics studies the phenomenon at the individuals level : behavior ofindividual consumers, firms. The concepts of micro economics used frequently inmanagerial economics are : (i)elasticity of demand, (ii)marginal cost, (iii)marginalrevenue, (iv)market structures and their significance in pricing policies, etc. Some ofthese concepts, however, provide only the logical base and have to be modified in practice.2.Micro economics assists firms in forecasting. Note that macro economic theory studiesthe economy at the aggregative level and ignores the distinguishing features of individualobservations. For example, macro economics indicates the relationship between (i)themagnitude of investment and the level of national income, (ii)the level of national incomeand the level of employment, (iii)the level of consumption and the national income, etc.Therefore, the postulates of macro economics can be used to identify the level of demandat some future point in time, based on the relationship between the level of nationalincome and the demand for a particular product. For example, there is a relationshipbetween the level of national income and demand for electric motors. Also, the demandfor durable goods such as refrigerators, air-conditioners, motor cars depends upon thelevel of national income.3.Managerial Economics is decidedly applied branch of knowledge. There fore, the emphasisis laid on those propositions which are likely to be useful to the management.4.Managerial Economics is prescriptive in nature and character. It recommends that athing should be done under alternative conditions. For example, If the price of the syntheticyarn falls by 50%, it may be desirable to increase its use in producing different types oftextiles. Thus, managerial economics is one of the normative sciences and reflects uponthe desirability or otherwise of the propositions. For example if the analysis suggeststhat the benefit-cost ratio of a large plant is less than that for a smaller plant and thebenefit-cost ratio is used as the criterion for project appraisal it is recommended that thefirm should not install a large plant. Contrast this with the positive sciences which statethe propositions without commenting upon what should be done. For example, if thedistribution of income has become more uneven, it is stated without indicating whatshould be done to correct this phenomenon.5.Managerial Economics, to the extent that it uses economic thought, is a science, but itis an applied science. Economic thought uses deductive logic (if X is true, then Y is

Nature and Scope of Managerial Economics Scope of Managerial Economics: Well scope is something which tells us how far a particular subject will go. As faras Managerial Economic is concerned it is very wide in scope. It takes intoaccount almost all the problems and areas of manager and the firm.ME deals with Demand analysis, Forecasting, Production function, Cost analysis,Inventory Management, Advertising, Pricing System, Resource allocation etc.Following aspects are to be taken into account while knowing the scope of ME: 1. Demand analysis and forecasting: Unless and until knowing thedemand for a product how can we think of producing that product. Therefore demand analysis is something which is necessary for theproduction function to happen. Demand analysis helps in analyzing thevarious types of demand which enables the manager to arrive atreasonable estimates of demand for product of his company. Managersnot only assess the current demand but he has to take into account thefuture demand also. 2. Production function: Conversion of inputs into outputs is known asproduction function. With limited resources we have to make thealternative uses of this limited resource. Factor of production called asinputs is combined in a particular way to get the maximum output. Whenthe price of input rises the firm is forced to work out a combination of inputs to ensure the least cost combination. 3. Cost analysis: Cost analysis is helpful in understanding the cost of aparticular product. It takes into account all the costs incurred whileproducing a particular product. Under cost analysis we will take intoaccount determinants of costs, method of estimating costs, therelationship between cost and output, the forecast of the cost, profit,these terms are very vital to any firm or business. 4. Inventory Management: What do you mean by the term inventory? Wellthe actual meaning of the term inventory is stock. It refers to stock of rawmaterials which a firm keeps. Now here the question arises how much of the inventory is ideal stock. Both the high inventory and low inventory is not good for the firm.Managerial economics will use such methods as ABC Analysis, simplesimulation exercises, and some mathematical models, to minimize inventorycost. It also helps in inventory controlling. 5. Advertising: Advertising is a promotional activity. In advertising whilethe copy, illustrations, etc., are the responsibility of those who get it readyfor the press, the problem of cost, the methods of determining the totaladvertisement costs and budget, the measuring of the economic effects of advertising ---- are the problems of the manager. Theres a vast difference

between producing a product and marketing it.It is through advertising only that the message about the product shouldreach the consumer before he thinks to buy it.Advertising forms the integral part of decision making and forwardplanning. 6. Pricing system: Here pricing refers to the pricing of a product. As you allknow that pricing system as a concept was developed by economics andit is widely used in managerial economics. Pricing is also one of thecentral functions of an enterprise. While pricing commodity the cost of production has to be taken into account, but a complete knowledge of theprice system is quite essential to determine the price. It is also importantto understand how product has to be priced under different kinds of competition, for different markets. Pricing = cost plus pricing and the policies of the enterprise Nowit is clear that the price system touches the several aspects of managerialeconomics and helps managers to take valid and profitable decisions. 7. Resource allocation: Resources are allocated according to the needsonly to achieve the level of optimization.As we all know that we have scarce resources, and unlimited needs. Wehave to make the alternate use of the available resources. For the allocationof the resources various advanced tools such as linear programming are used toarrive at the best course of action
While executing his duties, a manager has to take several decisions, which conform to the objectives of the firm. Many business decisions fall prey to conditions of uncertainty and risk. Uncertainty and risk arise chiefly due to volatile market forces, changing business environment, emerging competitors with highly competitive products, government policy, external influences on the domestic market and social and political changes in the country. The intricacy of the modern business world weaves complexity in to the decision making process of a business. However, the degree of uncertainty and risk can be greatly condensed if market conditions are calculated with a high degree of reliability. Envisaging a business environment in the future does not suffice. Appropriate business decisions and formulation of a business strategy in conformity with the goals of the firm hold similar importance. Pertinent business decisions require an unambiguous understanding of the technical and environmental conditions under which business decisions are taken. Application of economic theories to explain and analyse technical conditions and business environment,

contributes greatly to the rational decision-making process. Economic theories have many pronged applications in the analysis of practical problems of business. Keeping in view the escalating complexity of business environment, the efficacy of economic theory as a tool of analysis and its contribution to the process of decision-making has been widely recognised. Contributions of economic theory to business economics According to Baumol, there are three main contributions of economic theory to business economics. 1. The practice of building analytical models, which assist in recognising the structure of 12 Managerial Economics managerial problems and eliminating minor details, which might obstruct decisionmaking has been derived from economic theory. Analytical models help in eradicating peripheral problems and help the management in retaining focus on core issues. 2. Economic theory comprises a founding pillar of business analysis- a set of analytical methods, which may not be applied directly to specific business problems, but they do enhance the analytical capabilities of the business analyst. 3. Economic theories offer an unequivocal perspective on the various concepts used in business analysis, which enables the manager to swerve from conceptual pitfalls. Economic problems

The resources of society consist not only of the free gifts of nature, such as land, forests, and minerals, but also of human capacity, both mental and physical, and all sorts of manmade aids to further production such as tools, machinery and buildings. all those free gifts of nature, such as land, forests, minerals etc.. commonly called matural resources and know to economists as LAND all human resources mental and physical, both inherited and acquired, which economics call LABOUR; and all those man-made aids to further production, such as tools, machinery, plant and equipment, including everything man-made which is not consumed for its own sake but is used in the process of

making other goods.and services which economists call CAPITAL. Chapter 3 Profit Preview Meaning of Profit, Accounting Profit vs. Economic Profit, A brief review about the theories ofprofit, Measurement of profit, Profit Policies and Reasons for limiting profit, standard of limitedprofits. 1.MEANING OF PROFIT : Profit means different things to different people. "The word 'Profit' has different meanings tobusinessmen, accountants, tax collectors, workers and economists and it is often used in aloose sense that buries its real significance. In general sense, 'profit' is regarded as incomeaccruing to the equity holders, in the same sense as wages accrue to the labour, rent accruesto the owners of rentable assets; and interest accrues to the money lenders. To a layman,profit means all incomes that flow to the investors. To an accountant, 'profit' means the excessof revenue over all paid-out costs including both manufacturing and overhead expenses. It ismore or less the same as 'net profit'. For all practical purposes, businessmen also use thisdefinition of profit. For taxation purposes, profit or business income means profit in accountancysense plus non-allowable expenses. Economist's concept of profit is of 'Pure Profit', alsocalled 'economic profit' or 'just profit'. Pure profit is a return over and above the opportunitycost, i.e. the income which a businessman might expect from the second best alternative useof his resources. These two concepts of profit are discussed below in detail. Accounting Profit Vs. Economic Profit The two important concepts of profit that figure in business decisions are 'economic profit' and'accounting profit'. It will be useful to explain the difference between the two concepts of profit. Inaccounting sense, profit is surplus of revenue over and above all paid-out costs, includingboth manufacturing and overhead expenses . Accounting profit may be calculated asAccounting profit = TR - (W + R + I + M) where W = Wages, R = Rent, I = Interest and M = cost of materials.Obviously, while calculating accounting profit, only explicit or book costs, i.e. the cost recordedin the books of accounts, are considered. The concept of 'economic profit' differs from that of 'accounting profit.' Economic profit takesinto account also the implicit or imputed costs . The implicit cost is opportunity cost.Opportunity cost is defined as the payment that would be 'necessary to drawforth thefactors of productions from their most remunerative alternative employment'. In simpleterms, opportunity cost is the income foregone, which a businessman could expectfrom the second best alternative use of his resources. For example, if an entrepreneuruses his capital in his own business, he foregoes interest which he might earn by purchasingdebentures of other companies or by depositing his money with joint stock companies for aperiod. Furthermore, if an entrepreneur uses his

labour in his own business, he foregoes hisincome (salary) which he might earn by working as a manager in another firm. Similarly, byusing productive assets (land and building) in his own business, he sacrifices his market rent.These foregone incomes interest, salary, and rent - are called opportunity costs or transfercosts. Accounting profit does not take into account the opportunity cost.It should also be noted that the economic or pure profit makes provision also for (a) insurablerisks, (b) depreciation, and (c) necessary minimum payment of shareholders to prevent themfrom withdrawing their capital. Pure profit may thus be defined as 'residual left after allcontractual costs have been met, including the transfer costs of management,insurable risks, depreciation and payments to shareholders, sufficient to maintaininvestment at its current level'' Thus. Pure profit = Total revenue - (explicit costs + implicit costs). Pure profit so defined may not be necessarily positive for a single firm in a single year - it maybe even negative, since it may not be possible to decide beforehand the best way of using theresources. Besides, in economics, pure profit is considered to be a short term phenomenon- it does not exist in the long run under perfectly competitive conditions.An entrepreneur brings together various factors of production such as land, labour and capital.He ensures co-ordination between the factors and supervises the productive activity. He looksafter purchase of raw materials, production, marketing, recovery of receivable and personnel.The most important function performed by an entrepreneur is, however to undertake risk anduncertainty in business. The reward which is paid to an entrepreneur for discharging thisfunction is called Profit. In this chapter, we propose to study the emergence of profit. (A)Gross Profit and Pure (Net) Profit When cost of production is deducted from the total sales proceeds, the residual portionis called Gross Profit.Gross Profit = Total Receipts - Total ExpenditureAn entrepreneur is required to make following payments out of the Gross Profit a)Remuneration for the factors of production contributed by the entrepreneurhimselfHe must pay rent for the use of land. If the land is owned by him, he must pay notionalreward for the use of land, because, he is otherwise required to pay rent if he hires landfrom some other person. (b)Depreciation and Maintenance Charges Some portion should be deducted from gross profit by way of depreciation on machineryand other assets. (c)Extra - Personal Profits This includes i)Monopoly Profits : If a producer is a monopolist, he may be earning monopolyprofits. These are profits not because of the business skill or ability of the entrepreneur,but because he is a monopolist in his field. Monopoly profits must be deductedfrom gross profits to arrive at net (pure) profits. ii)Chance Profit : An entrepreneur may earn high profits just 'by chance', say becauseof an outbreak of war. This is not a part of net profits.

(d)Net Profits : When all the above payments are made out of gross profit, the residual portion is calledPure (Net) Profit. The reward which an entrepreneur gets (i) for undertaking risk anduncertainty, (ii) for co-ordinating and organizing production and (iii) for innovating is calledPure Profit. 2.THEORIES OF PROFITS : Various theories have been developed to explain the emergence of Profit. It is worthwhile toexplain some of the theories of profit. (1)Risk Taking Theory The Risk-Taking Theory was developed by the American economist Hawley. Accordingto him, profit arises because considerable amount of risk is involved in business. Profitis, therefore, the reward for risk-taking. Hawley's theory has been criticized on severalgrounds. In the first place, Hawley has not classified the types of risks. Secondly, asCawer has pointed out, profit is not the reward for risk-taking. It is the reward for risk-avoiding. An entrepreneur is required to minimize his, risk, if he cannot eliminate ittotally. A successful entrepreneur is he who earns good profits by eliminating the risk. On the other hand, a mediocre businessmen is not able to reduce the risk in business;and therefore, is subjected to losses. (2)Uncertainty-Bearing Theory of Profit : Uncertainty-Bearing Theory of profit was developed by the American economist, Prof.F.H. Knight. He has classified the risks under the two heads.(a)Certain risks such as risk of fire, risk of theft, risk of accident etc. are less importantbecause they can be passed on to an insurance company. An entrepreneur cantake an insurance policy by paying the premium. Since such risks are covered byinsurance, they are called "Insurable Risks."(b)There are other risks which cannot be passed on to an insurance company or tothe paid managers. Every business involves great amount of uncertainty and thelosses arising there from cannot be estimated with precision. The prices of rawmaterials may suddenly increase, the supply of raw materials may be restrictedand introduction of new substitutes in the market may reduce the demand for theproduct. When demand declines, large stocks may remain unsold in the go-down.A producer may have to face keen competition. if the market is characterised bymonopolistic competition. All these factors are uncertain and losses arising therefrom cannot be insured with any insurance company. These risks and losses mustbe borne by the entrepreneur himself. According to Prof. Knight, profit is, therefore,the reward for uncertainty-bearing.Uncertainty theory of profit has gained wide popularity since its publication. After theIndustrial Revolution, production is carried out on a large scale and in anticipation ofdemand. Producers take into account the tastes and fashions of the people and producethe goods accordingly. Sudden change in the tastes and fashions may affect the demandfor products. If a particular fashion is receded in the background, goods may not be soldat all. The losses arising out of such uncertainty cannot be estimated with precision.According to Prof. Knight, profit is, therefore, a reward of uncertainty.Uncertainty theory has been criticized on the ground that profit is the reward paid to anentrepreneur for discharging several duties. Prof. Knight has overlooked other duties andhas glorified the uncertainty; the

theory has no sound foundations either in logic or inpractice. A number of illiterate producers who have not studied the theory, are able toanticipate precisely the profits or losses that would arise in future. (3)Innovation Theory of Profit. Innovation Theory was developed by Joseph Schumpeter. According to him, profit is thereward paid to an entrepreneur for his innovative endeavours. Schumpeter has made distinction between invention and innovation. A scientist maymake an invention, but this invention is exploited on a commercial basis by anentrepreneur. The basis on which the invention is exploited depends upon the innovativenature of the entrepreneur. If he is successful in exploiting the invention it is innovation.According to Schumpeter, profit is the reward for innovation.Schumpeter's theory has been criticized on several grounds. Profit is the reward fordischarging so many duties; but Schumpeter has overlooked the other duties. Anotherpoint of criticism is that Schumpeter has neglected the fact that profit is also the rewardfor risk and uncertainty bearing. The most serious criticism of this theory is that a particularproducer who exhibits an innovative character may earn super-normal profits in the short-run. But the super normal profits will attract new firms to the industry. If new firms enterthe industry, the super-normal profits would be shared between the existing as well asthe new firms. In the long run, super normal profits would, therefore, disappear. It is saidthat profits are caused by innovation and disappear by imitation. Schumpeter's theory is,therefore, to be taken to a limited extent. (4)Dynamic Theory of Profit The Dynamic Theory of Profit was developed by the renowned economist, J.B. Clark.Prof. Clark points out that the whole world is dynamic. Changes after changes are takingplace every day; and the economic consequences of these changes are of a far reachingcharacter. Prof. Clark has pointed out the following types of changes.a)Changes in the quantity and quality of human needs;b)Changes in the techniques of productionc)Changes in the supply of capitald)Changes in organization of businesse)Changes in populationThese changes can occur at any time. Techniques of production may change and improvedmachinery may be introduced. This may reduce the cost and increase the profit andoutput. But to purchase the improved machinery, a larger amount of fixed capital isrequired. This may necessitate the admission of a new partner or conversion of thepartnership firm into a joint stock company to raise capital on a large scale.All these changes can occur suddenly, and an entrepreneur has to face them properly. Aproducer who overcomes these hurdles is successful in earning higher profits. He mustadjust himself to the changing times. A producer who cannot address himself to thedynamic world lags behind. In order to survive and grow every producer must change themethods to suit the changing needs. According to Prof. Clark, profit is the reward paidfor dynamism. Profits in a Static Society According to Prof. Clark, profit cannot arise in a static society. In a static society there are nochanges. Population is stable and the demand is stationary. Since the demand is limited,output is also limited. The general price level and factor prices being stable; the

cost ofproduction is constant. The selling price and the margin of profit are also constant. A producerhas to produce a limited quantity of goods and it is sold immediately, the moment it is produced.Since demand is constant, a producer does not run the risk of uncertainty. In static society,there are no inventions and producers are not required to make innovations. Producers in astatic society have not to face any changes in the tastes, fashions and output. They producea given quantity and sell it in a routine manner. A producer in a static society works like a paidmanager. He performs only the routine duties and gets normal profit. The normal profit whichhe gets may be called 'Wages for Management'. According to Prof. Clark, a producer in astatic society gets only normal profits, because pure profit does not arise. Conclusion Prof. Clark's Dynamic Theory of Profit has been criticized on several grounds. He has classifiedthe changes under five categories but has overlooked many other important changes. In thisdynamic world, the Government policy may suddenly change. A change in the MonetaryPolicy of the Central Bank may bring about an expansion or contraction in the supply ofmoney. This may lead to an expansion or contraction in the supply of capital. Ultimately itmay affect the fortunes of business. Prof. Clark has overlooked such important factors. 3.MEASUREMENT OF PROFIT : Our discussion of profit so far, has made it clear how difficult it is to have a simple definition ofprofit that is acceptable to all. The measurement of profit is also equally difficult. For onething, the economic concept of profit-and loss and the legal concept of profit-and-loss are notthe same. This is especially difficult when it comes to the measurement of net profit. Forcalculating net profit, it is necessary to deduct all costs from the total revenue. But theinclusiveness of costs itself involves many difficulties. All these problems, therefore, deservea more careful and detailed analysis. (A)Economic Profit and Accounting Profit : Let us take an example to understand the difference between the economic concept ofprofit and the accounting concept of profit. Suppose an individual starts at his residencethe business of repairing scooters. At the end of the year, he gets a total revenue ofRs.1,50,000/-. Out of this, let us say, he spent Rs.50,000/- on the wages of his helper,tools and spare parts, etc. What remains is a sum of Rs.l,00,000/-. Apparently, onewould be tempted to conclude that this is his profit. But it is not so. The place that isavailable to him might have saved him a sum of, say Rs.30,000/-. In other words, theplace of work might have an opportunity cost. His own transfer earnings may be say Profit 71 Rs.60,000/-. Had he borrowed the money capital, the interest would have been sayRs.l0,000/-. Besides, a provision will have to be made for the wear and tear of the toolsand instruments, i.e. a certain amount will have to be deducted for depreciation. Thus,calculated, the total costs would be (i) Helper's wages, spares etc. Rs.50,000 + (ii) RentRs.30,000 + (iii) Entrepreneur's management wages : Rs.60,000 + (iv) Interest :Rs.l0,000 + (v) Depreciation Rs.5,000. This takes the total cost equal to Rs.l,55,000against the total revenue of Rs.l,50,000 showing a let net loss of Rs.5,000.The

loss in the above example does not become apparent because the entrepreneuruses some of the factors owned by himself and therefore, the remunerations to these arenot actually paid. It should be obvious from the above example that these difficulties maynot arise in respect of large industrial units. In such units, ownership is with theshareholders while the management is entrusted to the salaried managers. Thus, mostof the costs enter the account books and the accounting and economic concepts ofcosts in such cases come closer.According to the financial accounting principle, the assets of a concern have claims fromtwo sides : from the owners and from the lenders. Therefore, in any business unit,Assets = Liabilities + ProprietorshipTherefore, Assets - Liabilities = Proprietorship or the net worthThe balance sheet of any concern shows, during a given period, the total liabilities andthe net worth after these are deducted. Similarly, the profit and loss account or theincome statement shows the changes in the balance sheet of the unit from the beginningof the year and those at the end of the year is the net income or profit. The fundsstatement is based on this profit and loss statement. This statement indicates the financialstanding of the business concern. The funds statement shows the amount of cash availableand how it has been invested.While preparing all these statements, the accountant has to include items, the truthabout which can be tested. But in doing so, many difficulties arise. For example, whilepreparing the balance-sheet, the cost of the asset that is taken is the one at which theasset was purchased. The current value of the asset is not considered. Similarly thechanges in the value of money are ignored. It is also incorrect as is done in financialaccounts, to calculate net profits by deducting from the total revenue of year the totalcosts incurred during that year.The economic concept of net profit will have to be altogether different. In the valuation ofany asset, the economist is guided by the concept of opportunity cost. For example, theaccounting method will take into account the original price of a machine; but in theeconomic concept, the replacement cost of the machine would be used. For valuation of Rs.60,000/-. Had he borrowed the money capital, the interest would have been sayRs.l0,000/-. Besides, a provision will have to be made for the wear and tear of the toolsand instruments, i.e. a certain amount will have to be deducted for depreciation. Thus,calculated, the total costs would be (i) Helper's wages, spares etc. Rs.50,000 + (ii) RentRs.30,000 + (iii) Entrepreneur's management wages : Rs.60,000 + (iv) Interest :Rs.l0,000 + (v) Depreciation Rs.5,000. This takes the total cost equal to Rs.l,55,000against the total revenue of Rs.l,50,000 showing a let net loss of Rs.5,000.The loss in the above example does not become apparent because the entrepreneuruses some of the factors owned by himself and therefore, the remunerations to these arenot actually paid. It should be obvious from the above example that these difficulties maynot arise in respect of large industrial units. In such units, ownership is with theshareholders while the management is entrusted to the salaried managers. Thus, mostof the costs enter the account books and the accounting and economic concepts ofcosts in such cases come closer.According to the financial accounting principle, the assets of a concern have claims fromtwo sides : from the owners and from the lenders. Therefore, in any business unit,Assets = Liabilities + ProprietorshipTherefore, Assets - Liabilities = Proprietorship or the net worthThe balance sheet of any concern shows, during a given period, the total liabilities andthe net worth after these are deducted. Similarly, the profit and loss account or theincome statement shows the changes in the balance sheet of the unit from the beginningof the year and those at the end of the year is the net income or profit. The fundsstatement is based on

this profit and loss statement. This statement indicates the financialstanding of the business concern. The funds statement shows the amount of cash availableand how it has been invested.While preparing all these statements, the accountant has to include items, the truthabout which can be tested. But in doing so, many difficulties arise. For example, whilepreparing the balance-sheet, the cost of the asset that is taken is the one at which theasset was purchased. The current value of the asset is not considered. Similarly thechanges in the value of money are ignored. It is also incorrect as is done in financialaccounts, to calculate net profits by deducting from the total revenue of year the totalcosts incurred during that year.The economic concept of net profit will have to be altogether different. In the valuation ofany asset, the economist is guided by the concept of opportunity cost. For example, theaccounting method will take into account the original price of a machine; but in theeconomic concept, the replacement cost of the machine would be used. For valuation of the machine, further alternatives would be to take the price of a similar machine, if thesame is not available; or to consider the total expected return of the machine and fromthat calculate the present worth of the machine. We are familiar with the various costconcepts. Thus, the differences in the profit concepts arise out of the differences in costconcepts. The modern method used for valuation is based on the cash flow technique.It will also be necessary to remember that the sum total of all the individual machinesadded together will not be the correct value of the total establishment. This is becausethe goodwill enjoyed by the concern will also have to be included in its total worth. Thisis how the economic and the accounting approaches differ and make measurement ofprofit more complicated. (B)Factors Leading to Differences in the Economic and theTraditional Concepts ofValuation The above discussion makes it clear how valuation of asset is important in themeasurement of profits. Let us now consider those factors which underline the differencesin the economic and the accounting approaches to the problem. These factors are :(a)Depreciation, (b) Inventory Valuation and (c) the unaccounted value changes in theassets and the liabilities. a)Depreciation : Depreciation is the loss in value caused by the continuous use ofan asset. Every durable asset has a certain life at the end of which it has got to bereplaced. For such a replacement, a provision in the form of depreciation is requiredto be made.There are various methods of calculating this depreciation. Following are the importantones among them. i)Staright Line Method This is the simplest method of all. What is done is the life of an asset is firstestimated and then the share of one year in the total value of the asset isdeducted. What remains is taken as the value of the asset for the next year.In this way, at the end of the life-time of the asset, the firm will have collectedan amount equal to the value of the asset. If, for example, the price of amachine is P, the scrap-value at the end of its life-time is S and the life of themachine is Y years, then the amount of depreciation (D) will be given by theformula :D =P S Y

If P = Rs.25,000/-; S = Rs.5,000/- and Y = 20 years, the annual amount ofdepreciation will be (25,000 5,000)/20= 2000. This means that the annual allotment towards, depreciation will have to be Rs.2000 only. (ii)Diminishing Balance Method In this method, the amount of depreciation is large in the initial years. Supposethe annual amount of depreciation is taken as 10 per cent of the value of themachine. Then, in the first year the depreciation will be 10 per cent of thevalue of the machine; but during the second year, it will be l0 per cent of thetotal value minus the depreciation fund created during the first year. By thismethod, the value of the machine will never become zero and the amount ofdepreciation will go on diminishing. (iii)Annuity Method In this method, equal annual amounts are first calculated for the length of thelife of an asset. However, along with the annual allotment, the interest that canbe earned is also calculated. (iv)Service Unit Method Instead of considering the life of an asset in years, the actual working hourscan be taken. This is the basis of service unit method. If a machine can workfor l,000 hours, then the value of the machine divided by l,000 will be thehourly rate of depreciation. The total number of hours for which the machinewas actually used during a given period can thus give us the amount ofdepreciation during that period. The original value of machine minus depreciationwill give its value for the remaining period.Whatever method used for the valuation of assets, in the accounting sense,some problems remain unsolved. Thus, for instance, every asset has a limitedlife and at the end of it, the asset needs to be replaced. At the time ofreplacement, new and more efficient machines may be available. If such newmachines are to be purchased, how much money will be required and at whatrate depreciation will have to be provided cannot be decided before hand, byany of these methods. This makes measurement of profit difficult. (b)Inventory Valuation Another difficulty that is encountered is in respect of inventory valuation. This difficultywould not arise if the prices of all products and the level of all production wereconstant. But this never happens. The raw materials are purchased at differentprices. The costs of production also change from time to time. This makes the valuation of of stocks of finished products very difficult. Let us first consider the twomost widely used methods of inventory valuation.i)First-In-First Out Method (FIFO) : In this method, it is assumed that goodswhich entered the firm's stock first were used first. Then, in this assumption,the cost of producing the given output is estimated.ii)Last-In-First Out Method (LIFO) : In this method, the cost of production iscalculated on the assumption that the material which was last to enter theinventory of the company was used first.It is obvious that a change in the use from either of the two methods mentionedabove to the other one must lead to a change in estimate of profit. There would bea great divergence between the profits estimated by these two methods especiallywhen the above mentioned changes in prices etc. are very rapid. The profit wouldappear to be abnormally high if it is calculated on the basis of FIFO in times ofinflation and abnormally low in times of deflation. The methods, however, are in usedue to their convenience from accounting point of view.It is thus, clear that by either method, it is difficult to state precisely the value of theinventory. This is mainly because of the changes in the value of money.

Taking astable value of money, i.e. valuation at constant prices would also not serve thepurpose. Thus, due to these difficulties in the valuation of inventories, themeasurement of profit is rendered difficult. (c)The Unaccounted Value Changes in the Assets and the Liabilities Besides the above two factors which create difficulties of valuation, there is a third categoryof changes in the value of assets and liabilities that poses a challenge to valuation. Theresearch that is undertaken to improve the de of the product, the expenses onimproving the efficiency of management etc. increase the value of the establishment.These costs create assets, which cannot be precisely valued. They do increase profitsbut cannot be expressed in terms of money, and therefore, measurement of changes inthe value of assets becomes difficult.Thus, it is clear, how difficult the precise measurement of profits is. By simply usinghistorical cost the profits are likely to be either inflated or deflated. It is, therefore, necessaryto calculate costs and profits at constant price to take utmost care in calculatingdepreciation, to take cognizance of modern methods like cost flow techniques,management accounting and so on, and to use opportunity costs wherever necessary.Even then, a correct amount of profit may not be found out. But we shall be close to thecorrect estimate. The calculation of profit will also vary according to the purpose forwhich the calculation is required. Managerial Economics 74 valuation of of stocks of finished products very difficult. Let us first consider the twomost widely used methods of inventory valuation.i)First-In-First Out Method (FIFO) : In this method, it is assumed that goodswhich entered the firm's stock first were used first. Then, in this assumption,the cost of producing the given output is estimated.ii)Last-In-First Out Method (LIFO) : In this method, the cost of production iscalculated on the assumption that the material which was last to enter theinventory of the company was used first.It is obvious that a change in the use from either of the two methods mentionedabove to the other one must lead to a change in estimate of profit. There would bea great divergence between the profits estimated by these two methods especiallywhen the above mentioned changes in prices etc. are very rapid. The profit wouldappear to be abnormally high if it is calculated on the basis of FIFO in times ofinflation and abnormally low in times of deflation. The methods, however, are in usedue to their convenience from accounting point of view.It is thus, clear that by either method, it is difficult to state precisely the value of theinventory. This is mainly because of the changes in the value of money. Taking astable value of money, i.e. valuation at constant prices would also not serve thepurpose. Thus, due to these difficulties in the valuation of inventories, themeasurement of profit is rendered difficult. (c)The Unaccounted Value Changes in the Assets and the Liabilities Besides the above two factors which create difficulties of valuation, there is a third categoryof changes in the value of assets and liabilities that poses a challenge to valuation. Theresearch that is undertaken to improve the quality of the product, the expenses onimproving the efficiency of management etc. increase the value of the establishment.These costs create assets, which cannot be precisely valued. They do increase profitsbut cannot be expressed in terms of money, and therefore, measurement of changes inthe value of assets becomes difficult.Thus, it is clear, how difficult the precise

measurement of profits is. By simply usinghistorical cost the profits are likely to be either inflated or deflated. It is, therefore, necessaryto calculate costs and profits at constant price to take utmost care in calculatingdepreciation, to take cognizance of modern methods like cost flow techniques,management accounting and so on, and to use opportunity costs wherever necessary.Even then, a correct amount of profit may not be found out. But we shall be close to thecorrect estimate. The calculation of profit will also vary according to the purpose forwhich the calculation is required.

4.PROFIT POLICY : By and large, we say that an entrepreneur aims at maximum profits. But 'how much' profitshould be taken as the maximum ? This is a difficult question to answer. A scientific thoughtto this question must provide a guidance on the following two lines : (a) What profit should anentrepreneur expect in any enterprise, and (b) How far is profit influenced by factors, which areexternal to the firm.It must be understood at the outset that the freedom of an entrepreneur to decide his rate ofprofit depends on the nature of the market and other constraints including legal provisions,business conventions, consumer resistance and so on.Profit is usually expressed as gross profit, or as net profit or as a per cent return to capitalinvested. In modern business, the common practice is to express profit as a per cent netreturn to capital.(a) Profit Expectations : The profit that an entrepreneur should expect can be subjected toa number of criteria. The following four criteria are widely accepted : i)The rate of profit should be sufficient to attract share capital if felt necessary. When new shares are to be issued for expansion, the old shareholders should nothave a feeling of having suffered a capital loss. New shares must therefore be soldat a price that gives the old shareholders a satisfaction that they are in possessionof sound shares. Their rate of profit should be enough to command a good price forthe new issue of shares. ii)The rate of profit should be comparable to that in similar companies. Manytimes, there are many independent units under the same management. In all thesesiter-concerns, the rates of profitability should be comparable. iii)The profit rate should be comparable to the profit rates in the past.iv)The profits should be large enough to allow for a plough-back for businessexpansion. It is, however, necessary to see that reinvestment of profits does notcause a dwindling in the reasonable rate of profit.(b) External Factors : Besides the criteria mentioned above, there are certain externalfactors that influence the profitability of a firm in modern times. These factors are : i)Full Employment : Under conditions of full employment, maintenance of cordiallabour relations is of utmost importance. Excessive profits, under suchcircumstances, become an invitation to labour unrest. Care should be taken tokeep profits within reasonable limits. ii) Potential Rivals :

In any business, the possibility of emergence of rival firms must betaken into consideration. Abnormal profits attract rivals and wipe out profits. To keepaway the rivals, it becomes necessary to control profits. Whether this will be possibledepends upon many factors, but an effort should be made to abide by this rule. iii) Consumers' Confidence : It is also necessary to maintain the confidence of theconsumers in the reasonableness of the firm's prices. Those entrepreneurs whoare tempted to exploit the situation of reaping huge profits usually lose thesympathies of their customers. It pays in the long-run to overcome such temptationsand continue to enjoy the confidence of the customers. iv) Political Climate : In modern times, entrepreneurs are also required to take note ofthe political climate in the country. This is especially true where a firm suppliesproducts to government departments, or public enterprises. Charges of profiteeringand exploitation may invite public inquiries and this will cause a great deal to thefirm. It is, therefore, advisable to keep profit rates low and create an image of a firmwith fair dealings.Thus, profit policy involves many important considerations and all the factors notedabove go into the formulation of a sound profit policy. 5.REASONABLE PROFIT TARGET : We have already studied that modern firms and corporations may not aim at profit maximization.Instead they set 'a standard', 'a target' or 'a reasonable profit' which they strive to achieve. Wehave also studied the reasons for aiming at Reasonable Profits in the previous chapter.Let us now look into the policy questions related to setting standards or criteria for reasonableprofits. The important policy questions are :a)What are the criteria for determining the profit standard?b)How should 'reasonable profits' be determined?Let us now briefly examine the policy implications of these questions. a)Standards of Reasonable Profits : When firms voluntarily exercise restraint on profit maximization and choose to make only a'reasonable profit', the questions that arise are : (i) what form of profit standard should beused, and (ii) how should reasonable profits be determined ?

In figure, DD is the original demand curve and SS is the original supply curve. Theybalance each other at point E. The equilibrium price is, therefore, OP. Now D1D1 is thenew demand curve which shows a higher demand, and S1S1 is the new supply curve.The new equilibrium price would, therefore, be OP 1 . Laws of Demand, Supply & Price : From the foregoing discussion the following laws of demand, supply and price can bestated:(d)Under perfect competition, price of a product is determined by the interaction of totaldemand and total supply in the market. This is called 'Equilibrium Price.'(e)If demand increases, supply being constant, the price would rise. If demand falls, supplybeing constant, price would fall.(f)If supply is reduced, demand being constant, price would rise and if supply increases,demand being constant, the price would fall.(g)If

a change occurs in demand and supply simultaneously, a new equilibrium price isestablished. Price in the Short Run and Long Run : The above laws of demand, supply and price, however, constitute the general framework of pricedetermination. As Marshall has elegantly pointed out, time element plays an important role indetermination of price. Marshall has classified the period of time under four heads; but for thesake of simplicity we can reduce this classification of period only under three heads viz. (i)Market Period (ii) Short Run, and (iii) Long Run.It is worthwhile to see how price is determined in the market, in market period, Short periodand the Long run or period.(i) Market Period : According to Marshall, market period relates to few hours or few days. Perishablegoods such as fish, eggs, leafy vegetables etc. are sold in this market. The supply ofthese goods on any particular day is fixed. It cannot be increased or decreased withinthe market period. At the same time, such goods being perishable, their supply cannotbe held back from the market. The entire supply is to be disposed off on the same day;because it cannot be stored or preserved. In such circumstances, price would bedetermined according to the total demand in the market. If on a particular day, morecustomers come to buy, the supply would be less and the supply being constant, pricewould rise. Thus, in the short run, determination of price in the market period is shown inthe following figure :

In figure, SS is the supply curve representing perfectly inelastic or a fixed supply in the market period.

ii) Short-Run : In the short-run, supply of goods can be adjusted to the demand to some extent, because,some factors remain fixed, whereas other factors can be changed in the short period,the price in the short period is thus determined with the help of the active role of bothsupply as well as demand

In figure, the supply curve is positively sloping, the equilibrium price is OP at whichquantity supplied equantity demanded equals OQ.(iii) Long - Run : In the Long - run, supply of goods can be adjusted to the demand, Dr. Marshall has takenan example of durable goods, which are sold in the long run. Durable goods such aswheat, rice, oil, textiles etc. can be stored for some time. Their supply can be increasedor reduced according to the demand. Since the supply is adjustable, supply curve ishorizontal to the X-axis. The sellers of durable goods are unwilling to sell unless theyrecover a minimum price. This price is based on the cost of production. Producers

ofdurable goods would not, therefore, sell unless the cost of production is recovered. If theprice is less, they would hold back the supply from the market. On the other hand, if theyare getting the minimum expected price which covers the cost of production, they wouldbe prepared to sell more. i.e., they would increase the supply at the same price.Determination of price in the long run is shown in the following diagram

In figure the supply curve is horizontal to the X-axis because it is adjustable to demand.Here, price of the product would be OP which covers the cost of production. In this case,an increase or decrease in demand would not influence the price because it is based onthe cost of production. If less people come, a small quantity would be supplied and ifmore people come, a larger quantity would be sold at the same price.It will be seen that in the long run, supply plays a dominant role and demand is passivein determining the price. Conclusion : Under perfect competition, price is determined by the interaction of total demandand total supply in the market. The price which is so determined is called theEquilibrium Price. The equilibrium price may change on account of changes in the relative positions ofdemand and supply. The most significant point to be emphasized here is that the timeelement plays an important role in determination of price in the short and long run. In theshort run demand is active, whereas in the long run supply is active in determining theprice. By introducing the importance of time element, Dr. Marshall has made a significantcontribution to the theory of value. (B)Equilibrium of Firm And Industry Under Perfect CompetitionINTRODUCTION In the previous sub-unit, we have studied how price of a product is determined by the interactionof demand and supply. We have also seen the important role played by the time element inthe theory of value. We have thus studied the rules of price determination under perfect.

competition. However, we have not yet studied how a firm or an industry would maximize itsprofits. An attempt is, therefore, made in this chapter to explain how equilibrium position of afirm or an industry is reached under perfect competition. Firm And Industry : Before explaining the equilibrium of a firm or an industry it is necessary to revise the distinctionbetween a firm and an industry. Any business unit organized under one ownership andmanagement is called a firm. The firm may be organized as a sole proprietorship, partnershipor a joint stock company. The form of organization can be anything. It is necessary that thebusiness should be owned and managed by one management.An industry is a group of firms dealing in the same line of business. The ownership andmanagement of each firm may be different; but since all such firms are engaged in the productionof the same commodity, they are collectively called an industry. Thus Swadeshi Mills inMumabi is a firm dealing in textiles. Similarly, Shriram Mills is another firm and Kohinoor Millsis still another firm dealing in textiles. But when we take into account all the textile firms inIndia we describe them collectively as the cotton textile industry of India. Concept of Equilibrium : The term equilibrium is frequently used in economic theory. Thus, there is an equilibrium of aconsumer, an equilibrium of a firm or an equilibrium of an industry. Since the concept occupiesa central position in the theory of value it is necessary to know the meaning of the termequilibrium.A consumer who spends his income on various goods may derive satisfaction from theconsumption of those goods. When consumer maximizes his satisfaction he is said to be inequilibrium. In the case of a firm, equilibrium is reached when the firm's profits are maximized.The ultimate aim of every firm is to maximize its profits. Accordingly, the firm tries to reach thestage of maximum profit by adjusting its output.In the initial stages, when production is on a small scale, the margin of profit is small. Butwhen the scale of production is increased the average cost goes on diminishing and themargin of profit goes on increasing. After some time, the disadvantages of largescale productionbegin to operate. As a result, the difference between the selling price and the cost goes ondiminishing. Even though the margin of profit is reduced, there is still some addition to thetotal profits. It is, therefore, worthwhile to carry on production for some more time. Finally, apoint is reached when cost of production exceeds the selling price. From this point, lossesbegin to occur. Every firm would, therefore, stop to produce. At this point, the total profit ismaximum and the firm is said to be in equilibrium. Like a firm, an industry can also achieve itsequilibrium when all the firms in the industry are in equilibrium. Equilibrium of Firm : There are two methods to study the equilibrium of a firm. Viz.(a)Total Cost and Total Revenue method, and(b)Marginal Cost and Marginal Revenue method.Before we examine these methods, it is worthwhile to know the assumptions on which ouranalysis is based :(i)It is presumed that a firm is managed as a sole proprietary concern. This would enableus to study the behaviour of an individual.(ii)Every individual proprietor aims at profit maximization and he exhibits rational economicbehavior.(iii)It is also assumed that

the firm is producing only one commodity. It is possible toconsider a firm producing more commodities, but in that case, our analysis would becomemore complicated. For the sake of simplicity we, therefore, assume that the firm isproducing only one commodity. Equilibrium of a firm with Marginal Cost and Marginal Revenue Method The total cost incurred to produce a given quantity is called the Total Cost (TC). Now, theaddition made to the total cost on account of production of one more unit of output iscalled the Marginal Cost (MC). Similarly, the revenue received from the sale of a givenoutput is called Total Revenue (TR) and the addition made to the total revenue on accountof sale of one more unit is called Marginal Revenue (MR).(i)Marginal Revenue should be equal to Marginal Cost i.e. MR = MC(ii)The marginal cost curve should cut the marginal revenue curve from below at theequilibrium point.Firm's equilibrium, arrived at by this method is shown in the following diagram

In figure, MC is the marginal cost curve and MR is the marginal revenue curve. Similarly,AC is the average cost curve and AR is the average revenue curve. When OM output isproduced, MC and MR curves balance each other at point E. At this point the firm'sprofits are maximum and the firm is in equilibrium. If smaller output is produced than OMthe marginal cost is smaller than marginal revenue, which means that addition to thecost is less than addition to the revenue by producing more output. This means thatthere is scope to earn more profits be increasing output. Output will, therefore, be increasedfrom OL to OM. When production is OL, average cost is LH and average revenue is LG.Profit per unit is HG. Since there is marginal profit, output will be carried on upto OM.After the point OM, marginal cost would exceed the marginal revenue; and the firm'sprofit will begin to fall, because more is added to cost than to revenue by increasingoutput. For example, if ON output is produced, KN is the average cost and SN is theaverage revenue. There is a profit per unit to the extent of SK, which is less than QD(profit per unit at output OM). Therefore, it would not be worthwhile to produce ON

output.The firm should stop production when its output is OM, and its profits are maximum. Equilibrium of Firm under Perfect Competition : The conditions equilibrium of a firm are applicable to all the types of markets. i.e.they are applicable to perfect competition, monopoly, monopolistic competition etc. Theseconditions are i) MR = MC and ii) MC Curve must cut MR curve from below. Anattempt is made below to examine the equilibrium of a firm under perfect competition.

Under perfect competition, no firm can fix the price or influence it by its own action. Priceis determined by the interaction of total demand and total supply in the market. Underthese circumstances the firm has to satisfy both the conditions to achieve its equilibrium,viz.

LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Single Answer Question The concept of Perfect competition includes all the features of :Correct Answer Pure competition Your Answer Pure competition Multiple Choice Single Answer Question An entrepreneur may earn high profits just by luck, say because of outbreak of war. This is known as :-

Correct Answer Chance Profits Your Answer Monopoly Profits Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Multiple Choice Multiple Answer Question Features of Dumping are :Correct Answer It is possible in the case of monopoly market , Selling same good at higher price in home market and at lower price in international market , It is encouraged with a view to promote the exports Your Answer It is possible in the case of monopoly market , It is encouraged with a view to promote the exports Multiple Choice Single Answer Question The type economic problem is Correct Answer universal Your Answer universal True/False Question In macro economic analysis the behavior of economic agents such as firms, households and government is seen in total, disregarding details at particular level. Correct Answer True Your Answer True True/False Question Changes in the value of money because of inflation, make inventory valuation of finished products difficult. Correct Answer

True Your Answer True Multiple Choice Single Answer Question The method of inventory valuation in which, the cost of production is calculated on the assumption that the material which was last to enter the inventory of the company was used first is :Correct Answer LIFO Your Answer LIFO Multiple Choice Single Answer Question The act of making goods and services is called Correct Answer production Your Answer production Select The Blank Question The partnership between private sector & government is called ________. Correct Answer Joint sector enterprise Your Answer Joint sector enterprise Multiple Choice Multiple Answer Question According to Keynes there are three motives for holding cash for liquidity preference :Correct Answer The speculative motive , The transactions motive , The precautionary motive Your Answer The transactions motive , The precautionary motive , The speculative motive Multiple Choice Single Answer Question If the substitutes are relatively costly then the demand for the commodity in question will be :Correct Answer More Your Answer More

Multiple Choice Multiple Answer Question The Laws of Returns to scale are :Correct Answer Law of Increasing Returns to Scale , Law of Constant Returns to Scale , Law of Decreasing Returns to scale Your Answer Law of Decreasing Returns to scale Multiple Choice Multiple Answer Question Increasing Returns explains :Correct Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Your Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Multiple Choice Single Answer Question An individual consumer or particular market for a given commodity are the subject matter of :Correct Answer Micro Economics Your Answer Micro Economics True/False Question The prosperity phase is characterized by rise in the level of employment. Correct Answer True Your Answer True Select The Blank Question Baumol has suggested as an alternative objective for profit maximization, the maximization of ________. Correct Answer Sales Your Answer Sales

Multiple Choice Single Answer Question The profit which is surplus of revenue over and above all paid out cost is :Correct Answer Accounting Profit Your Answer Gross Profit Select The Blank Question In perfect competition various factors of production are assumed to be ________. Correct Answer Perfectly mobile Your Answer Perfectly mobile Select The Blank Question Keynes, on the basis of a fundamental psychological law, observed that as income ________, consumption Increases. Correct Answer Increases Your Answer Increases True/False Question During the period of depression, a large part of a countrys resources lie involuntarily idle. Correct Answer True Your Answer True True/False Question Pure private goods are completely divisible and to them the principle of exclusion applies in full measure. Correct Answer True Your Answer False Select The Blank Question The taxation & public expenditure policies are called as ________ ..

Correct Answer Budgetary Policy Your Answer Budgetary Policy Multiple Choice Multiple Answer Question The disinvestments of industries is needed for :Correct Answer Phased privatization , Reducing deficit , Capital support to plans Your Answer Phased privatization , Reducing deficit , Capital support to plans Multiple Choice Single Answer Question The act of using goods and services to satisfy wants is called Correct Answer consumption Your Answer consumption Multiple Choice Single Answer Question The things that are produced by factors of production are called Correct Answer commodities Your Answer commodities Select The Blank Question In the context of externalities, driving the smoke-emitting buses and trucks in the cities is an example of ________ cost. Correct Answer Social Your Answer Social Multiple Choice Single Answer Question The concept of just distribution of national product is a Correct Answer normative Your Answer normative

True/False Question The government also fixes minimum procurement prices for major crops on the recommendation of the Agricultural Prices Commission (APC). Correct Answer True Your Answer True Multiple Choice Multiple Answer Question According to Lionel Robbins definition of economics, Economics is a science which :Correct Answer Studies human behaviour , Relationship between ends and scares resources , Scarce means have alternate uses Your Answer Studies human behaviour , Relationship between ends and scares resources , Scarce means have alternate uses Select The Blank Question Under perfect competition, price is determined by the interaction of total demand and ________. Correct Answer Total supply Your Answer Total selling cost Multiple Choice Multiple Answer Question Features of monopolistic Competition are :Correct Answer Fairly large number of firms , Product differentiation , Selling costs are existed Your Answer Fairly large number of firms , Product differentiation , Selling costs are existed Multiple Choice Multiple Answer Question Steps in cost benefit analysis are :Correct Answer Identification of a project , Formulation of the project , Appraisal and selection of the project Your Answer Identification of a project , Formulation of the project , Appraisal and selection of the project

True/False Question There is no separation of ownership and management in case of a Joint Stock Company. Correct Answer False Your Answer False Multiple Choice Single Answer Question During a period of rising prices (inflation), the goods and services are :Correct Answer Scarce Your Answer Scarce Multiple Choice Single Answer Question The cost recorded in the books of accounts are considered as :Correct Answer Explicit costs Your Answer Explicit costs Multiple Choice Single Answer Question Variable cost are those costs which vary with the level of :Correct Answer Output Your Answer Output Select The Blank Question Open market operations measures are ________. Correct Answer Quantitative credit control Your Answer Quantitative credit control Select The Blank Question Managerial ________ lies on the borderline of management and Economics. Correct Answer Economics

Your Answer Economics True/False Question The demand for life saving drugs is elastic. Correct Answer False Your Answer False Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice Match The Following Question Correct Answer Your Answer Resource allocation decisions in free market economy Theory of price Theory of price Economic problem Universal Universal Managerial Economics Applied branch of knowledge Applied branch of knowledge Inflation Reduction in purchasing power Reduction in purchasing power Waste of resources Involuntary unemployment Involuntary unemployment Multiple Choice Single Answer Question According J.B.Clark, profit is the reward paid for :Correct Answer Dynamism

Your Answer Risk bearing Multiple Choice Multiple Answer Question The characteristics of a sole proprietorship firm is :Correct Answer Unlimited Capital , Ownership by a single person , Easy to form Your Answer Ownership by a single person , Easy to form Select The Blank Question The rate of interest, according to Keynes depends upon two factors: the liquidity preference function and ________. Correct Answer The quantity of money. Your Answer The quantity of money. Match The Following Question Correct Answer Your Answer Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce scarce Commodities goods and services goods and services Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient

Your Answer insufficient

List Of Attempted Questions And Answers Select The Blank Question The sum of all individual demands constitutes________ Correct Answer market demand Your Answer market demand True/False Question Under perfect competition, price is determined by the interaction of total demand and total supply in the market. Correct Answer False Your Answer True Multiple Choice Single Answer Question Price of a product under perfect competition is determined by the interaction of total supply and Correct Answer total demand Your Answer total demand Select The Blank Question The cost which enter the accounts book of the firm are referred as ________. Correct Answer Accounting cost Your Answer Accounting cost Multiple Choice Multiple Answer Question Keyness theory of employment explains Correct Answer Effective demand , Aggregate supply , Aggregate demand Your Answer Effective demand , Aggregate supply , Aggregate demand Multiple Choice Single Answer Question The type economic problem is Correct Answer universal Your Answer universal Multiple Choice Single Answer Question An individual consumer or particular market for a given commodity are the subject matter of Correct Answer Micro Economics Your Answer Micro Economics

Multiple Choice Multiple Answer Question Features of the firm are Correct Answer It is a business unit organized under one ownership , It is a sole proprietorship , It is a partnership or joint stock company Your Answer It is a business unit organized under one ownership , It is a sole proprietorship , It is a partnership or joint stock company Multiple Choice Single Answer Question Whether the economys capacity to produce goods and services is growing from year to year or remaining static is studied under the Correct Answer Theory of economic growth Your Answer Theory of economic growth Multiple Choice Multiple Answer Question Co-operative organizations is Correct Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members Your Answer voluntary organization , managed by democratic principle , non profit motive organization Multiple Choice Multiple Answer Question Assumptions underlying the law of Supply are Correct Answer The cost of production is unchanged , No change in technique of production , Government policies are unchanged Your Answer The cost of production is unchanged , No change in technique of production , Government policies are unchanged True/False Question Macro-economies is a policy oriented science. Correct Answer True Your Answer True Multiple Choice Single Answer Question Expansion of supply is shown by the movement in the supply curve which is Correct Answer upward Your Answer upward Multiple Choice Single Answer Question Liability of a sole trader is Correct Answer unlimited Your Answer unlimited Select The Blank Question If the output rises in the greater proportion than that of the increase in factor inputs, it is referred to as ________.

Correct Answer increasing returns to scale. Your Answer increasing returns to scale. Select The Blank Question An upward sloping demand curve is called ________ Correct Answer exceptional demand curve Your Answer exceptional demand curve Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer insufficient Multiple Choice Single Answer Question The act of making goods and services is called Correct Answer production Your Answer production Multiple Choice Single Answer Question Question related to the efficient production and allocation belong to the branch of economic theory called Correct Answer Welfare Economics Your Answer Welfare Economics Multiple Choice Single Answer Question The act of using goods and services to satisfy wants is called Correct Answer consumption Your Answer consumption Multiple Choice Multiple Answer Question Explicit costs are Correct Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Your Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Select The Blank Question In the 3rd stage of operation of the law of variable proportions, the marginal product becomes ________. Correct Answer negative Your Answer negative True/False Question The Keynesian theory emphasizes effective supply as a crucial factor in determining the level of income and employment.

Correct Answer False Your Answer False Multiple Choice Single Answer Question The things that are produced by factors of production are called Correct Answer commodities Your Answer commodities Select The Blank Question By profits, the accountant means total revenue minus________. Correct Answer Explicit costs Your Answer Explicit costs Multiple Choice Single Answer Question All the buyers and sellers operating under perfect competition have knowledge which is Correct Answer perfect Your Answer perfect Match The Following Question Correct Answer Your Answer Resource allocation decisions in free market economy Theory of price Theory of price Economic problem Universal Universal Managerial Economics Applied branch of knowledge Applied branch of knowledge Inflation Reduction in purchasing power Theory of price Waste of resources Involuntary unemployment Involuntary unemployment Multiple Choice Multiple Answer Question 16. The phase of recovery denotes Correct Answer More employment opportunities , Increase in profitability , Wage rate increase Your Answer More employment opportunities , Increase in profitability , Wage rate increase Select The Blank Question Supply is predominantly determined by ________. Correct Answer stock Your Answer demand Select The Blank Question The form of organization which is best for self employment is ________. Correct Answer Sole trader Your Answer Sole trader

Multiple Choice Single Answer Question The suggestion of maximization of balanced growth rate as another alternative objective of a firms profit is suggested by Correct Answer Prof. Morris Your Answer Baumol True/False Question Under perfect competition,firms are free to enter and exit in the market. Correct Answer True Your Answer True Multiple Choice Single Answer Question J.M. Keynes, on the basis of a fundamental psychological law of consumption, observed that as income increases, consumption also increases, but proportionately Correct Answer less Your Answer less Multiple Choice Single Answer Question The Risk theory of profit was developed by Correct Answer Hawley Your Answer Hawley True/False Question The congress government led by Narsimha Rao announced the New Industrial Policy in July 1991. Correct Answer True Your Answer True Select The Blank Question Perfectly elastic demand curve is ________ Correct Answer horizontal Your Answer horizontal True/False Question The distinction between fixed costs and variable costs is relevant in the short period only. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The term externalities may also be referred as: Correct Answer Spill-over effects , Neighborhood effects , Third party effects Your Answer Spill-over effects , Neighborhood effects , Third party effects Multiple Choice Multiple Answer Question Methods of forecasting demand for new products are

Correct Answer Product life cycle analysis , Test marketing , Evolutionary approach Your Answer Evolutionary approach Multiple Choice Single Answer Question Often monopolies purposely keep certain factors of production idle creating artificial scarcities of their products as a result the prices Correct Answer rise Your Answer rise Multiple Choice Multiple Answer Question The methods of calculating depreciation is Correct Answer Diminishing Balance Method , Annuity Method , Service Unit Method Your Answer Diminishing Balance Method , Annuity Method , Service Unit Method Match The Following Question Correct Answer Your Answer Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce scarce Commodities goods and services goods and services Select The Blank Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally. Correct Answer management Your Answer management True/False Question The sum of total fixed costs and total variable costs is the total cost. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Features of Market are Correct Answer Place where buyers and sellers meet each other , A building where a number of shops dealing in a particular commodity exist , A place where transaction of goods and services is undertaken Your Answer Place where buyers and sellers meet each other , A building where a number of shops dealing in a particular commodity exist , A place where transaction of goods and services is undertaken

Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics True/False Question Private profit motive is an essential feature of Capitalism. Correct Answer True Your Answer True

LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question In case of a proprietary firm the liability of the proprietor is limited. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Accounting profit includes :Correct Answer Wages , Rent , Interest Your Answer Interest , Total revenue True/False Question In experimental price approach the firms takes some cognizance of the demand for the product and proceeds to fix a price by a trial and error method. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Defects of market system:Correct Answer Inequalities of income and wealth , Emergence of monopolies , Failure to provide full employment

Your Answer Emergence of monopolies , Failure to provide full employment , Prevailing of barter system Multiple Choice Single Answer Question In case of perfectly elastic supply, the supply curve is :Correct Answer Horizontal Your Answer Vertical Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer insufficient Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Multiple Choice Single Answer Question Economists have pointed out that the real world is full of :Correct Answer Imperfect competition Your Answer Pure competition Multiple Choice Multiple Answer Question Characteristics of Pure Public goods are:Correct Answer They are completely indivisible , Their marginal cost would be zero or close to zero , Their benefits cannot be priced Your Answer They are completely indivisible , Their benefits cannot be priced

Multiple Choice Multiple Answer Question Main aims of the New Industrial Policy (1991) are :Correct Answer To unshackle the Indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the Indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Your Answer To unshackle the Indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the Indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Multiple Choice Single Answer Question Under perfect competition, generally demand and supply act and react upon each other and determine the price Correct Answer equilibrium Your Answer equilibrium Multiple Choice Multiple Answer Question Factors leading to differences in the economic & the traditional concepts of valuation are :Correct Answer Inventory Valuation , Depreciation , Unaccounted value changes in the assets & liabilities Your Answer Inventory Valuation , Depreciation , Unaccounted value changes in the assets & liabilities Select The Blank Question Super-normal profit is also called ________. Correct Answer Excess profit Your Answer Excess profit Multiple Choice Multiple Answer Question Under cost plus pricing :Correct Answer Actual costs, standard costs are included , Certain percentage of profit also included , The price is set to cover material, labour cost

Your Answer The price is set to cover material, labour cost , Actual costs, standard costs are included Match The Following Question Correct Answer Your Answer Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce scarce Commodities goods and services goods and services True/False Question Consumers protection involves protection to the consumers from unfair trade practices. Correct Answer True Your Answer True Select The Blank Question When Government repays old loans, the purchasing power at the disposal of the people ________. Correct Answer Increases Your Answer Becomes negative True/False Question The law of supply is not hypothetical. Correct Answer False

Your Answer True Multiple Choice Single Answer Question A firm gets an opportunity to produce multiple products because changes in business activity in a firms is :Correct Answer Cyclical Your Answer Cyclical True/False Question When a change in income has no effect upon the quantity demanded of a product, the income elasticity of demand is zero. Correct Answer True Your Answer True Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice Select The Blank Question Propensity to consume is defined as the relationship between consumption and ________. Correct Answer Income Your Answer Income True/False Question Public enterprises have shown a very high rate of return of the capital invested. Correct Answer False Your Answer False

Select The Blank Question ________ effects are those externalities which flow from the production or use of the good to other parties or economic units. Correct Answer Third party Your Answer External True/False Question In the traditional concept of equilibrium, a firm attains the equilibrium when the firms Total Revenue (T.R.) =Total Cost (T.C.). Correct Answer False Your Answer True Multiple Choice Single Answer Question The method of inventory valuation in which, the cost of production is calculated on the assumption that the material which was last to enter the inventory of the company was used first is :Correct Answer LIFO Your Answer LIFO True/False Question Supply management is related to the volume of supply & its distribution system. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Demand is determined by :Correct Answer Price of the product , Relative prices of other goods , Tastes and habits Your Answer Price of the product , Relative prices of other goods , Tastes and habits Multiple Choice Multiple Answer Question

Different types of Elasticity of Demand are :Correct Answer Cross elasticity of demand , Price elasticity of demand , Income elasticity of demand Your Answer Price elasticity of demand , Income elasticity of demand , Cross elasticity of demand Multiple Choice Single Answer Question In case of a Joint-Stock Company, the liability of share holders is :Correct Answer Limited Your Answer Limited Multiple Choice Single Answer Question Expansion of supply is shown by the movement in the supply curve which is :Correct Answer Upward Your Answer Upward Multiple Choice Single Answer Question Saving is a :Correct Answer Private virtue Your Answer Private virtue Multiple Choice Single Answer Question According to the Government, the building up of inflationary pressure during the Nineties was attributed to :Correct Answer Higher Fiscal deficit Your Answer Higher Fiscal deficit Multiple Choice Multiple Answer Question A competitive industry has three basic characteristics :Correct Answer Large Number of Firms , Homogeneous Product , Free entry and exit Your Answer Large Number of Firms , Homogeneous Product , Free entry and exit

Multiple Choice Single Answer Question The income which a businessman might expect from the second best alternative use of his resources is called as :Correct Answer Opportunity cost Your Answer Opportunity cost Select The Blank Question Advertising forms an integral part of decision-making and________. Correct Answer Forward planning Your Answer Forward planning Multiple Choice Multiple Answer Question Exceptions to the Law of Demand are :Correct Answer Griffin goods , Articles of snob appeal , Speculation Your Answer Griffin goods , Articles of snob appeal , Speculation Select The Blank Question True inflation starts only after reaching ________. Correct Answer Level of full employment Your Answer Level of full employment Select The Blank Question The financing of ________ goods is done through Public expenditure. Correct Answer Public Your Answer Public Multiple Choice Multiple Answer Question Assumptions of the Law of Demand are :Correct Answer No change in consumers income , No change in consumers preferences , No change in

fashion Your Answer No change in consumers income , No change in consumers preferences , No change in fashion Multiple Choice Multiple Answer Question Types of Share capital of Joint-Stock Company are :Correct Answer Registered or authorized capital , Issued capital , Paid-up capital Your Answer Registered or authorized capital , Issued capital , Paid-up capital True/False Question The sum of total fixed costs and total variable costs is the total cost. Correct Answer True Your Answer True True/False Question During the period of depression, a large part of a countrys resources lie involuntarily idle. Correct Answer True Your Answer True True/False Question Under the New Industrial Policy, in order to invite foreign investment in high priority industries, it was decided to provide approval for direct foreign investment upto 51% equity in such industries. Correct Answer True Your Answer True

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Single Answer Question Economists call all human resources as Correct Answer labor Your Answer labor True/False Question Economic problem arises only in case of an overpopulated country. Correct Answer False Your Answer False Multiple Choice Single Answer Question All the buyers and sellers operating under perfect competition have knowledge Correct Answer perfect Your Answer perfect True/False Question The meaning of the word economic is most closely associated with the word unlimited Correct Answer True Your Answer True Multiple Choice Single Answer Question The conditions of equilibrium of a firm are applicable to all markets Correct Answer None Your Answer particular True/False Question In case of the co-operative societies supplying cheap inputs or supplying consumer products at fair prices, a system of subsidized pricing is followed Correct Answer True

Your Answer True Multiple Choice Single Answer Question The price of a good and the exclusion princople together is Correct Answer divisibility Your Answer indivisibility Multiple Choice Single Answer Question The liability of a sole proprietary firm is Correct Answer unlimited Your Answer unlimited True/False Question Institution of private property is not an essential feature of Capitalism Correct Answer False Your Answer False True/False Question There never was in any country at any time pure capitalism or pure communism Correct Answer True Your Answer True True/False Question The railways using a lot of coal in firing the steam locomotives put the residential and other areas near the loco shades to a lot of sufferings on account of smoke nuisance, is an example of pr Correct Answer False Your Answer True

True/False Question A Joint stock company has perpetual succession. Correct Answer True Your Answer True True/False Question The management of the cooperative form of business organization is totalitarian in nature. Correct Answer False Your Answer True Multiple Choice Single Answer Question In Trade cycles the economic activity are Correct Answer ups and downs Your Answer ups and downs True/False Question In macro economic analysis the behavior of economic agents such as firms, households and government is seen in total, disregarding details at particular level Correct Answer True Your Answer True Multiple Choice Single Answer Question Market economy or private enterprise economy is a economy which is Correct Answer planless Your Answer planned Multiple Choice Single Answer Question New commodities due to technotogical progress may result in demand for traditional type of goods

Correct Answer decrease Your Answer decrease Multiple Choice Single Answer Question If a person is habituated to the consumption of a commodity and if he cannot easily give up its use, demand for it is generally Correct Answer inelastic Your Answer inelastic Match The Following Question Correct Answer Your Answer Normal demand curve Downwards to right Downwards to right Income consumption curve Upwards to the right Upwards to the right Inelastic demand curve Vertical straight line Vertical straight line Cross elasticity of demand between two perfect substitute will be Infinity Infinity A demand curve, which takes the form of a horizontal line parallelto the quantity axis illustrates elasticity Infinity. Infinity. Multiple Choice Single Answer Question The law of diminishing returns is applicable to agriculture provided the state of technology is given and Correct Answer constant Your Answer resources Multiple Choice Single Answer Question

Under the system of dual prices in case of essential goods, adopted by the government, the weaker sections of the community are supplied these goods through fair price shops whi Correct Answer fair Your Answer neo rich Multiple Choice Single Answer Question The Government attempts to increase supplies of food grains and other essential goods in times of internal shortage through larger Correct Answer imports Your Answer borrowings True/False Question External economies are the advantages of large scale production enjoyed exclusively an individual firm alone. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Equilibrium is Correct Answer The stage of maximum satisfaction , The stage of balance , The stage of stationary Your Answer The stage of balance Multiple Choice Multiple Answer Question Conditions of equilibrium Correct Answer Marginal Revenue should be equal to Marginal Cost , The Marginal cost curve should cut the marginal revenue curve from below at the equilibrium point , Marginal cost curve should be increasing at equilibrium point Your Answer Marginal Revenue should be equal to Marginal Cost , The Marginal cost curve should cut the marginal revenue curve from below at the equilibrium point , Average cost curve should cut the Average Revenue curve

Select The Blank Question Cost-benefit analysis refers to the analysis undertaken to judge any projects ________ whether government or private and find out its ________ and facilities its comparison with other available oppor Correct Answer investments Your Answer investments Correct Answer worth Your Answer profit Multiple Choice Multiple Answer Question Aggregate supply function Correct Answer Refers to that price at which the seller is willing to supply , Refers to show the varying level of supply at different prices , Explains the level of out put varies with the level of employment Your Answer Refers to show the varying level of supply at different prices Multiple Choice Multiple Answer Question Characteristics of Depression Correct Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly Your Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly Multiple Choice Multiple Answer Question Recession includes Correct Answer The demand is halted , Increase in production of goods , Inventories piling up in stocks Your Answer The demand is halted , Inventories piling up in stocks , The growth of discrepancy between supply and demand is very fast Multiple Choice Multiple Answer Question The causes of inflation

Correct Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand Your Answer Increase in public expenditure , Increase in foreign demand , Increase in taxation Select The Blank Question In the ________ terminology, the ________ demand function refers to the schedule of maximum sales proceeds, which the entrepreneurial community actually does expect to be received from the sale of Correct Answer Keynesian Your Answer Keynesian Correct Answer aggregate Your Answer total Select The Blank Question The rate of interest, according to ________ , depends upon two factors: (i) ________ and (ii) the quantity of money Correct Answer Keynes Your Answer Keynes Correct Answer the liquidity preference function Your Answer speculative Multiple Choice Multiple Answer Question Reasons for need of public distribution system Correct Answer To maintain stable price conditions , An efficient management of the supply , To supply the necessary goods to people at reasonable price Your Answer To maintain stable price conditions , An efficient management of the supply , To supply the necessary goods to people at reasonable price Multiple Choice Multiple Answer Question The consumer protection Act includes

Correct Answer Protection from hazardous commodities , Right to a competitive price , Right to information regarding protection Your Answer Protection from hazardous commodities , Right to information regarding protection , Protest against price discrimination Multiple Choice Multiple Answer Question Objectives of economic policy Correct Answer To increase the efficiency and international competitiveness of industrial production , To improve the performance and rationalize the scope of the public sector , To reform and modernize the financial sector Your Answer To increase the efficiency and international competitiveness of industrial production , To improve the performance and rationalize the scope of the public sector , To reform and modernize the financial sector Multiple Choice Multiple Answer Question Scope of Managerial Economics deals with: Correct Answer Demand analysis and forecasting. , Production function & cost analysis. , Inventory management adverting, price system. Your Answer Demand analysis and forecasting. , Production function & cost analysis. , Inventory management adverting, price system. Multiple Choice Multiple Answer Question Assumptions of the Law of Demand are: Correct Answer No change in consumers income , No change in consumers preferences , No change in fashion Your Answer No change in consumers income , No change in consumers preferences , No change in fashion , No Change in government policy. Multiple Choice Multiple Answer Question Types of income elasticity of demand Correct Answer Negative income elasticity , Zero income elasticity , Unit income elasticity Your Answer Negative income elasticity , Zero income elasticity , Unit income elasticity

Select The Blank Question Managerial ________s generally refers to the integration of economic theory with ________ practice. Correct Answer economic Your Answer economic Correct Answer business Your Answer business Select The Blank Question The problem of unlimited wants and limited ________ with ________ uses has been forever confronting mankind. Correct Answer means Your Answer means Correct Answer alternative Your Answer alternative Select The Blank Question As per the International Labour Organisation (ILO), _ ________ is a ________ association of individuals with limited income on the basis of equal rights and responsibilities for achieving certa Correct Answer Co-operation Your Answer Co-operation Correct Answer voluntary Your Answer voluntary Select The Blank Question Like all organism, the ________ , too is an organism, according to the ________ theory. Correct Answer firm Your Answer

firm Correct Answer life-cycle theory Your Answer homeostatic theory Select The Blank Question The ________-taking theory was developed by the ________ . According to him, profit arises because considerable amount of risk is involved in business. Correct Answer American economist Hawley Your Answer risk Correct Answer risk Your Answer American economist Hawley Select The Blank Question The extent of the change of demand for a commodity to a given change in ________ , other demand determinants remaining constant, is termed as the ________ of demand. Correct Answer price Your Answer price Correct Answer price elasticity Your Answer price elasticity Select The Blank Question Indices constructed for one ________ should not be ________ for other purposes where they not be fully appropriate and given erroneous conclusions. Correct Answer purpose Your Answer purpose Correct Answer used Your Answer used

Select The Blank Question The law of diminishing returns states that, as the proportion of one factor in a combination of factors is ________ after a point, first the ________ and then the average product of that factor w Correct Answer increased Your Answer increased Correct Answer marginal Your Answer marginal Match The Following Question Correct Answer Your Answer Statutory Reserve Ratio Quantitative credit Control Measure Quantitative credit Control Measure Trade cycle Wave like movement Wave like movement Keynesian theory Short Period Analysis J. M. Keynes Aggregate Demand Function Maximum sale proceeds expected by entrepreneurs Short Period Analysis Effective Demand J. M. Keynes Maximum sale proceeds expected by entrepreneurs

Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice

Your Answer Practice Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer sufficient Multiple Choice Single Answer Question All the buyers and sellers operating under perfect competition have knowledge Correct Answer perfect Your Answer perfect True/False Question Inflation reduces the purchasing power of money and savings. Correct Answer True Your Answer False Multiple Choice Single Answer Question The supply curve during market period is perfectly Correct Answer inelastic Your Answer inelastic True/False Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce Correct Answer True Your Answer True

Match The Following Question Correct Answer Your Answer Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce goods and services Commodities goods and services scarce Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes True/False Question The price policy under monopolistic competition is dependent on the prices charged by other rival firms Correct Answer True Your Answer False Multiple Choice Single Answer Question All firms producing the same or similar product together make Correct Answer an industry Your Answer an industry Multiple Choice Single Answer Question Joint Stock Company succession is Correct Answer perpetual Your Answer perpetual

True/False Question Private profit motive is an essential feature of Capitalism Correct Answer True Your Answer True True/False Question Free riders is a term associated with the people who would like to have benefit of a good without sharing the cost of its supply Correct Answer True Your Answer False Multiple Choice Single Answer Question Macro economics provides an exploration to the functioning of an economy in Correct Answer general Your Answer general True/False Question Inflation is a great opportunity for merchants to benefit more. Correct Answer True Your Answer True True/False Question The various phases of business cycles are shown by the line of cycle which moves up and down the steady growth line Correct Answer True Your Answer True True/False Question In the measurement of profit, the differences in the concept of profit arise out of the differences in cost concepts

Correct Answer True Your Answer False Multiple Choice Single Answer Question In economics demand means desire backed by adequate Correct Answer purchasing power Your Answer ability to pay Multiple Choice Single Answer Question The law of diminishing returns is applicable to agriculture provided the state of technology is given and Correct Answer constant Your Answer constant Multiple Choice Single Answer Question Under the monetary measures to control inflation, the R. B. I relies heavily on selective credit controls on bank loans against food grains, sugar, oils, oilseeds, cotton etc so as to discourage Correct Answer Speculative hoarding Your Answer Speculative hoarding Multiple Choice Single Answer Question Slope of supply curve is Correct Answer positive Your Answer positive Multiple Choice Single Answer Question Costs which increase because of the expansion of a firm are called costs Correct Answer incremental

Your Answer incremental True/False Question The opportunity cost of a product is the opportunity gained of being able to produce some other product. Correct Answer False Your Answer False True/False Question The supply curve in case of unitary elastic supply is rectangular hyperbola. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question An Industry Correct Answer Is a group of firms , All firms dealing in the same line of business , The ownership and management of each firm is different Your Answer Is a group of firms , All firms dealing in the same line of business , The ownership and management of each firm is different Select The Blank Question Under monopoly, there is ________ seller who controls the entire ________ in the market Correct Answer only one Your Answer only one Correct Answer supply Your Answer supply Select The Blank Question Under monopsony, there are ________ sellers but ________ buyer

Correct Answer many Your Answer many Correct Answer only one Your Answer only one Match The Following Question Correct Answer Your Answer Marginal utility Addition to total utility Addition to total utility Total utility increases marginal Posative and declining Marginal utility is zero At the saturation point for a commodity x the Mux is Zero Demand curve of a commodity Marginal utilities are Demand curve of a commodity Posative and declining Total utility is Marginal utility is zero Zero Select The Blank Question By using cost-benefit analysis we can show the ________ necessary for attaining maximum ________ and optimal policy aiming at this goal Correct Answer measures Your Answer Gross Domestic Product Correct Answer net wealth Your Answer gross wealth Multiple Choice Multiple Answer Question Average propensity to consume Correct Answer

It is defined as the ratio of consumption expenditure to any particular level of income , It is found by dividing consumption expenditure by income , It is expressed as the percentage of income consumed Your Answer It is derived by dividing income by consumption expenditure Multiple Choice Multiple Answer Question Inflation means Correct Answer It is a phenomenon of rising prices , It is a general and dynamic phenomenon , It includes an excess of demand Your Answer It is a phenomenon of rising prices Select The Blank Question Aggregate supply function refers to a ________ of the various minimum amounts of proceeds or ________ , which must be expected to be received by the entrepreneur class from the sale of output result Correct Answer schedule Your Answer demand Correct Answer revenues Your Answer revenues Select The Blank Question In the ________ terminology, the ________ demand function refers to the schedule of maximum sales proceeds, which the entrepreneurial community actually does expect to be received from the sale of Correct Answer Keynesian Your Answer Keynesian Correct Answer aggregate Your Answer aggregate Multiple Choice Multiple Answer Question The fiscal policy includes

Correct Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Your Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Multiple Choice Multiple Answer Question The meaning of monetary policy Correct Answer It is programme of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability Your Answer It is programme of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability Multiple Choice Multiple Answer Question Causes for rise in prices in India Correct Answer Mounting government expenditure , Deficit financing and increase in money supply , Role of black money Your Answer Mounting government expenditure , Deficit financing and increase in money supply , Role of black money Multiple Choice Multiple Answer Question Managerial economics deals with Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics. , The use of economic modes of thought to analyze business solution. Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics. Multiple Choice Multiple Answer Question The sources of economic problems are: Correct Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited. , These resources are not specific but have alternative uses. Your Answer

Man has unlimited wants or ends , The means or resources to satisfy them are limited. , These resources are not specific but have alternative uses. Multiple Choice Multiple Answer Question Different types of business organizations are; Correct Answer Private sector. , Public sector. , Joint sector. Your Answer Joint sector. Multiple Choice Multiple Answer Question Proprietary firm is Correct Answer Owned by a single person. , Easy to form. , An organization of single person. Your Answer Owned by a single person. Multiple Choice Multiple Answer Question Methods of measurement of elasticity Correct Answer Percentage Method , Point elasticity Method , Total outlay expenditure method Your Answer Percentage Method , Point elasticity Method , Total outlay expenditure method Multiple Choice Multiple Answer Question Demand forecasts are necessary for: Correct Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms Your Answer Preparation of a budget , Expansion of firms Select The Blank Question Economic theory provides the basis for the ________ _ making process, there is some difference between the generalization based on abstraction and actual practices. Besides economic theory, mat Correct Answer decision making Your Answer optimal Correct Answer

statistics Your Answer Select The Blank Question The resources of a society consist not only of the free gifts of nature such as ________ but also of ________ and of all sorts of man made aids to further production. Correct Answer land and minerals Your Answer land and minerals Correct Answer human capacity Your Answer human capacity Select The Blank Question Individual or sole ________ , which is also called sole- ________ , or single entrepreneurship is the most common, the simplest and the oldest form of business organisation. Correct Answer proprietorship Your Answer proprietorship Correct Answer trader ship Your Answer trader ship Select The Blank Question Nominal cost is the ________ cost of production, it is also called expenses of production. The real cost is the ________ cost of production. Correct Answer money Your Answer opportunity Correct Answer opportunity Your Answer gross Select The Blank Question Costs may be classified as : (a) ________ , including material costs, wage cost and

interest cost (b) ________ , including costs of advertising and (c) other costs, including insurance ch Correct Answer Production costs Your Answer Production costs Correct Answer Selling costs Your Answer Selling costs Select The Blank Question The costs of self owned resources, which are employed by the ________ , are nonexpenditure or , ________ Correct Answer firm Your Answer firm Correct Answer implicit costs . Your Answer implicit costs .

Multiple Choice Single Answer Question The study of the working and allocation of resources in the free market economies is the topic in the Correct Answer theory of price Your Answer theory of production Multiple Choice Single Answer Question Managerial economics aims at providing help in the firms is Correct Answer decision making Your Answer decision making True/False Question The federal government of U.S.A. does not face the basic economic problem.

Correct Answer False Your Answer False Multiple Choice Single Answer Question In equilibrium analysis of a firm, it is assumed that every individual proprietor exhibits rational economic Correct Answer behavior Your Answer behavior Match The Following Question Correct Answer Your Answer Managerial Economics Prescriptive in nature The theory of distribution Resources Alternative uses Alternative uses Division of societys output of goods and services The theory of distribution Prescriptive in nature Motor cars Tangible goods Tangible goods Wants Insatiable Insatiable True/False Question Market price fluctuates very often Correct Answer True Your Answer False Multiple Choice Single Answer Question The firm is the unit that makes the decisions regarding employment of and the output of commodities are

Correct Answer factors of production Your Answer factors of production Multiple Choice Single Answer Question The principle of exclusion cannot be applied to the goods which are Correct Answer indivisible Your Answer invisible Multiple Choice Single Answer Question In the cost benefit analysis, the firm step involved is that the investor has to choose a few project alternatives promising a rate of return which is Correct Answer high Your Answer high Multiple Choice Single Answer Question Market system of economy is characterized by consumers Correct Answer sovereignty Your Answer demand Multiple Choice Single Answer Question In case of a joint stock company, the liability of share holders is Correct Answer limited Your Answer limited True/False Question The divisible goods, whose benefits can be priced, are called pure public goods Correct Answer False Your Answer True

True/False Question In case of a proprietary firm the liability of the proprietor is limited Correct Answer False Your Answer False True/False Question During the phase of depression, the level of national income and expenditure rises rapidly Correct Answer False Your Answer False Multiple Choice Single Answer Question According J.B.Clark, profit is the reward paid for Correct Answer dynamism Your Answer risk bearing Multiple Choice Single Answer Question Gross profit is the excess of total revenue of a firm over total Correct Answer expenditure Your Answer expenditure Multiple Choice Single Answer Question In general, the demand for necessaries is relatively Correct Answer inelastic Your Answer elastic True/False Question Demand for food grains is inelastic but the demand for wheat is elastic. Correct Answer True

Your Answer False Match The Following Question Correct Answer Your Answer Excess supply can be defined as Quantity supplied minus quantity demanded Quantity supplied minus quantity demanded If demand remain unchanged on increase in supply will result in A rise in equilibrium quantity The supply is perfectly elastic Market Price is a situation which The supply is perfectly elastic A rise in equilibrium quantity The responsiveness of demand to change in price is measured Elasticity of demand In the same proportion Unit income elasticity implies that asincome rises demand for a commodity rises In the same proportion Elasticity of demand Select The Blank Question Greater scope for the ________ sector may mean incremental ________ , which connotes the expansion of public sector undertakings, can be left to some private companies Correct Answer private Your Answer investment Correct Answer disinvestments Your Answer growth Multiple Choice Single Answer Question Goods produced on small scale of supply is Correct Answer inelastic Your Answer zero elastic True/False Question

The sum of total fixed costs and total variable costs is the total cost. Correct Answer True Your Answer True True/False Question Contraction of supply is traced by the downward movement on the supply curve. Correct Answer True Your Answer True True/False Question The laws of returns to scale explain the behavior of output in response to changes in scale. Correct Answer True Your Answer True True/False Question In the stage I of the law of diminishing returns, the marginal product goes on increasing Correct Answer True Your Answer False Multiple Choice Multiple Answer Question Features of monopolistic Competition Correct Answer Fairly Large number of firms , Product differentiation , Selling costs are existed Your Answer Fairly Large number of firms , Product differentiation , Selling costs are existed Select The Blank Question Where ________ is charging a ________ in the home market and a lower price in the international market, it is called Dumping Correct Answer monopolist Your Answer

a firm Correct Answer higher price Your Answer higher price Select The Blank Question The number of sellers operating under this type of competition is ________ under oligopoly, but less than under ________ Correct Answer larger than Your Answer complementary Correct Answer perfect ompetition Your Answer perfect ompetition Multiple Choice Multiple Answer Question Marginal Propensity to consume Correct Answer It is defined as the ratio of the change in consumption to the change in income , It is rate of change in the average propensity to consume as income changes , It is derived by the formula mpc= change in C/change in Y Your Answer It is defined as the ratio of the change in consumption to the change in income , It is derived by the formula mpc= change in C/change in Y , It is derived by dividing the change in income by change in the consumption expenditure Multiple Choice Multiple Answer Question Investment Correct Answer It adds to capital equipments , It leads to increase in level of income , It includes new plant and equipment Your Answer It adds to capital equipments , It leads to increase in level of income , It includes new plant and equipment Multiple Choice Multiple Answer Question Features of stage of expansion in business cycle are Correct Answer Rise in national output , Rise in consumer and capital expenditure , Bank advances grow

rapidly Your Answer Rise in national output , Rise in consumer and capital expenditure , Bank advances grow rapidly Multiple Choice Multiple Answer Question Characteristics of Depression Correct Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly Your Answer Decrease in economic activities , The growth rate becomes negative Multiple Choice Multiple Answer Question Recession includes Correct Answer The demand is halted , Increase in production of goods , Inventories piling up in stocks Your Answer The demand is halted , Inventories piling up in stocks Multiple Choice Multiple Answer Question The causes of inflation Correct Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand Your Answer Increase in public expenditure , Increase in foreign demand , Increase in taxation Select The Blank Question The rate of interest, according to ________ , depends upon two factors: (i) ________ and (ii) the quantity of money Correct Answer Keynes Your Answer Keynes Correct Answer the liquidity preference function Your Answer the liquidity preference function Select The Blank Question

In the words of ________ , inflation occurs when the ________ of prices and cost is rising. Correct Answer Prof. Samuelson Your Answer Prof. Samuelson Correct Answer general level Your Answer general level Multiple Choice Multiple Answer Question Forms of Public Enterprises Correct Answer Public Corporations , Departmental management , Company Management or management by boards Your Answer Departmental management , Public Corporations Multiple Choice Multiple Answer Question Specific organizational goals of Firms are: Correct Answer Maximisation of profit , Reasonable Profit Target , Sales revenue Maximization Your Answer Maximisation of profit , Reasonable Profit Target , Sales revenue Maximization Multiple Choice Multiple Answer Question Individual Demand Schedule: Correct Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Your Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Multiple Choice Multiple Answer Question The production function can be explained by: Correct Answer Law of variable proportions , Laws of returns to scale , Optimum combinations of inputs Your Answer Law of variable proportions , Laws of returns to scale , Optimum combinations of inputs

Multiple Choice Multiple Answer Question Implicit costs are: Correct Answer Cost on self owned resources , Costs of salary of the proprietor , Interest on the entrepreneurs own investment Your Answer Cost on self owned resources , Interest on the entrepreneurs own investment Select The Blank Question Managerial ________s generally refers to the integration of economic theory with ________ practice. Correct Answer economic Your Answer economic Correct Answer business Your Answer business Select The Blank Question In a competitive industry, there is a large number of firms so that the action of ________ firm has ________ on the price and output of the whole industry. Correct Answer a single Your Answer a single Correct Answer no effect Your Answer no effect Select The Blank Question As per the International Labour Organisation (ILO), _ ________ is a ________ association of individuals with limited income on the basis of equal rights and responsibilities for achieving certa Correct Answer Co-operation Your Answer Co-operation Correct Answer voluntary

Your Answer voluntary Select The Blank Question The word ________ has different meanings to businessmen, ________ , tax collectors, workers and economists and it is often used in a loose sense that buries its real significance Correct Answer Profit Your Answer Profit Correct Answer accountants Your Answer accountants Select The Blank Question The demand curve is ________ representation of a demand schedule, demand curve slopes ________ ward from left to right. Correct Answer graphical Your Answer graphical Correct Answer down Your Answer down Select The Blank Question The ________ that is ________ is the opportunity cost of the commodity produced. Correct Answer sacrificed Your Answer commodity Correct Answer commodity Your Answer sacrificed

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Single Answer Question Pure public goods are subject to the law of decreasing average cost, because of the Correct Answer economies of scale Your Answer economies of scale Multiple Choice Single Answer Question In the cost benefit analysis, after formulating various alternative project capacity, each of them has to be examined in terms of its Correct Answer feasibility Your Answer feasibility True/False Question Bargaining is one of the remedies of corrective action. Correct Answer False Your Answer True Match The Following Question Correct Answer Your Answer Defence service Indivisible Indivisible Economic effects of public goods are Spill over effect Spill over effect Selection or implementation Step of cost benefit analysis Step of cost benefit analysis Production possibility frontier Maximization of output Maximization of output Multiple Choice Multiple Answer Question The advantage of cost-benefit analysis are Correct Answer Maximization of social welfare , Objective measurement of the tradeoff , Maximization of difference between total benefits & total costs Your Answer Maximization of social welfare , Objective measurement of the trade-off , Maximization of difference between total benefits & total costs Multiple Choice Multiple Answer Question The term externalities may also be referred as: Correct Answer Spill-over effects , Neighborhood effects , Third party effects Your Answer Spill-over effects , Neighborhood effects , Third party effects Select The Blank Question Modern economists treat social cost and benefits as ________ of private investment and production decisions. Correct Answer externalities Your Answer disadvantages

Select The Blank Question Economists like A.C.Harberger have shown that the cost benefit analysis can be applied to ________ analysis. Correct Answer general equilibrium Your Answer general equilibrium Select The Blank Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally. Correct Answer management Your Answer management Select The Blank Question Prof. Sam Nelson calls risks from unsafe factories or nuclear power plants as ________ economies. Correct Answer negative Your Answer hazardous Multiple Choice Single Answer Question According to Lionel Robbins, Economics is a science which studies Correct Answer human behavior Your Answer social behavior Multiple Choice Single Answer Question Question related to the efficient production and allocation belong to the branch of economic theory called Correct Answer Welfare Economics Your Answer Business Economics Multiple Choice Multiple Answer Question Managerial economics deals with Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution Multiple Choice Single Answer Question The public sector is owned & controlled by Correct Answer state enterprises Your Answer state enterprises Select The Blank Question Reasonable profit target as an alternative to the objective of profit maximization

was suggested by ________. Correct Answer Joel Dean Your Answer Joel Dean Select The Blank Question Homeostatic Approach as an alternative objective of firms was suggested by ________. Correct Answer Prof. Kenneth Boulding Your Answer Prof. Kenneth Boulding Select The Blank Question The form of organization which is best for self employment is ________. Correct Answer Sole trader Your Answer Sole trader True/False Question Accounting profit takes in to account opportunity cost. Correct Answer False Your Answer False Multiple Choice Single Answer Question Complementary goods are demanded Correct Answer jointly Your Answer jointly Multiple Choice Single Answer Question If the substitutes are relatively costly then the demand for the commodity in question will be Correct Answer more Your Answer same True/False Question There are no real exceptions to the law of demand Correct Answer False Your Answer False True/False Question Demand curve slopes downwards from left to right. Correct Answer True Your Answer True Select The Blank Question An upward sloping demand curve is called ________ Correct Answer exceptional demand curve Your Answer exceptional demand curve

Select The Blank Question Goods which are paradoxical to the law of demand are ________ Correct Answer Giffen goods, , Your Answer Giffen goods, , Match The Following Question Correct Answer Your Answer Normally the isoquant slopes upward from right to left. downward from right to left Any straight line supply curve which cuts y axis will have zero elasticity of supply. perfectly elastic The market period supply curve for perishable commodities is perfectly inelastic. perfectly inelastic. A rightwards shift in supply schedule indicates an increase in supply. an increase in supply. Multiple Choice Multiple Answer Question Explicit costs are Correct Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Your Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Select The Blank Question Output rises in a lesser proportion to that of the increase in input, under the case of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale Select The Blank Question The cost which enter the accounts book of the firm are referred as ________. Correct Answer Accounting cost Your Answer Accounting cost Multiple Choice Single Answer Question Jevons , the economists who defined the term market different from that of the traditional sense is an Correct Answer English economists Your Answer English economists Multiple Choice Single Answer Question Economists have pointed out that the real world is full of

Correct Answer Imperfect competition Your Answer Imperfect competition True/False Question A firm under perfect competition is a price maker. Correct Answer False Your Answer False True/False Question Under perfect competition single seller can influence the price. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Types of imperfect competition are Correct Answer Monopoly , Duopoly , Oligopoly Your Answer Monopoly , Duopoly , Oligopoly Multiple Choice Multiple Answer Question Features of Pure Competition are Correct Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Your Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Multiple Choice Multiple Answer Question Equilibrium is the stage of Correct Answer maximum satisfaction , balance , stationary Your Answer maximum satisfaction , balance Multiple Choice Single Answer Question Inflation is a phenomena in which prices Correct Answer rise Your Answer rise Multiple Choice Single Answer Question True inflation starts only after reaching the level of full Correct Answer Employment Your Answer Employment True/False Question During inflation, the pensioners whose income is permanently fixed, are substantially benefited. Correct Answer False Your Answer False

True/False Question Saving is a private virtue Correct Answer True Your Answer True Multiple Choice Multiple Answer Question According to Keynes, Aggregate supply function refers to Correct Answer the minimum price of revenue which the entrepreneurs must get , Associated with different levels of employment , Explains that the level of out put varies with the level of employment Your Answer the minimum price of revenue which the entrepreneurs must get , Associated with different levels of employment , Explains that the level of out put varies with the level of employment Multiple Choice Multiple Answer Question Marginal Propensity to consume is characterized as follows Correct Answer It is defined as the ratio of the change in consumption to the change in income , It is rate of change in the average propensity to consume as income changes , It is derived by the formula mpc= change in c/change in y Your Answer It is rate of change in the average propensity to consume as income changes , It is derived by the formula mpc= change in c/change in y , It is derived by dividing the change in income by change in the consumption expenditure Multiple Choice Single Answer Question During the period of depression various factors of production are Correct Answer exhausted Your Answer unutilized True/False Question In general SBI uses its monetary policy to achieve a judicious balance between the growth of production and control of the general price level. Correct Answer False Your Answer False True/False Question Public enterprises have shown a very high rate of return of the capital invested Correct Answer False Your Answer False Multiple Choice Multiple Answer Question The meaning of monetary policy is Correct Answer It is programmed of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability Your Answer It is programmed of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability

Multiple Choice Multiple Answer Question Main aims of the New Industrial Policy (1991) are Correct Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Your Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Multiple Choice Multiple Answer Question Objectives of economic policy are Correct Answer To increase the efficiency and international competitiveness of industrial production , To improve the performance and rationalize the scope of the public sector , To reform and modernize the financial sector Your Answer To increase the efficiency and international competitiveness of industrial production , To improve the performance and rationalize the scope of the public sector , To reform and modernize the financial sector

LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question A supply schedule is a graphical presentation of supply patterns. Correct Answer False Your Answer True True/False Question The subject matter of macro economics includes the theory of income and employment at an individual level. Correct Answer False Your Answer False Select The Blank Question When demand for the product increases in the same proportion in which income increases, Income elasticity of demand will be equal to________

Correct Answer unity Your Answer unity Multiple Choice Multiple Answer Question Features of stage of expansion in business cycle are Correct Answer Rise in national output , Rise in consumer and capital expenditure , Bank advances grow rapidly Your Answer Rise in national output , Rise in consumer and capital expenditure , Bank advances grow rapidly Multiple Choice Multiple Answer Question Explicit costs are Correct Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Your Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Multiple Choice Single Answer Question Demand for products like tea, betel, tobacoo, sigaratte is a matter of Correct Answer habit Your Answer habit Multiple Choice Single Answer Question If the substitutes are relatively cheaper then the demand for the commodity in question will be Correct Answer less Your Answer less Multiple Choice Single Answer Question An assembly of several machines, linked together either physically or by processes, capable of producing a given quantity of a product per day is Correct Answer plant

Your Answer plant Multiple Choice Single Answer Question The Risk Taking Theory was developed by Hawley, who was an Correct Answer American Economist Your Answer American Economist Select The Blank Question The cost which enter the accounts book of the firm are referred as ________. Correct Answer Accounting cost Your Answer Accounting cost Select The Blank Question The persons who own the ________hip concern are called Partners. Correct Answer Partners Your Answer Partners Select The Blank Question Perfectly elastic demand curve is ________ Correct Answer horizontal Your Answer horizontal Select The Blank Question While discussing the product divisibility of public and private goods, the principle of ________ may be applied in case of only those people who do not agree to pay or who cannot pay the market price Correct Answer exclusion Your Answer exclusion

Multiple Choice Multiple Answer Question Features of the firm are Correct Answer It is a business unit organized under one ownership , It is a sole proprietorship , It is a partnership or joint stock company Your Answer It is a business unit organized under one ownership , It is a sole proprietorship , It is a partnership or joint stock company Multiple Choice Multiple Answer Question The causes of inflation are Correct Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand Your Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand True/False Question Inflation is a great opportunity for merchants to earn more profit. Correct Answer True Your Answer True Match The Following Question Correct Answer Your Answer Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce scarce Commodities

goods and services goods and services Multiple Choice Multiple Answer Question The advantage of cost-benefit analysis are Correct Answer Maximization of social welfare , Objective measurement of the trade-off , Maximization of difference between total benefits & total costs Your Answer Maximization of social welfare , Objective measurement of the trade-off , Maximization of difference between total benefits & total costs Select The Blank Question Sole Proprietorship which is also called sole ________ Correct Answer tradership Your Answer tradership True/False Question A plant is an economic unit which takes various decisions related to production and distribution. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Features of an Industry are Correct Answer All firms dealing in the same line of business , The ownership and management of each firm is different , Is a group of firms Your Answer All firms dealing in the same line of business , The ownership and management of each firm is different , Is a group of firms Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice

Your Answer Practice True/False Question During recession, on account of decline in investment by producers, there is decline in income and consumption. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The fiscal policy includes Correct Answer Monitoring of public expenditure , Formation of taxation policy , It is an instrument for economic stabilization Your Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Multiple Choice Single Answer Question Forecasts made either through experience or through methodigistic are Correct Answer statistical Your Answer statistical Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Select The Blank Question The externality which causes an economic gain or an economic loss to other economic units is also referred to as ________ externality. Correct Answer Pecuniary Your Answer Social

Multiple Choice Single Answer Question According to Prof. F.H. Knight, profit is a reward for Correct Answer uncertainty bearing Your Answer uncertainty bearing Multiple Choice Single Answer Question The principle of full employment equilibrium was stated by Correct Answer Says Law of Market Your Answer Law of Demand Multiple Choice Multiple Answer Question Phases of business cycle Correct Answer Expansion , Peak , Recession Your Answer Expansion , Peak , Recession , Trough True/False Question In case of a Joint Stock Company the liability of the share holders is unlimited. Correct Answer False Your Answer False Multiple Choice Single Answer Question Goods which are completely divisible and to them the principle of exclusion applies in full measure, are called Correct Answer Pure public goods Your Answer Private goods Multiple Choice Multiple Answer Question Assumptions underlying the law of Supply are Correct Answer The cost of production is unchanged , No change in technique of production ,

Government policies are unchanged Your Answer The cost of production is unchanged , No change in technique of production , Government policies are unchanged Multiple Choice Multiple Answer Question The payments made out of the Gross Profit are Correct Answer Remuneration to factors of production , Depreciation , Maintenance Charges Your Answer Remuneration to factors of production , Depreciation , Maintenance Charges Select The Blank Question The indivisible goods to which the principle exclusion does not apply are called ________ goods. Correct Answer pure public Your Answer pure public True/False Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce? Correct Answer False Your Answer True Multiple Choice Single Answer Question Gross profit is the excess of total revenue of a firm over total Correct Answer expenditure Your Answer expenditure True/False Question During period of depression various factors of production lie unutilized. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question Co-operative organizations is Correct Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members Your Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members , non profit motive organization Multiple Choice Single Answer Question Macro economics is the study of the Correct Answer aggregate behavior of economy Your Answer aggregate behavior of economy True/False Question To solve the unemployment problem, the level of effective demand must decrease. Correct Answer False Your Answer False Multiple Choice Single Answer Question The public sector is owned & controlled by Correct Answer state enterprises Your Answer state enterprises Select The Blank Question Demand for safety pins is ________ Correct Answer inelastic Your Answer relatively inelastic Multiple Choice Single Answer Question Under perfect competition, generally demand and supply act and react upon each other and determine the price

Correct Answer equilibrium Your Answer equilibrium True/False Question During the period of recession there is increase in incomes of wage and interest earners. Correct Answer False Your Answer False Select The Blank Question In a market economy ________ is the best judge of personal interest. Correct Answer individual Your Answer firm

LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question A monopolist in a price maker. Correct Answer True Your Answer True Multiple Choice Single Answer Question The city of Faridabad has specialized in the manufacture of Correct Answer bangles Your Answer bangles Multiple Choice Multiple Answer Question Demand is determined by Correct Answer Price of the product , Relative prices of other goods , Tastes and habits

Your Answer Price of the product , Relative prices of other goods , Tastes and habits Multiple Choice Multiple Answer Question Baumol has pointed out three main contributions of economic theory. They are Correct Answer Economic theory offers clarity to various concepts used in the business anlayses , Economic theory contributes in building anlyatical model to rocognize managerial problems , Economic theory contributes to ,a set of analytical methods which enhance the analytical capabilities of business analyasis Your Answer Economic theory offers clarity to various concepts used in the business anlayses , Economic theory contributes in building anlyatical model to rocognize managerial problems , Economic theory contributes to ,a set of analytical methods which enhance the analytical capabilities of business analyasis True/False Question In case of indivisible goods, which are not priced, the decisions regarding their demand preferences are taken through price mechanism. Correct Answer False Your Answer True True/False Question A shift in the demand curve to the left shows increase in demand. Correct Answer False Your Answer True Multiple Choice Single Answer Question The act of making goods and services is called Correct Answer production Your Answer production Multiple Choice Single Answer Question With decline in price of a commodity, total expenditure spent on the commodity is less than before, then elasticity of demand for the commodity is

Correct Answer <1 Your Answer <1 Match The Following Question Correct Answer Your Answer N.G.O.S Voluntary social work Voluntary social work Sole proprietorship Unlimited liability Unlimited liability Preference shares Fixed rate of dividend Fixed rate of dividend Public enterprises State control State control True/False Question Pure private goods are completely divisible and to them the principle of exclusion applies in full measure. Correct Answer True Your Answer True Multiple Choice Single Answer Question The act of using goods and services to satisfy wants is called Correct Answer consumption Your Answer consumption True/False Question External economies are the advantages of large scale production enjoyed exclusively an individual firm alone. Correct Answer False

Your Answer True Multiple Choice Single Answer Question Market mechanism is characterized by Correct Answer instability Your Answer stability Multiple Choice Multiple Answer Question Features of Pure Competition are Correct Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Your Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Multiple Choice Single Answer Question The things that are produced by factors of production are called Correct Answer commodities Your Answer free goods True/False Question Generally, the larger the income of a consumer, his demand for overall commodities tends to be relatively elastic. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question The production function studies Correct Answer Input and out put relation , Factors of production and final production , Technology used in production Your Answer

Input and out put relation , Factors of production and final production , Demand for production Select The Blank Question The externality which causes an economic gain or an economic loss to other economic units is also referred to as ________ externality. Correct Answer Pecuniary Your Answer Social Select The Blank Question The index numbers which are compiled to measure the changes in retail prices of various commodities refers to ________ Correct Answer Retail prices index Your Answer Retail prices index Select The Blank Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally. Correct Answer management Your Answer management Select The Blank Question The minimum number of directors which private limited should have is ________. Correct Answer 2 Your Answer 2 Select The Blank Question In a market economy ________ is the best judge of personal interest. Correct Answer individual Your Answer individual

Multiple Choice Single Answer Question The concept of just distribution of national product is a Correct Answer normative Your Answer neutral True/False Question Supply management is related to the volume ofsupply & its distribution system. Correct Answer True Your Answer True Multiple Choice Single Answer Question The type economic problem is Correct Answer universal Your Answer universal Multiple Choice Single Answer Question Under monopoly entry of new firms is Correct Answer prohibited Your Answer prohibited Multiple Choice Multiple Answer Question Specific organizational goals of Firms are Correct Answer maximization of profit , reasonable profit target , sales revenue maximization Your Answer maximization of profit , sales revenue maximization , to cover risk and uncertainty Multiple Choice Multiple Answer Question Government intervention is needed in free market mechanism to Correct Answer To provide employment to all who willing to work at prevailing wage rate , Factors of production are optimally allocated between the various industries , All will get sufficient

income to meet their basic needs Your Answer To provide employment to all who willing to work at prevailing wage rate , Factors of production are optimally allocated between the various industries , Control the market mechanism by charging license fees, commissions, etc Multiple Choice Single Answer Question The firm is a center, where all the decisions are taken about Correct Answer production Your Answer production Multiple Choice Single Answer Question Under the imperfect market, the market in which few firms exists is called as Correct Answer Oligopoly Your Answer Oligopoly True/False Question There are no real exceptions to the law of demand Correct Answer False Your Answer False Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer insufficient True/False Question The prosperity phase is characterized by rise in the level of employment. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question The characteristics of a sole proprietorship firm is Correct Answer Unlimited Capital , Ownership by a single person , Easy to form Your Answer Ownership by a single person , Easy to form Select The Blank Question Sole Proprietorship which is also called sole ________ Correct Answer tradership Your Answer tradership Multiple Choice Single Answer Question The method of inventory valuation in which , the cost of production is calculated on the assumption that the material which was last to enter the inventory of the company was used first is Correct Answer LIFO Your Answer LIFO Multiple Choice Single Answer Question In economics, demand means desire backed by adequate Correct Answer purchasing power Your Answer purchasing power Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice Multiple Choice Single Answer Question A group of firms dealing in the same line of business are called as

Correct Answer Industry Your Answer Industry Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Match The Following Question Correct Answer Your Answer Non-price competition advertisement. advertisement. Prestige price high price on account of prestige considerations. high price on account of prestige considerations. Administered prices public sector undertaking. state government. Pricing in cooperative societies state government. public sector undertaking. Multiple Choice Single Answer Question The demand curve (A.R.) of a firm under perfect competition is Correct Answer perfectly elastic Your Answer inelastic Multiple Choice Multiple Answer Question The advantage of cost-benefit analysis are Correct Answer Maximization of social welfare , Objective measurement of the trade-off , Maximization of difference between total benefits & total costs Your Answer

Maximization of social welfare , Maximization of difference between total benefits & total costs , Applicable only in partial equilibrium framework. Select The Blank Question By using cost-benefit analysis we can show the measures necessary for attaining maximum ________ and optimal policy aiming at this goal. Correct Answer net wealth Your Answer net domestic product Multiple Choice Multiple Answer Question The causes of inflation are Correct Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand Your Answer Increase in public expenditure , Increase in foreign demand , Increase in taxation Select The Blank Question The partnership between private sector & government is called ________ Correct Answer Joint sector enterprise Your Answer Joint sector enterprise Multiple Choice Multiple Answer Question Features of short run period are Correct Answer Supply of goods can be adjusted to the demand to some extent , Supply and demand determine the price , Some factors can be changed Your Answer Supply of goods can be adjusted to the demand to some extent , Supply and demand determine the price , Some factors can be changed

LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Single Answer Question

Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer sufficient Multiple Choice Single Answer Question All the buyers and sellers operating under perfect competition have knowledge Correct Answer perfect Your Answer perfect True/False Question Inflation reduces the purchasing power of money and savings. Correct Answer True Your Answer False Multiple Choice Single Answer Question The supply curve during market period is perfectly Correct Answer inelastic Your Answer inelastic True/False Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce Correct Answer True

Your Answer True Match The Following Question Correct Answer Your Answer Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce goods and services Commodities goods and services scarce Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes True/False Question The price policy under monopolistic competition is dependent on the prices charged by other rival firms Correct Answer True Your Answer False Multiple Choice Single Answer Question All firms producing the same or similar product together make Correct Answer an industry Your Answer an industry Multiple Choice Single Answer Question Joint Stock Company succession is Correct Answer perpetual

Your Answer perpetual True/False Question Private profit motive is an essential feature of Capitalism Correct Answer True Your Answer True True/False Question Free riders is a term associated with the people who would like to have benefit of a good without sharing the cost of its supply Correct Answer True Your Answer False Multiple Choice Single Answer Question Macro economics provides an exploration to the functioning of an economy in Correct Answer general Your Answer general True/False Question Inflation is a great opportunity for merchants to benefit more. Correct Answer True Your Answer True True/False Question The various phases of business cycles are shown by the line of cycle which moves up and down the steady growth line Correct Answer True Your Answer True

True/False Question In the measurement of profit, the differences in the concept of profit arise out of the differences in cost concepts Correct Answer True Your Answer False Multiple Choice Single Answer Question In economics demand means desire backed by adequate Correct Answer purchasing power Your Answer ability to pay Multiple Choice Single Answer Question The law of diminishing returns is applicable to agriculture provided the state of technology is given and Correct Answer constant Your Answer constant Multiple Choice Single Answer Question Under the monetary measures to control inflation, the R. B. I relies heavily on selective credit controls on bank loans against food grains, sugar, oils, oilseeds, cotton etc so as to discourage Correct Answer Speculative hoarding Your Answer Speculative hoarding Multiple Choice Single Answer Question Slope of supply curve is Correct Answer positive Your Answer positive Multiple Choice Single Answer Question

Costs which increase because of the expansion of a firm are called costs Correct Answer incremental Your Answer incremental True/False Question The opportunity cost of a product is the opportunity gained of being able to produce some other product. Correct Answer False Your Answer False True/False Question The supply curve in case of unitary elastic supply is rectangular hyperbola. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question An Industry Correct Answer Is a group of firms , All firms dealing in the same line of business , The ownership and management of each firm is different Your Answer Is a group of firms , All firms dealing in the same line of business , The ownership and management of each firm is different Select The Blank Question Under monopoly, there is ________ seller who controls the entire ________ in the market Correct Answer only one Your Answer only one Correct Answer supply Your Answer supply

Select The Blank Question Under monopsony, there are ________ sellers but ________ buyer Correct Answer many Your Answer many Correct Answer only one Your Answer only one Match The Following Question Correct Answer Your Answer Marginal utility Addition to total utility Addition to total utility Total utility increases marginal Posative and declining Marginal utility is zero At the saturation point for a commodity x the Mux is Zero Demand curve of a commodity Marginal utilities are Demand curve of a commodity Posative and declining Total utility is Marginal utility is zero Zero Select The Blank Question By using cost-benefit analysis we can show the ________ necessary for attaining maximum ________ and optimal policy aiming at this goal Correct Answer measures Your Answer Gross Domestic Product Correct Answer net wealth Your Answer gross wealth

Multiple Choice Multiple Answer Question Average propensity to consume Correct Answer It is defined as the ratio of consumption expenditure to any particular level of income , It is found by dividing consumption expenditure by income , It is expressed as the percentage of income consumed Your Answer It is derived by dividing income by consumption expenditure Multiple Choice Multiple Answer Question Inflation means Correct Answer It is a phenomenon of rising prices , It is a general and dynamic phenomenon , It includes an excess of demand Your Answer It is a phenomenon of rising prices Select The Blank Question Aggregate supply function refers to a ________ of the various minimum amounts of proceeds or ________ , which must be expected to be received by the entrepreneur class from the sale of output result Correct Answer schedule Your Answer demand Correct Answer revenues Your Answer revenues Select The Blank Question In the ________ terminology, the ________ demand function refers to the schedule of maximum sales proceeds, which the entrepreneurial community actually does expect to be received from the sale of Correct Answer Keynesian Your Answer Keynesian Correct Answer aggregate Your Answer aggregate

Multiple Choice Multiple Answer Question The fiscal policy includes Correct Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Your Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Multiple Choice Multiple Answer Question The meaning of monetary policy Correct Answer It is programme of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability Your Answer It is programme of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability Multiple Choice Multiple Answer Question Causes for rise in prices in India Correct Answer Mounting government expenditure , Deficit financing and increase in money supply , Role of black money Your Answer Mounting government expenditure , Deficit financing and increase in money supply , Role of black money Multiple Choice Multiple Answer Question Managerial economics deals with Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics. , The use of economic modes of thought to analyze business solution. Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics. Multiple Choice Multiple Answer Question The sources of economic problems are: Correct Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited. ,

These resources are not specific but have alternative uses. Your Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited. , These resources are not specific but have alternative uses. Multiple Choice Multiple Answer Question Different types of business organizations are; Correct Answer Private sector. , Public sector. , Joint sector. Your Answer Joint sector. Multiple Choice Multiple Answer Question Proprietary firm is Correct Answer Owned by a single person. , Easy to form. , An organization of single person. Your Answer Owned by a single person. Multiple Choice Multiple Answer Question Methods of measurement of elasticity Correct Answer Percentage Method , Point elasticity Method , Total outlay expenditure method Your Answer Percentage Method , Point elasticity Method , Total outlay expenditure method Multiple Choice Multiple Answer Question Demand forecasts are necessary for: Correct Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms Your Answer Preparation of a budget , Expansion of firms Select The Blank Question Economic theory provides the basis for the ________ _ making process, there is some difference between the generalization based on abstraction and actual practices. Besides economic theory, mat Correct Answer decision making Your Answer optimal

Correct Answer statistics Your Answer Select The Blank Question The resources of a society consist not only of the free gifts of nature such as ________ but also of ________ and of all sorts of man made aids to further production. Correct Answer land and minerals Your Answer land and minerals Correct Answer human capacity Your Answer human capacity Select The Blank Question Individual or sole ________ , which is also called sole- ________ , or single entrepreneurship is the most common, the simplest and the oldest form of business organisation. Correct Answer proprietorship Your Answer proprietorship Correct Answer trader ship Your Answer trader ship Select The Blank Question Nominal cost is the ________ cost of production, it is also called expenses of production. The real cost is the ________ cost of production. Correct Answer money Your Answer opportunity Correct Answer opportunity Your Answer gross Select The Blank Question

Costs may be classified as : (a) ________ , including material costs, wage cost and interest cost (b) ________ , including costs of advertising and (c) other costs, including insurance ch Correct Answer Production costs Your Answer Production costs Correct Answer Selling costs Your Answer Selling costs Select The Blank Question The costs of self owned resources, which are employed by the ________ , are nonexpenditure or , ________ Correct Answer firm Your Answer firm Correct Answer implicit costs . Your Answer implicit costs .

Multiple Choice Single Answer Question The study of the working and allocation of resources in the free market economies is the topic in the Correct Answer theory of price Your Answer theory of production Multiple Choice Single Answer Question Managerial economics aims at providing help in the firms is Correct Answer decision making Your Answer decision making True/False Question

The federal government of U.S.A. does not face the basic economic problem. Correct Answer False Your Answer False Multiple Choice Single Answer Question In equilibrium analysis of a firm, it is assumed that every individual proprietor exhibits rational economic Correct Answer behavior Your Answer behavior Match The Following Question Correct Answer Your Answer Managerial Economics Prescriptive in nature The theory of distribution Resources Alternative uses Alternative uses Division of societys output of goods and services The theory of distribution Prescriptive in nature Motor cars Tangible goods Tangible goods Wants Insatiable Insatiable True/False Question Market price fluctuates very often Correct Answer True Your Answer False Multiple Choice Single Answer Question The firm is the unit that makes the decisions regarding employment of and the output of

commodities are Correct Answer factors of production Your Answer factors of production Multiple Choice Single Answer Question The principle of exclusion cannot be applied to the goods which are Correct Answer indivisible Your Answer invisible Multiple Choice Single Answer Question In the cost benefit analysis, the firm step involved is that the investor has to choose a few project alternatives promising a rate of return which is Correct Answer high Your Answer high Multiple Choice Single Answer Question Market system of economy is characterized by consumers Correct Answer sovereignty Your Answer demand Multiple Choice Single Answer Question In case of a joint stock company, the liability of share holders is Correct Answer limited Your Answer limited True/False Question The divisible goods, whose benefits can be priced, are called pure public goods Correct Answer False Your Answer True

True/False Question In case of a proprietary firm the liability of the proprietor is limited Correct Answer False Your Answer False True/False Question During the phase of depression, the level of national income and expenditure rises rapidly Correct Answer False Your Answer False Multiple Choice Single Answer Question According J.B.Clark, profit is the reward paid for Correct Answer dynamism Your Answer risk bearing Multiple Choice Single Answer Question Gross profit is the excess of total revenue of a firm over total Correct Answer expenditure Your Answer expenditure Multiple Choice Single Answer Question In general, the demand for necessaries is relatively Correct Answer inelastic Your Answer elastic True/False Question Demand for food grains is inelastic but the demand for wheat is elastic. Correct Answer True

Your Answer False Match The Following Question Correct Answer Your Answer Excess supply can be defined as Quantity supplied minus quantity demanded Quantity supplied minus quantity demanded If demand remain unchanged on increase in supply will result in A rise in equilibrium quantity The supply is perfectly elastic Market Price is a situation which The supply is perfectly elastic A rise in equilibrium quantity The responsiveness of demand to change in price is measured Elasticity of demand In the same proportion Unit income elasticity implies that asincome rises demand for a commodity rises In the same proportion Elasticity of demand Select The Blank Question Greater scope for the ________ sector may mean incremental ________ , which connotes the expansion of public sector undertakings, can be left to some private companies Correct Answer private Your Answer investment Correct Answer disinvestments Your Answer growth Multiple Choice Single Answer Question Goods produced on small scale of supply is Correct Answer inelastic Your Answer zero elastic True/False Question

The sum of total fixed costs and total variable costs is the total cost. Correct Answer True Your Answer True True/False Question Contraction of supply is traced by the downward movement on the supply curve. Correct Answer True Your Answer True True/False Question The laws of returns to scale explain the behavior of output in response to changes in scale. Correct Answer True Your Answer True True/False Question In the stage I of the law of diminishing returns, the marginal product goes on increasing Correct Answer True Your Answer False Multiple Choice Multiple Answer Question Features of monopolistic Competition Correct Answer Fairly Large number of firms , Product differentiation , Selling costs are existed Your Answer Fairly Large number of firms , Product differentiation , Selling costs are existed Select The Blank Question Where ________ is charging a ________ in the home market and a lower price in the international market, it is called Dumping Correct Answer monopolist Your Answer

a firm Correct Answer higher price Your Answer higher price Select The Blank Question The number of sellers operating under this type of competition is ________ under oligopoly, but less than under ________ Correct Answer larger than Your Answer complementary Correct Answer perfect ompetition Your Answer perfect ompetition Multiple Choice Multiple Answer Question Marginal Propensity to consume Correct Answer It is defined as the ratio of the change in consumption to the change in income , It is rate of change in the average propensity to consume as income changes , It is derived by the formula mpc= change in C/change in Y Your Answer It is defined as the ratio of the change in consumption to the change in income , It is derived by the formula mpc= change in C/change in Y , It is derived by dividing the change in income by change in the consumption expenditure Multiple Choice Multiple Answer Question Investment Correct Answer It adds to capital equipments , It leads to increase in level of income , It includes new plant and equipment Your Answer It adds to capital equipments , It leads to increase in level of income , It includes new plant and equipment Multiple Choice Multiple Answer Question Features of stage of expansion in business cycle are Correct Answer Rise in national output , Rise in consumer and capital expenditure , Bank advances grow

rapidly Your Answer Rise in national output , Rise in consumer and capital expenditure , Bank advances grow rapidly Multiple Choice Multiple Answer Question Characteristics of Depression Correct Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly Your Answer Decrease in economic activities , The growth rate becomes negative Multiple Choice Multiple Answer Question Recession includes Correct Answer The demand is halted , Increase in production of goods , Inventories piling up in stocks Your Answer The demand is halted , Inventories piling up in stocks Multiple Choice Multiple Answer Question The causes of inflation Correct Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand Your Answer Increase in public expenditure , Increase in foreign demand , Increase in taxation Select The Blank Question The rate of interest, according to ________ , depends upon two factors: (i) ________ and (ii) the quantity of money Correct Answer Keynes Your Answer Keynes Correct Answer the liquidity preference function Your Answer the liquidity preference function Select The Blank Question

In the words of ________ , inflation occurs when the ________ of prices and cost is rising. Correct Answer Prof. Samuelson Your Answer Prof. Samuelson Correct Answer general level Your Answer general level Multiple Choice Multiple Answer Question Forms of Public Enterprises Correct Answer Public Corporations , Departmental management , Company Management or management by boards Your Answer Departmental management , Public Corporations Multiple Choice Multiple Answer Question Specific organizational goals of Firms are: Correct Answer Maximisation of profit , Reasonable Profit Target , Sales revenue Maximization Your Answer Maximisation of profit , Reasonable Profit Target , Sales revenue Maximization Multiple Choice Multiple Answer Question Individual Demand Schedule: Correct Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Your Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Multiple Choice Multiple Answer Question The production function can be explained by: Correct Answer Law of variable proportions , Laws of returns to scale , Optimum combinations of inputs Your Answer Law of variable proportions , Laws of returns to scale , Optimum combinations of inputs

Multiple Choice Multiple Answer Question Implicit costs are: Correct Answer Cost on self owned resources , Costs of salary of the proprietor , Interest on the entrepreneurs own investment Your Answer Cost on self owned resources , Interest on the entrepreneurs own investment Select The Blank Question Managerial ________s generally refers to the integration of economic theory with ________ practice. Correct Answer economic Your Answer economic Correct Answer business Your Answer business Select The Blank Question In a competitive industry, there is a large number of firms so that the action of ________ firm has ________ on the price and output of the whole industry. Correct Answer a single Your Answer a single Correct Answer no effect Your Answer no effect Select The Blank Question As per the International Labour Organisation (ILO), _ ________ is a ________ association of individuals with limited income on the basis of equal rights and responsibilities for achieving certa Correct Answer Co-operation Your Answer Co-operation Correct Answer voluntary

Your Answer voluntary Select The Blank Question The word ________ has different meanings to businessmen, ________ , tax collectors, workers and economists and it is often used in a loose sense that buries its real significance Correct Answer Profit Your Answer Profit Correct Answer accountants Your Answer accountants Select The Blank Question The demand curve is ________ representation of a demand schedule, demand curve slopes ________ ward from left to right. Correct Answer graphical Your Answer graphical Correct Answer down Your Answer down Select The Blank Question The ________ that is ________ is the opportunity cost of the commodity produced. Correct Answer sacrificed Your Answer commodity Correct Answer commodity Your Answer sacrificed LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Single Answer Question Pure public goods are subject to the law of decreasing average cost, because of

the Correct Answer economies of scale Your Answer economies of scale Multiple Choice Single Answer Question In the cost benefit analysis, after formulating various alternative project capacity, each of them has to be examined in terms of its Correct Answer feasibility Your Answer feasibility True/False Question Bargaining is one of the remedies of corrective action. Correct Answer False Your Answer True Match The Following Question Correct Answer Your Answer Defence service Indivisible Indivisible Economic effects of public goods are Spill over effect Spill over effect Selection or implementation Step of cost benefit analysis Step of cost benefit analysis Production possibility frontier Maximization of output Maximization of output Multiple Choice Multiple Answer Question The advantage of cost-benefit analysis are Correct Answer Maximization of social welfare , Objective measurement of the tradeoff , Maximization of difference between total benefits & total costs Your Answer Maximization of social welfare , Objective measurement of the trade-off , Maximization of difference between total benefits & total costs Multiple Choice Multiple Answer Question The term externalities may also be referred as: Correct Answer Spill-over effects , Neighborhood effects , Third party effects Your Answer Spill-over effects , Neighborhood effects , Third party effects Select The Blank Question Modern economists treat social cost and benefits as ________ of private investment and production decisions. Correct Answer externalities Your Answer disadvantages Select The Blank Question Economists like A.C.Harberger have shown that the cost benefit analysis can be

applied to ________ analysis. Correct Answer general equilibrium Your Answer general equilibrium Select The Blank Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally. Correct Answer management Your Answer management Select The Blank Question Prof. Sam Nelson calls risks from unsafe factories or nuclear power plants as ________ economies. Correct Answer negative Your Answer hazardous Multiple Choice Single Answer Question According to Lionel Robbins, Economics is a science which studies Correct Answer human behavior Your Answer social behavior Multiple Choice Single Answer Question Question related to the efficient production and allocation belong to the branch of economic theory called Correct Answer Welfare Economics Your Answer Business Economics Multiple Choice Multiple Answer Question Managerial economics deals with Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution Multiple Choice Single Answer Question The public sector is owned & controlled by Correct Answer state enterprises Your Answer state enterprises Select The Blank Question Reasonable profit target as an alternative to the objective of profit maximization was suggested by ________.

Correct Answer Joel Dean Your Answer Joel Dean Select The Blank Question Homeostatic Approach as an alternative objective of firms was suggested by ________. Correct Answer Prof. Kenneth Boulding Your Answer Prof. Kenneth Boulding Select The Blank Question The form of organization which is best for self employment is ________. Correct Answer Sole trader Your Answer Sole trader True/False Question Accounting profit takes in to account opportunity cost. Correct Answer False Your Answer False Multiple Choice Single Answer Question Complementary goods are demanded Correct Answer jointly Your Answer jointly Multiple Choice Single Answer Question If the substitutes are relatively costly then the demand for the commodity in question will be Correct Answer more Your Answer same True/False Question There are no real exceptions to the law of demand Correct Answer False Your Answer False True/False Question Demand curve slopes downwards from left to right. Correct Answer True Your Answer True Select The Blank Question An upward sloping demand curve is called ________ Correct Answer exceptional demand curve Your Answer exceptional demand curve

Select The Blank Question Goods which are paradoxical to the law of demand are ________ Correct Answer Giffen goods, , Your Answer Giffen goods, , Match The Following Question Correct Answer Your Answer Normally the isoquant slopes upward from right to left. downward from right to left Any straight line supply curve which cuts y axis will have zero elasticity of supply. perfectly elastic The market period supply curve for perishable commodities is perfectly inelastic. perfectly inelastic. A rightwards shift in supply schedule indicates an increase in supply. an increase in supply. Multiple Choice Multiple Answer Question Explicit costs are Correct Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Your Answer Out of pocket costs , These are firms accounting expenses , Expenditure costs Select The Blank Question Output rises in a lesser proportion to that of the increase in input, under the case of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale Select The Blank Question The cost which enter the accounts book of the firm are referred as ________. Correct Answer Accounting cost Your Answer Accounting cost Multiple Choice Single Answer Question Jevons , the economists who defined the term market different from that of the traditional sense is an Correct Answer English economists Your Answer English economists Multiple Choice Single Answer Question Economists have pointed out that the real world is full of

Correct Answer Imperfect competition Your Answer Imperfect competition True/False Question A firm under perfect competition is a price maker. Correct Answer False Your Answer False True/False Question Under perfect competition single seller can influence the price. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Types of imperfect competition are Correct Answer Monopoly , Duopoly , Oligopoly Your Answer Monopoly , Duopoly , Oligopoly Multiple Choice Multiple Answer Question Features of Pure Competition are Correct Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Your Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Multiple Choice Multiple Answer Question Equilibrium is the stage of Correct Answer maximum satisfaction , balance , stationary Your Answer maximum satisfaction , balance Multiple Choice Single Answer Question Inflation is a phenomena in which prices Correct Answer rise Your Answer rise Multiple Choice Single Answer Question True inflation starts only after reaching the level of full Correct Answer Employment Your Answer Employment True/False Question During inflation, the pensioners whose income is permanently fixed, are substantially benefited. Correct Answer False Your Answer False

True/False Question Saving is a private virtue Correct Answer True Your Answer True Multiple Choice Multiple Answer Question According to Keynes, Aggregate supply function refers to Correct Answer the minimum price of revenue which the entrepreneurs must get , Associated with different levels of employment , Explains that the level of out put varies with the level of employment Your Answer the minimum price of revenue which the entrepreneurs must get , Associated with different levels of employment , Explains that the level of out put varies with the level of employment Multiple Choice Multiple Answer Question Marginal Propensity to consume is characterized as follows Correct Answer It is defined as the ratio of the change in consumption to the change in income , It is rate of change in the average propensity to consume as income changes , It is derived by the formula mpc= change in c/change in y Your Answer It is rate of change in the average propensity to consume as income changes , It is derived by the formula mpc= change in c/change in y , It is derived by dividing the change in income by change in the consumption expenditure Multiple Choice Single Answer Question During the period of depression various factors of production are Correct Answer exhausted Your Answer unutilized True/False Question In general SBI uses its monetary policy to achieve a judicious balance between the growth of production and control of the general price level. Correct Answer False Your Answer False True/False Question Public enterprises have shown a very high rate of return of the capital invested Correct Answer False Your Answer False Multiple Choice Multiple Answer Question The meaning of monetary policy is Correct Answer It is programmed of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability Your Answer It is programmed of the central bank , It controls the total supply of money , The basic objective is to achieve economic stability

Multiple Choice Multiple Answer Question Main aims of the New Industrial Policy (1991) are Correct Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Your Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Multiple Choice Multiple Answer Question Objectives of economic policy are Correct Answer To increase the efficiency and international competitiveness of industrial production , To improve the performance and rationalize the scope of the public sector , To reform and modernize the financial sector Your Answer To increase the efficiency and international competitiveness of industrial production , To improve the performance and rationalize the scope of the public sector , To reform and modernize the financial sector LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer insufficient Match The Following Question Correct Answer Your Answer Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce scarce Commodities goods and services goods and services Human wants unlimited

unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes Multiple Choice Single Answer Question The feasibility, which includes the prospects of employment generation, development of backward areas, social groups comprises of Correct Answer Economic feasibility Your Answer Economic feasibility Multiple Choice Single Answer Question As far as its use is concerned, tuning in of a radio can be categorized as: Correct Answer Divisible Your Answer Divisible True/False Question In a market system of economy, there is no harmony between individual interests and interests of the community. Correct Answer False Your Answer False True/False Question Institution of private property is not an essential feature of Capitalism. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question In case of defense services, all the sections of the society are equally protected and benefited. The defense services in other words is Correct Answer indivisible in character , cannot be priced in the market , a public good

Your Answer indivisible in character , cannot be priced in the market Select The Blank Question On the ________ level, the summation of maximum individual welfare does not automatically lead to maximum social welfare. Correct Answer macro Your Answer micro Select The Blank Question While discussing the product divisibility of public and private goods, the principle of ________ may be applied in case of only those people who do not agree to pay or who cannot pay the market price Correct Answer exclusion Your Answer exceptions Select The Blank Question The goods become ________ only when each individual has an access to the entire amount of it and its use by the individual does not reduce its availability to others. Correct Answer indivisible Your Answer public Select The Blank Question In the context of formulation of an investment project, ________ feasibility means the availability of land, plant, machinery, raw materials and technical know how etc. Correct Answer technical Your Answer technical Select The Blank Question In a market economy ________ is the best judge of personal interest. Correct Answer individual

Your Answer individual True/False Question Inflation reduces the purchasing power of peoples income and savings. Correct Answer True Your Answer True True/False Question In a free-enterprise economy, the problems of what how and for whom are solved by a planning committee Correct Answer False Your Answer False Multiple Choice Single Answer Question A technical unit of given capacity of output is Correct Answer plant Your Answer plant Multiple Choice Multiple Answer Question Preference Shares can be classified as Correct Answer Simple Shares , Cumulative Shares , Redeemable Shares Your Answer Simple Shares , Redeemable Shares Multiple Choice Multiple Answer Question The sole proprietorship type of organization is found in Correct Answer Agriculture, , Retail trade, , Hotel, Your Answer Agriculture, , Retail trade, , Hotel, Multiple Choice Multiple Answer Question

Co-operative organizations is Correct Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members Your Answer voluntary organization , managed by democratic principle , non profit motive organization Select The Blank Question A private limited company can be formed with 2 to 50 members maximum, excluding ________ Correct Answer employee shareholders Your Answer Directors Multiple Choice Single Answer Question The method of inventory valuation in which , the cost of production is calculated on the assumption that the material which was last to enter the inventory of the company was used first is Correct Answer LIFO Your Answer LIFO True/False Question Profit should be large enough for a plough back for business expansion. Correct Answer True Your Answer True True/False Question Accounting profit takes in to account opportunity cost. Correct Answer False Your Answer True Multiple Choice Multiple Answer Question Profit is regarded as

Correct Answer income accruing to the equity holders , wages accrue to the labour , rent accrue to the owner Your Answer income accruing to the equity holders , rent accrue to the owner Multiple Choice Single Answer Question Change in income of a person may result in demand for goods to Correct Answer change Your Answer change Multiple Choice Single Answer Question With decline in price of a commodity, total expenditure spent on the commodity is less than before, then elasticity of demand for the commodity is Correct Answer <1 Your Answer >1 Multiple Choice Single Answer Question Peas & beas, groundnut oil & til oil, tea & coffee are examples of Correct Answer substitutes goods Your Answer substitutes goods True/False Question Demand for luxury goods is inelastic Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Increase in demand Upward shift of the demand curve Upward movement on the demand curve

Extension of demand Downward movement on the demand curve Vertical Demand curve Decrease in Demand Leftward shift of the demand curve Downward movement on the demand curve Contraction of Demand Upward movement on the demand curve Leftward shift of the demand curve Select The Blank Question Increase in consumers income leads in the demand for inferior goods to ________ Correct Answer decrease Your Answer decrease Multiple Choice Multiple Answer Question Reasons for change in Demand (Increase or Decrease in Demand) Correct Answer Change income of consumer , Change in population , Change in fashion and customs Your Answer Change income of consumer , Change in population , Change in fashion and customs Multiple Choice Single Answer Question AVC is the per unit variable cost of Correct Answer production Your Answer fixed variable True/False Question The sum of total fixed costs and total variable costs is the total cost. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The production function can be explained by Correct Answer

Law of variable proportions , Laws of returns to scale , Optimum combinations of inputs Your Answer Law of variable proportions , Laws of returns to scale Select The Blank Question Output rises in a lesser proportion to that of the increase in input, under the case of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale Select The Blank Question The costs which cover the cost of advertising is ________. Correct Answer Selling cost Your Answer Incremental cost Select The Blank Question The out of pocket costs are ________. Correct Answer Explicit costs Your Answer Explicit costs Select The Blank Question By profits, the accountant means total revenue minus________. Correct Answer Explicit costs Your Answer Fixed costs Multiple Choice Single Answer Question The supply curve during market period is Correct Answer perfectly inelastic Your Answer perfectly inelastic

Multiple Choice Single Answer Question Under monopoly entry of new firms is Correct Answer prohibited Your Answer limited True/False Question In case of the co-operative societies supplying cheap inputs or supplying consumer products at fair prices, a system of subsidized pricing is followed. Correct Answer True Your Answer True True/False Question Market price fluctuates very often. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Macro Economics is the study of Correct Answer The aggregate behavior of the economy , The behavior of economic agents , Problems such as the rates of inflation, the balance of payments, etc Your Answer The aggregate behavior of the economy , Problems such as the rates of inflation, the balance of payments, etc , Economic welfare Multiple Choice Multiple Answer Question The subject matter of Micro economics includes the study of Correct Answer an individual consumer , particular market for a given commodity , operation of a firm Your Answer an individual consumer , particular market for a given commodity , major economic issues , problems & policies Multiple Choice Multiple Answer Question

16. The phase of recovery denotes Correct Answer More employment opportunities , Increase in profitability , Wage rate increase Your Answer More employment opportunities , Increase in profitability , Wage rate increase Multiple Choice Multiple Answer Question Quantitative credit control measures are Correct Answer open market operations , changes in bank rates , changes in statutory reserve ratio Your Answer open market operations , moral suasion Multiple Choice Single Answer Question The government has adopted a system of dual prices in the case of Correct Answer essential goods Your Answer essential goods Multiple Choice Multiple Answer Question The disinvestments of industries is needed for Correct Answer Phased privatization , Reducing deficit , Capital support to plans Your Answer Phased privatization , Reducing deficit , Capital support to plans

LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME1 Question In India, the first phase of economic reforms is believed to have begun in 1985 when Vishwanath Pratap Singh was the Prime Minister of the country. Correct Answer False Your Answer False Question Price discrimination is possible in case of Correct Answer public utilities with legal sanction , personnel services sold , geographical barriers Your Answer public utilities with legal sanction , personnel services sold , geographical barriers

Question The methods of calculating depreciation is Correct Answer Diminishing Balance Method , Annuity Method , Service Unit Method Your Answer Diminishing Balance Method , Annuity Method , Service Unit Method Question Correct Answer Your Answer Break even point T.R. = T.C. T.R. = T.C. Normal profit Implicit cost Short run cost Average variable cost (A.V.C.) Short run cost Explicit cost Change in supply Increase and decrease in supply Expansion and contraction of supply Question A competitive industry has three basic characteristics Correct Answer Large Number of Firms , Homogeneous Product , Free entry and exit Your Answer Large Number of Firms , Homogeneous Product , Free entry and exit Question To solve the unemployment problem , the level of effective demand must decrease. Correct Answer False Your Answer True Question The act of using goods and services to satisfy wants is called Correct Answer consumption Your Answer consumption Question The minimum number of directors which public limited should have is ________. Correct Answer 3 Your Answer 3 Question The factors of production are Correct Answer Labour , Land , Capital Your Answer Labour , Land , Profit Question Economists have pointed out that the real world is full of Correct Answer Imperfect competition Your Answer Monopolistic competition Question According to J.M. Keynes, the equilibrium between the aggregate demand function and the aggregate supply function can, and often does take place at Correct Answer less than full employment Your Answer full employment

Question Important theories of profits are Correct Answer Uncertainty-bearing theory of profit , Dynamic theory of profit , Life cycle theory Your Answer Risk taking theory , Uncertainty-bearing theory of profit , Dynamic theory of profit Question The things that are produced by factors of production are called Correct Answer commodities Your Answer commodities Question Demand is determined by Correct Answer Price of the product , Relative prices of other goods , Tastes and habits Your Answer Price of the product , Relative prices of other goods , Tastes and habits Question The necessary condition of profit maximization of a firm is that Marginal Revenue (M.R) must be equal to ________. Correct Answer Marginal cost (M.C) Your Answer Marginal cost (M.C) Question The concept of just distribution of national product is a Correct Answer normative Your Answer objective Question Dalal Street in Bombay is known as Correct Answer Bombay Stock Exchange Your Answer Bombay Stock Exchange Question The type economic problem is Correct Answer universal Your Answer universal Question Preference share holders get a rate of dividend which is Correct Answer fixed Your Answer high Question The act of making goods and services is called Correct Answer production Your Answer production Question Contraction of supply is traced by the downward movement on the supply curve Correct Answer True Your Answer True Question Baumol has suggested as an alternative objective for profit maximization , the maximization of ________

Correct Answer sales Your Answer sales Match The Following Question Correct Answer Your Answer Commodities goods and services goods and services Human wants unlimited unlimited General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes Managerial economics Decision making and forward planning Decision making and forward planning Resources scarce scarce Question In the traditional concept of equilibrium, a firm attains the equilibrium when the firms Total Revenue (T.R.) =Total Cost (T.C.). Correct Answer False Your Answer True Question Under cost plus pricing Correct Answer The price is set to cover material, labour cost , Actual costs, standard costs are included , Certain percentage of profit also included Your Answer The price is set to cover material, labour cost , Actual costs, standard costs are included , Certain percentage of profit also included Question In economics, supply is considered to be a Correct Answer relative term Your Answer relative term Question In economics the question related to the selection of methods with which commodities are produced is a subject matter of Correct Answer theory of production Your Answer theory of production Question Under the decreasing returns to scale, the marginal output curve slopes ________. Correct Answer downward Your Answer downward Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice

Question Steps in cost benefit analysis Correct Answer Identification of a project , Formulation of the project , Appraisal and selection of the project Your Answer Identification of a project , Formulation of the project , Appraisal and selection of the project Question Slope of supply curve is Correct Answer positive Your Answer positive Question The salary of the proprietor or rent on own land are the ________. Correct Answer Implicit cost Your Answer Implicit cost Question The profits which must be deducted from the gross profits to arrive at net profits are Correct Answer Monopoly Profits Your Answer Monopoly Profits Question We say that a nation faces economic problems , under following conditions Correct Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited , These resources are not specific but have alternative uses Your Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited , These resources are not specific but have alternative uses Question A shift in the demand curve to the left shows increase in demand. Correct Answer False Your Answer False Question The sum of total fixed costs and total variable costs is the total cost. Correct Answer True Your Answer True Question A Joint- Stock Company is owned by its share holders but it is managed by Correct Answer Board of Directors Your Answer Non-government organization Question The liability of a Karta in a Joint Hindu Family Business firm is ________. Correct Answer limited Your Answer joint Question A fall in price tends the demand for goods to ________ Correct Answer expand Your Answer increase

Question The supply curve slopes downwards from left to right. Correct Answer False Your Answer False Question Poverty is the root cause of Economic problem. Correct Answer False Your Answer False Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer insufficient Question In case of a proprietory firm, the liability for all his debts is Correct Answer unlimited Your Answer unlimited Question The city of Kashmir has specialized in the manufacture of Correct Answer shawls Your Answer shawls Question The Laws of Returns to scale are Correct Answer Law of Increasing Returns to Scale , Law of Constant Returns to Scale , Law of Decreasing Returns to scale Your Answer Law of Increasing Returns to Scale , Law of Constant Returns to Scale , Law of Decreasing Returns to scale Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Question The registration of a partnership firm is voluntary Correct Answer True Your Answer True

LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME2 Question A responsible factor for inflation is Correct Answer hike in prices Your Answer hike in prices Question Economists call all human resources as Correct Answer labor Your Answer labor

Question The wage and salary earners who get fixed income in terms of money are benefited during inflation. Correct Answer False Your Answer False Question Over the years in India the govt. expenditure is Correct Answer increasing Your Answer increasing Question Given the price, if the cost of production increases because of higher price of raw materials, the supply Correct Answer decreases Your Answer decreases Question All the man made resources which are used in the process of making other goods and services are called Correct Answer capital Your Answer capital Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce? Correct Answer False Your Answer False Question Inflation is characterized by excess of demand. Correct Answer True Your Answer True Question Individual Demand Schedule Correct Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Your Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Question Measurement of profit becomes difficult because of the difficulty involved in the calculation of depreciation. Correct Answer True Your Answer False Question Main aims of the New Industrial Policy (1991) are Correct Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Your Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the

indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Question Free riders is a term associated with the people who would like to have benefit of a good without sharing the cost of its supply. Correct Answer True Your Answer True Question Managerial economics aims at providing help in the firms is Correct Answer decision making Your Answer decision making Question The persons who own the ________hip concern are called Partners. Correct Answer Partners Your Answer Partners Question The minimum number of directors which private limited should have is ________. Correct Answer 2 Your Answer 2 Question Generally, the larger the income of a consumer, his demand for overall commodities tends to be relatively elastic. Correct Answer False Your Answer True Question Correct Answer Your Answer Resource allocation decisions in free market economy Theory of price Theory of price Economic problem Universal Universal Managerial Economics Applied branch of knowledge Applied branch of knowledge Inflation Reduction in purchasing power Reduction in purchasing power Waste of resources Involuntary unemployment Involuntary unemployment Question In the context of externalities, driving the smoke-emitting buses and trucks in the cities is an example of ________ cost. Correct Answer social Your Answer environmental Question Correct Answer Your Answer Variable cost can refer to operating costs alone. operating costs alone.

The relationship between price and the quantity supplied of a product is indicated by upward sloping curve. upward sloping curve. Elasticity of supply means change in supply due to change in price of commodity. price of commodity. Fixed cost is known as prime cost. prime cost. Question Cost-benefit analysis refers to the analysis undertaken to judge any projects ________ whether government or private and find out its worth. Correct Answer investments Your Answer investments Question Variable cost are those costs which vary with the level of Correct Answer output Your Answer output Question An individual consumer or particular market for a given commodity are the subject matter of Correct Answer Micro Economics Your Answer Micro Economics Question In the Dynamic Theory of Profit, Prof. Clark has pointed out the types of changes, which are Correct Answer Changes in the supply of capital , Changes in population , Changes in the techniques of production Your Answer Changes in the supply of capital , Changes in population , Changes in the techniques of production Question Given the price, if the cost of production of a commodity decreases because of the use of improved technique of production, there will be increase in supply. Correct Answer True Your Answer True Question True inflation starts only after reaching the level of full Correct Answer Employment Your Answer Employment Question All the free gifts of nature which are commonly called natural resources are known to economists as Correct Answer Land Your Answer Land Question Reasons for need of public distribution system are Correct Answer To maintain stable price conditions , To bring an efficient management of the supply , To supply the necessary goods to people at reasonable price

Your Answer To maintain stable price conditions , To bring an efficient management of the supply , To supply the necessary goods to people at reasonable price Question Production Function implies relationship between Correct Answer input & output Your Answer input & output Question The important determinants of supply are Correct Answer Always referred to in relation to price & time , Government policy , Availability of factors of production Your Answer Always referred to in relation to price & time , Government policy , Availability of factors of production Question In economics the questions related to the division of societys output of goods and services among its members are topics in Correct Answer theory of distribution Your Answer theory of distribution Question Demand for a commodity depends on the relative price of its ________ Correct Answer substitute goods Your Answer substitute goods Question In case of the co-operative societies supplying cheap inputs or supplying consumer products at fair prices, a system of subsidized pricing is followed. Correct Answer True Your Answer False Question During periods of inflation, the income of farmers as a class decreases. Correct Answer True Your Answer True Question By profits, the accountant means total revenue minus________. Correct Answer Explicit costs Your Answer Sunk cost Question The index numbers which measure the changes in the general price level of a country refers to ________ Correct Answer Wholesale prices index Your Answer Commodity prices index Question The study of the working and allocation of resources in the free market economies is the topic in the Correct Answer theory of price Your Answer theory of price

Question According to the Government, the buildup of inflationary pressure during the Nineties was attributed to Correct Answer Higher Fiscal deficit Your Answer Higher Fiscal deficit Question In economics the questions related to the dynamic or static ( otherwise) capacity of the economy to produce goods and services are topics in the Correct Answer theory of economic growth Your Answer theory of economic growth Question Increasing Returns explains Correct Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Your Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Question Implicit costs are Correct Answer Cost on self owned resources , Costs of salary of the proprietor , Interest on the entrepreneurs own investment Your Answer Cost on self owned resources , Costs of salary of the proprietor , Interest on the entrepreneurs own investment Question Characteristics of the phase of Depression are Correct Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly Your Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly Question Micro-economic theory studies how a free enterprise economy determines the price of economic resources Correct Answer False Your Answer True Question Economists like A.C.Harberger have shown that the cost benefit analysis can be applied to ________ analysis. Correct Answer general equilibrium Your Answer general equilibrium Question Break-Even analysis is derived by Correct Answer Fixed cost , Average variable cost , Quantity of goods and price Your Answer Fixed cost , Average variable cost , Quantity of goods and price Question Managerial economics deals with Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution

Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME3 Question In the context of formulation of an investment project, ________ feasibility means the availability of land, plant, machinery, raw materials and technical know how etc. Correct Answer technical Your Answer infrastructure Question Scarcity of resources is the root cause of economic problem. Correct Answer True Your Answer True Question Inflation reduces the purchasing power of peoples income and savings. Correct Answer True Your Answer True Question Demand for safety pins is ________ Correct Answer inelastic Your Answer relatively inelastic Question Reasonable profit target as an alternative to the objective of profit maximization was suggested by ________. Correct Answer Joel Dean Your Answer Joel Dean Question Correct Answer Your Answer Motor cars Tangible goods Tangible goods Wants Insatiable Insatiable Managerial Economics Prescriptive in nature Prescriptive in nature Resources Alternative uses Alternative uses Division of societys output of goods and services The theory of distribution The theory of distribution Question Output rises in a lesser proportion to that of the increase in input, under the case of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale

Question Social costs cannot be included in a firms account book. Correct Answer True Your Answer False Question Economic problem arises only in case of an overpopulated country. Correct Answer False Your Answer False Question The cost which enter the accounts book of the firm are referred as ________. Correct Answer Accounting cost Your Answer Accounting cost Question The question regarding the nature and quantities of commodities to be produced is solely restricted to capitalist economies. Correct Answer False Your Answer True Question There are no real exceptions to the law of demand Correct Answer False Your Answer False Question The federal government of U.S.A. does not face the basic economic problem. Correct Answer False Your Answer False Question The subject matter of managerial economics covers two important areas namely decision-making and Correct Answer forward Planning Your Answer forward Planning Match The Following Question Correct Answer Your Answer Decrease in Demand Leftward shift of the demand curve Leftward shift of the demand curve Contraction of Demand Upward movement on the demand curve Upward movement on the demand curve Increase in demand Upward shift of the demand curve Upward shift of the demand curve Extension of demand Downward movement on the demand curve Downward movement on the demand curve Question The promoters of a company can get incorporated by filing with the registrarof companies various documents such as

Correct Answer Memorandum of Association , Articles of Association , Prospectus Your Answer Articles of Association , Prospectus Question Features of public sector enterprises Correct Answer it is controlled by the state , separate funds to undertake their activity , they are accountable to public Your Answer it is controlled by the state , separate funds to undertake their activity , they are accountable to public Question The production function studies Correct Answer Input and out put relation , Factors of production and final production , Technology used in production Your Answer Input and out put relation , Factors of production and final production , Demand for production Question In the 3rd stage of operation of the law of variable proportions, the marginal product becomes ________. Correct Answer negative Your Answer negative Question In a market economy ________ is the best judge of personal interest. Correct Answer individual Your Answer public Question All the buyers and sellers operating under perfect competition have knowledge which is Correct Answer perfect Your Answer perfect Question In a market system of an economy, producers are guided by ________ motive. Correct Answer profit Your Answer profit Question The cost recorded in the books of accounts are considered as Correct Answer explicit costs Your Answer explicit costs Question Demand forecasts are necessary for Correct Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms Your Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms Question Inflation reduces the purchasing power of money and savings. Correct Answer True Your Answer True

Question Features of an Industry are Correct Answer All firms dealing in the same line of business , The ownership and management of each firm is different , Is a group of firms Your Answer All firms produce different goods , All firms dealing in the same line of business , The ownership and management of each firm is different Question The characteristics of a sole proprietorship firm is Correct Answer Unlimited Capital , Ownership by a single person , Easy to form Your Answer Ownership by a single person , Easy to form Question Normally, a larger quantity is demanded at Correct Answer lower price Your Answer lower price Question When a company rasies additional finance by borrowing from the public for a specific period of time at a particular rate of interest, it is called as Correct Answer Debentures Your Answer Debentures Question In cost benefit analysis, in the valuation of costs and benefits, for finding the present value, one has to make use of Correct Answer discount rate Your Answer discount rate Question Like a particular street in a city , the entire city may sometimes specialize in the production of a particular commodity . The city acquire the status of a Correct Answer national market Your Answer capital market Question Types of Share capital of Joint-Stock Company are Correct Answer registered or authorized capital , issued capital , paid-up capital Your Answer registered or authorized capital , issued capital , paid-up capital Question An upward sloping demand curve is called ________ Correct Answer exceptional demand curve Your Answer exceptional demand curve Question Different types of Elasticity of Demand are Correct Answer Price elasticity of demand , Income elasticity of demand , Cross elasticity of demand Your Answer Price elasticity of demand , Income elasticity of demand , Cross elasticity of demand Question Cournot , the economists who defined the term market different from that of the traditional sense is an

Correct Answer French economists Your Answer French economists Question Demand forecasting is predicting for the demand of a firms product in Correct Answer future Your Answer future Question Pure inflation starts only after reaching the full employment level. Correct Answer True Your Answer True Question A monopolist in a price maker. Correct Answer True Your Answer True Question The demand curve (A.R.) of a firm under perfect competition is Correct Answer perfectly elastic Your Answer perfectly elastic Question Managerial economics aims at providing guidance to the firms for Correct Answer decision making Your Answer decision making Question In case of defense services, all the sections of the society are equally protected and benefited. The defense services in other words is Correct Answer indivisible in character , cannot be priced in the market , a public good Your Answer indivisible in character , cannot be priced in the market Question A fall in quantity demanded without a fall in price shows decrease in demand. Correct Answer True Your Answer True Question The subject matter of macro economics includes the theory of income and employment at an individual level. Correct Answer False Your Answer False LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Multiple Answer Question Types of Share capital of Joint-Stock Company are Correct Answer registered or authorized capital , issued capital , paid-up capital Your Answer registered or authorized capital , issued capital , paid-up capital Match The Following Question Correct Answer Your Answer

Equilibrium price is the price where the quantity demanded equals quantity supplied quantity demanded equals quantity supplied Excess supply can be defined as quantity supplied minus quantity demanded. quantity supplied minus quantity demanded. Tea and sugar Complimentary goods Complimentary goods Excess demand can be defined as quantity demanded minus quantity supplied quantity demanded minus quantity supplied Multiple Choice Single Answer Question The act of making goods and services is called Correct Answer production Your Answer production Multiple Choice Single Answer Question The act of using goods and services to satisfy wants is called Correct Answer consumption Your Answer consumption Select The Blank Question The liability of a Karta in a Joint Hindu Family Business firm is ________. Correct Answer limited Your Answer limited Select The Blank Question Demand for a commodity depends on the relative price of its ________ Correct Answer substitute goods Your Answer substitute goods Multiple Choice Multiple Answer Question reasonable profit are Correct Answer Capital Attraction , Plough Back , Normal earnings Your Answer Capital Attraction , Plough Back , Normal earnings Multiple Choice Multiple Answer Question Features of Long -run market are Correct Answer It is durable goods market , Supply can be increased or reduced according to the demand , Sellers at least recover minimum price for their goods Your Answer It is durable goods market , Supply can be increased or reduced according to the demand , Sellers at least recover minimum price for their goods Multiple Choice Single Answer Question The type economic problem is

Correct Answer universal Your Answer universal Select The Blank Question In a market system of an economy, producers are guided by ________ motive. Correct Answer profit Your Answer profit Multiple Choice Single Answer Question An individual consumer or particular market for a given commodity are the subject matter of Correct Answer Micro Economics Your Answer Micro Economics Select The Blank Question The index numbers which measure the changes in the general price level of a country refers to ________ Correct Answer Wholesale prices index Your Answer Wholesale prices index Multiple Choice Single Answer Question While calculating accounting profit, the costs which are considered are by nature Correct Answer explicit Your Answer implicit Multiple Choice Single Answer Question Given the price, if the cost of production increases because of higher price of raw materials, the supply Correct Answer decreases Your Answer decreases Multiple Choice Single Answer Question The things that are produced by factors of production are called Correct Answer commodities Your Answer commodities Multiple Choice Single Answer Question The concept of just distribution of national product is a Correct Answer normative Your Answer normative Multiple Choice Single Answer Question In economics the question related to the selection of methods with which commodities are produced is a subject matter of

Correct Answer theory of production Your Answer theory of production True/False Question In case of the co-operative societies supplying cheap inputs or supplying consumer products at fair prices, a system of subsidized pricing is followed. Correct Answer True Your Answer True Select The Blank Question Modern economists treat social cost and benefits as ________ of private investment and production decisions. Correct Answer externalities Your Answer externalities Multiple Choice Multiple Answer Question The market system of economy is based on the following foundations: Correct Answer Consumers Sovereignty , Non-interference by the state. , Private Profit Motive Your Answer Consumers Sovereignty , Private Profit Motive , Existence of monopoly Select The Blank Question The indivisible goods to which the principle exclusion does not apply are called ________ goods. Correct Answer pure public Your Answer private Select The Blank Question The goods become ________ only when each individual has an access to the entire amount of it and its use by the individual does not reduce its availability to others. Correct Answer indivisible Your Answer public Multiple Choice Single Answer Question The city of Banaras has specialized in the manufacture of Correct Answer silk Your Answer silk True/False Question During inflation, the pensioners whose income is permanently fixed, are substantially benefited. Correct Answer False Your Answer False Select The Blank Question Economists like A.C.Harberger have shown that the cost benefit analysis can be

applied to ________ analysis. Correct Answer general equilibrium Your Answer general equilibrium True/False Question Generally, the larger the income of a consumer, his demand for overall commodities tends to be relatively elastic. Correct Answer False Your Answer False Multiple Choice Single Answer Question In economics the questions related to the division of societys output of goods and services among its members are topics in Correct Answer theory of distribution Your Answer theory of distribution True/False Question Supply management is related to the volume ofsupply & its distribution system. Correct Answer True Your Answer True Select The Blank Question Demand for safety pins is ________ Correct Answer inelastic Your Answer inelastic Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Your Answer insufficient True/False Question Under the disinvestments process, there is full transfer of ownership Correct Answer True Your Answer False Multiple Choice Single Answer Question In cost benefit analysis, after the step of appraisal and selection of the project is the step of Correct Answer comparison of the cash flow Your Answer comparison of the cash flow Multiple Choice Single Answer Question When a company rasies additional finance by borrowing from the public for a specific period of time at a particular rate of interest, it is called as

Correct Answer Debentures Your Answer Debentures Multiple Choice Multiple Answer Question Features of market period are Correct Answer Related to few hours or few days , Related to perishable goods , The entire supply is to be disposed off on the same day Your Answer Related to few hours or few days , Related to perishable goods , The entire supply is to be disposed off on the same day Select The Blank Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally. Correct Answer management Your Answer organizational Multiple Choice Multiple Answer Question Increasing Returns explains Correct Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Your Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice Multiple Choice Multiple Answer Question Scope of Managerial Economics deals with Correct Answer Demand analysis and forecasting , Production function & cost analysis , Inventory management adverting, price system Your Answer Demand analysis and forecasting , Production function & cost analysis , Inventory management adverting, price system Multiple Choice Single Answer Question The observation of economic histories of the United States & West European countries shows that competition , the heart of market mechanism gives rise to Correct Answer monopolies Your Answer price competition Match The Following Question Correct Answer Your Answer

Chance profit Outbreak of war Outbreak of war Innovation theory of profit Joseph Schumpeter Joseph Schumpeter Uncertainly bearing F. H. Knight theory F. H. Knight theory Implicit cost Opportunity cost Opportunity cost Multiple Choice Single Answer Question During a period of rising prices (inflation), the goods and services are Correct Answer scarce Your Answer are also increasing True/False Question Contraction of supply is traced by the downward movement on the supply curve Correct Answer True Your Answer True Multiple Choice Single Answer Question Over the years in India the govt. expenditure is Correct Answer increasing Your Answer increasing True/False Question To solve the unemployment problem , the level of effective demand must decrease. Correct Answer False Your Answer False True/False Question Demand is related to price, time and place. Correct Answer True Your Answer False Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Select The Blank Question A fall in price tends the demand for goods to ________ Correct Answer expand Your Answer expand LIST OF ATTEMPTED QUESTIONS AND ANSWERS

True/False Question Macro economic studies are based on empirical evidence. Correct Answer True Your Answer True Select The Blank Question According to the World Banks approach, the trade able items would be valued at the corresponding world prices and the non-trade able items at the ________. Correct Answer shadow prices Your Answer market prices Multiple Choice Single Answer Question The study of the working and allocation of resources in the free market economies is the topic in the Correct Answer theory of price Your Answer theory of price Multiple Choice Single Answer Question Costs which increase because of the expansion of a firm are called Correct Answer incremental Your Answer incremental True/False Question In the Long- run, supply of goods can be adjusted to the demand and therefore supply curve is horizontal to the X-axis. Correct Answer False Your Answer True Select The Blank Question By profits, the accountant means total revenue minus________. Correct Answer Explicit costs Your Answer Implicit cost Multiple Choice Multiple Answer Question Features of short run period are Correct Answer Supply of goods can be adjusted to the demand to some extent , Supply and demand determine the price , Some factors can be changed Your Answer Supply of goods can be adjusted to the demand to some extent , Supply and demand determine the price , Some factors can be changed Select The Blank Question The law of constant returns to scale is depicted by the marginal output curve which is ________. Correct Answer horizontal Your Answer horizontal

Multiple Choice Single Answer Question The method of calculating depreciation in which the actual working hours of a capital asset are taken in to account is Correct Answer service unit Your Answer service unit True/False Question Demand curve slopes upwards from left to right. Correct Answer False Your Answer False Multiple Choice Single Answer Question All the free gifts of nature which are commonly called natural resources are known to economists as Correct Answer Land Your Answer Land True/False Question Macro-economies is a policy oriented science. Correct Answer True Your Answer True Multiple Choice Single Answer Question The assumption of perfect competition in all the analytical theories is made by Correct Answer Classical economists Your Answer Keynesian economists Select The Blank Question In the 3rd stage of operation of the law of variable proportions, the marginal product becomes ________. Correct Answer negative Your Answer positive Multiple Choice Multiple Answer Question Reasons for need of public distribution system are Correct Answer To maintain stable price conditions , To bring an efficient management of the supply , To supply the necessary goods to people at reasonable price Your Answer To maintain stable price conditions , To bring an efficient management of the supply , To supply the necessary goods to people at reasonable price Select The Blank Question When demand for the product increases in the same proportion in which income increases, Income elasticity of demand will be equal to________ Correct Answer unity Your Answer greater than unity

Multiple Choice Multiple Answer Question Accounting profit includes Correct Answer wages , rent , interest Your Answer wages , rent , interest Multiple Choice Multiple Answer Question The fiscal policy includes Correct Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Your Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure Multiple Choice Single Answer Question The method of inventory valuation in which , the cost of production is calculated on the assumption that the material which was last to enter the inventory of the company was used first is Correct Answer LIFO Your Answer LIFO Select The Blank Question A private limited company can be formed with 2 to 50 members maximum, excluding ________ Correct Answer employee shareholders Your Answer employee shareholders Multiple Choice Single Answer Question The number of sellers operating under monopolistic competition as compare to oligopoly is Correct Answer larger Your Answer larger Multiple Choice Multiple Answer Question Causes for rise in prices in India Correct Answer Mounting government expenditure , Deficit financing and increase in money supply , Role of black money Your Answer Mounting government expenditure , Deficit financing and increase in money supply , Increase in demand True/False Question Social costs cannot be included in a firms account book. Correct Answer True Your Answer False Multiple Choice Single Answer Question AVC is the per unit variable cost of

Correct Answer production Your Answer total revenue Multiple Choice Multiple Answer Question Exceptions to the Law of Demand are Correct Answer Giffen goods , Articles of snob appeal , Speculation Your Answer Giffen goods , Articles of snob appeal , Speculation Question In the cost benefit analysis, the first step involved is that the investor has to choose a few project alternatives promising a Correct Answer high rate of return Your Answer high rate of return Question In the Dynamic Theory of Profit, Prof. Clark has pointed out the types of changes, which are Correct Answer Changes in the supply of capital , Changes in population , Changes in the techniques of production Your Answer Changes in the supply of capital , Changes in population , Changes in the techniques of production Question Economic problem is faced by poor countrys only. Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Pure private goods Divisible goods Divisible goods Self -interest Market economy Neighborhood Danger from drunken drivers Negative economies Negative economies Impure public goods Quasi public goods Quasi public goods Multiple Choice Multiple Answer Question Types of imperfect competition are Correct Answer Monopoly , Duopoly , Oligopoly Your Answer Monopoly , Duopoly , Oligopoly Question If the output rises in the greater proportion than that of the increase in factor inputs, it is referred to as ________. Correct Answer increasing returns to scale. Your Answer increasing returns to scale.

Question Investment is significant because Correct Answer Addition to the real capital assets , It leads to increase in level of income , Increases accumulated wealth of the society Your Answer Addition to the real capital assets , It leads to increase in level of income , Increases accumulated wealth of the society Question In the context of externalities, driving the smoke-emitting buses and trucks in the cities is an example of ________ cost. Correct Answer social Your Answer social Question According to Lionel Robbins, Economics is a science which studies Correct Answer human behavior Your Answer economic variables behavior Question The out of pocket costs are ________. Correct Answer Explicit costs Your Answer Explicit costs Question A firm gets an opportunity to produce multiple products because changes in business activity in a firms is Correct Answer cyclical Your Answer rapid Question Market system or market economy suffers from time to time from economic depressions. Correct Answer True Your Answer True Question Under competitive conditions, market mechanism would automatically bring equilibrium at the level of Correct Answer full employment Your Answer optimum produce Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce? Correct Answer False Your Answer True Question Factors influencing selling costs are Correct Answer Type of product , Introduction of new goods , Technology changes Your Answer Type of product , Introduction of new goods , Advertising by customers Question The important determinants of supply are Correct Answer Always referred to in relation to price & time , Government policy , Availability of factors of production

Your Answer Always referred to in relation to price & time , Government policy , Availability of factors of production Question The slope of Supply curve of labour is always Correct Answer backward Your Answer upward Question In economics the questions related to the dynamic or static ( otherwise) capacity of the economy to produce goods and services are topics in the Correct Answer theory of economic growth Your Answer theory of economic growth Question Features of monopolistic Competition are Correct Answer Fairly large number of firms , Product differentiation , Selling costs are existed Your Answer Fairly large number of firms , Product differentiation , Selling costs are existed Question Under perfect competition,firms are free to enter and exit in the market. Correct Answer True Your Answer True Match The Following Question Correct Answer Your Answer Motor cars Tangible goods Tangible goods Wants Insatiable Insatiable Managerial Economics Prescriptive in nature Prescriptive in nature Resources Alternative uses Alternative uses Division of societys output of goods and services The theory of distribution The theory of distribution Question Under perfect competition single seller can influence the price. Correct Answer False Your Answer False

LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question The damage being done by the factories at and around Agra to Taj Mahal is an example of social cost for private benefit.

Correct Answer True Your Answer True Multiple Choice Single Answer Question The Risk theory of profit was developed by Correct Answer Hawley Your Answer Hawley Multiple Choice Multiple Answer Question Index numbers may broadly be classified as Correct Answer Price indices , Quantity indices , Special purpose indices Your Answer Price indices , Quantity indices , Special purpose indices Multiple Choice Single Answer Question Expansion of supply is shown by the movement in the supply curve which is Correct Answer upward Your Answer upward Multiple Choice Multiple Answer Question Forms of Public Enterprises Correct Answer departmental management , company management or management by boards , public corporations Your Answer departmental management , company management or management by boards , public corporations Select The Blank Question The financing of ________ goods is done through public expenditure. Correct Answer public Your Answer public Multiple Choice Single Answer Question A Joint- Stock Company is owned by its share holders but it is managed by Correct Answer Board of Directors Your Answer Board of Directors Multiple Choice Multiple Answer Question The examples of negative externalities are Correct Answer nuclear power plants , gargantuan trucks , unsafe factories Your Answer nuclear power plants , gargantuan trucks , unsafe factories Match The Following Question Correct Answer Your Answer Reduction in demand due to a new substitute in market Uncertainity Uncertainity Accounting profit Explicit costs Explicit costs

Economic profit Pure profit Pure profit Risk taking theory Hawley Hawley Multiple Choice Single Answer Question Peas & beas, groundnut oil & til oil, tea & coffee are examples of Correct Answer substitutes goods Your Answer complimentary goods Select The Blank Question Output rises in a lesser proportion to that of the increase in input, under the case of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale True/False Question A monopolist in a price maker. Correct Answer True Your Answer True Select The Blank Question The chemical effluents recklessly released by a chemical factory in the river causing water pollution, is an example of ________ cost. Correct Answer social Your Answer environmental True/False Question The financing of the pure public goods has to be through public expenditure and not through market pricing. Correct Answer True Your Answer True Multiple Choice Single Answer Question A firm is a unit of production, where production is done with the aim to maximize Correct Answer profits Your Answer profits Select The Blank Question By profits, the economist means total revenue minus ________. Correct Answer All costs Your Answer Explicit costs Multiple Choice Multiple Answer Question Cost-Benefit Analysis is Correct Answer The analysis undertaken to judge the investment of any project , Refers

to finding out the worth of investment , Enable ranking of optional investments Your Answer The analysis undertaken to judge the investment of any project , Refers to finding out the worth of investment , Enable ranking of optional investments True/False Question Giffen goods are superior goods. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question The railways use a lot of coal in firing the steam locomotives. This act causes Correct Answer a lot of sufferings to the people near the railway. , cost to the society. , no cost to the railways. Your Answer a lot of sufferings to the people near the railway. , cost to the society. , no cost to the railways. Multiple Choice Single Answer Question All the buyers and sellers operating under perfect competition have knowledge Correct Answer perfect Your Answer perfect Multiple Choice Multiple Answer Question Marginal cost pricing explains that the Correct Answer Price charged should be equal to the marginal cost , Cost price sets the lower limits for firms price , Cost price ensures the possible level of profitability Your Answer Price charged should be equal to the marginal cost , Cost price sets the lower limits for firms price , Cost price ensures the possible level of profitability True/False Question The question regarding the nature and quantities of commodities to be produced is solely restricted to capitalist economies. Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Implicit costs are the cost of resources owned by the firm. of resources owned by the firm. Opportunity costs are also known as alternative costs alternative costs The difference between average total cost &average fixed cost shows variable cost variable cost The difference between average cost and average revenue is average profit average profit

True/False Question During the period of depression, a large part of a countrys resources lie involuntarily idle. Correct Answer True Your Answer True Multiple Choice Single Answer Question The demand curve (A.R.) of a firm under perfect competition is Correct Answer perfectly elastic Your Answer perfectly elastic Select The Blank Question The externality which causes an economic gain or an economic loss to other economic units is also referred to as ________ externality. Correct Answer Pecuniary Your Answer Pecuniary Select The Blank Question While discussing the product divisibility of public and private goods, the principle of ________ may be applied in case of only those people who do not agree to pay or who cannot pay the market price Correct Answer exclusion Your Answer exclusion Select The Blank Question Under the decreasing returns to scale, the marginal output curve slopes ________. Correct Answer downward Your Answer downward Multiple Choice Multiple Answer Question Characteristics of Pure Public goods are: Correct Answer They are completely indivisible , Their marginal cost would be zero or close to zero , Their benefits cannot be priced Your Answer They are completely indivisible , Their marginal cost would be zero or close to zero , Their benefits cannot be priced Multiple Choice Multiple Answer Question Major types of costs are Correct Answer Accounting costs , Economic costs , Opportunity costs Your Answer Accounting costs , Economic costs , Opportunity costs True/False Question The short run Average Cost (A.C.) curve is U shaped. Correct Answer True Your Answer True

True/False Question Cyclical fluctuations are recurrent in nature Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Quantitative credit control measures are Correct Answer open market operations , changes in bank rates , changes in statutory reserve ratio Your Answer open market operations , changes in statutory reserve ratio True/False Question Private profit motive is an essential feature of Capitalism. Correct Answer True Your Answer True Multiple Choice Single Answer Question The number of buyers & sellers operating under perfect competition is Correct Answer large Your Answer large Select The Blank Question The sum of all individual demands constitutes________ Correct Answer market demand Your Answer market demand Select The Blank Question The costs which cover the cost of advertising is ________. Correct Answer Selling cost Your Answer Selling cost Multiple Choice Single Answer Question The relation between variable input and ouput Correct Answer is direct Your Answer is direct Multiple Choice Single Answer Question With decline in price of a commodity, total expenditure spent on the commodity is less than before, then elasticity of demand for the commodity is Correct Answer < 1 Your Answer < 1 Multiple Choice Single Answer Question The public sector is owned & controlled by Correct Answer state enterprises Your Answer state enterprises

True/False Question In the market, any one who agrees to pay the requisite price of a product would be excluded from their consumption. Correct Answer False Your Answer False Multiple Choice Single Answer Question A downward movement from one point to another point on the same demand curve implies Correct Answer expansion Your Answer expansion Multiple Choice Multiple Answer Question Methods of forecasting demand for new products are Correct Answer Product life cycle analysis , Test marketing , Evolutionary approach Your Answer Product life cycle analysis , Test marketing , Evolutionary approach True/False Question The concept of economic profit differs from that of normal profit. Correct Answer False Your Answer True Select The Blank Question Reasonable profit target as an alternative to the objective of profit maximization was suggested by ________. Correct Answer Joel Dean Your Answer Joel Dean Multiple Choice Single Answer Question Inflation is characterized by demand which is in Correct Answer excess of supply Your Answer surplus Select The Blank Question Defence service is an example of ________ good. Correct Answer indivisible Your Answer public LIST OF ATTEMPTED QUESTIONS AND ANSWERS Select The Blank Question When there is ________ in foreign demand for the goods manufactured in a country, exports increase and prices of commodities in the country Increase. Correct Answer Increase

Your Answer Increase Select The Blank Question Managerial ________ lies on the borderline of management and Economics. Correct Answer Economics Your Answer Economics True/False Question Demand curve slopes upwards from left to right. Correct Answer False Your Answer False Multiple Choice Single Answer Question If a person is habituated to the consumption of a commodity and if he cannot easily give up its use, demand for it is generally :Correct Answer Inelastic Your Answer Inelastic Select The Blank Question Propensity to consume is defined as the relationship between consumption and ________. Correct Answer Income Your Answer Income True/False Question In case of a proprietary firm the liability of the proprietor is limited. Correct Answer False Your Answer False Select The Blank Question

Government has carried out various rounds of disinvestments of equity shareholding, realizing a total amount of ________. Correct Answer Rs. 20,320 crores Your Answer Rs. 19,320 crores Select The Blank Question In a market system of an economy, producers are guided by ________ motive. Correct Answer Profit Your Answer Profit True/False Question Demand is related to price, time and place. Correct Answer True Your Answer False Match The Following Question Correct Answer Your Answer Pollution control certificate Government action Government action Air pollution Negative externality Measure to reduce externality Radio or TV signal Positive externality Positive externality Negotiation Private Action Perfect Competition in the market Select The Blank Question Cost-benefit analysis refers to the analysis undertaken to judge any projects ________ whether government or private and find out its worth. Correct Answer Investments

Your Answer Investments Multiple Choice Multiple Answer Question The entrepreneur gets Pure Profit for :Correct Answer Undertaking risk & uncertainty , For co-ordination & organizing production , For innovation Your Answer Undertaking risk & uncertainty , For innovation , For generating employment Multiple Choice Single Answer Question The demand for a commodity depends on the prices of its substitutes which are :Correct Answer Relative Your Answer Relative Multiple Choice Single Answer Question Under perfect competition, if demand increases, supply being constant, the price would :Correct Answer Rise Your Answer Rise True/False Question A firm is a technical unit of a given capacity of output. Correct Answer False Your Answer False Multiple Choice Single Answer Question With decline in price of a commodity, total expenditure spent on the commodity is less than before, then elasticity of demand for the commodity is :Correct Answer Less than one Your Answer Less than one

Select The Blank Question Modern economists treat social cost and benefits as ________ of private investment and production decisions. Correct Answer Externalities Your Answer Externalities Multiple Choice Single Answer Question When a firms A.R. (average revenue) is greater than A.C. (average cost), it gets a profit which is :Correct Answer Super normal Your Answer Positive Multiple Choice Multiple Answer Question Features of Dumping are :Correct Answer It is possible in the case of monopoly market , Selling same good at higher price in home market and at lower price in international market , It is encouraged with a view to promote the exports Your Answer It is possible in the case of monopoly market , Selling same good at higher price in home market and at lower price in international market , It is encouraged with a view to promote the exports Multiple Choice Single Answer Question According to J.M. Keynes, there is inducement to invest, when the marginal efficiency of capital is greater than :Correct Answer Rate of interest Your Answer Rate of interest Multiple Choice Single Answer Question According to many economists, the root cause of economic problem is :Correct Answer Scarcity Your Answer Scarcity

Multiple Choice Single Answer Question Demand for several products like ice-cream, chocolate, bhel-puri depends on :Correct Answer Individual tastes Your Answer Individual tastes True/False Question In the traditional concept of equilibrium, a firm attains the equilibrium when the firms Total Revenue (T.R.) =Total Cost (T.C.). Correct Answer False Your Answer True Multiple Choice Multiple Answer Question The phase of recovery denotes :Correct Answer More employment opportunities , Increase in profitability , Wage rate increase Your Answer Increase in profitability , Inventories decrease True/False Question There is no separation of ownership and management in case of a Joint Stock Company. Correct Answer False Your Answer False True/False Question Pure public goods must be in the hands of public sector only. Correct Answer True Your Answer True Select The Blank Question The salary of the proprietor or rent on own land are the ________. Correct Answer Implicit cost

Your Answer Implicit cost Multiple Choice Multiple Answer Question Demand Curve :Correct Answer Is a graphical presentation , Slopes downward , Explain the relation between price and demand Your Answer Is a graphical presentation , Slopes downward , Explain the relation between price and demand True/False Question The short run Average Cost (A.C.) curve is U shaped. Correct Answer True Your Answer True Select The Blank Question Sole Proprietorship is also called sole ________. Correct Answer Tradership Your Answer Tradership Select The Blank Question Perfectly elastic demand curve is ________. Correct Answer Horizontal Your Answer Horizontal Select The Blank Question The externality which causes an economic gain or an economic loss to other economic units is also referred to as ________ externality. Correct Answer Pecuniary Your Answer Pecuniary

Multiple Choice Multiple Answer Question Distinction between private sector and public sector is determined on the basis of :Correct Answer Economic system , Motive , Principle of pricing Your Answer Economic system , Motive , Principle of pricing Multiple Choice Single Answer Question For an economist, Tata Eng & Locomotive Company Ltd is a :Correct Answer Firm Your Answer Firm True/False Question In any business, while formulating a profit policy, the possibility of emergence of rival firms must be taken into account. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Government intervention is needed in free market mechanism to :Correct Answer Provide employment to all who willing to work at prevailing wage rate , Factors of production which are optimally allocated between the various industries , Get sufficient income to meet their basic needs by all Your Answer Provide employment to all who willing to work at prevailing wage rate , Factors of production which are optimally allocated between the various industries , Get sufficient income to meet their basic needs by all Multiple Choice Multiple Answer Question Demand is determined by :Correct Answer Price of the product , Relative prices of other goods , Tastes and habits Your Answer Price of the product , Tastes and habits

Match The Following Question Correct Answer Your Answer Human wants Unlimited Unlimited Managerial economics Decision making and forward planning Decision making and forward planning Resources Scarce Limited Commodities Goods and services Goods and services Multiple Choice Multiple Answer Question The payments made out of the Gross Profit are :Correct Answer Remuneration to factors of production , Depreciation , Maintenance Charges Your Answer Remuneration to factors of production , Depreciation , Maintenance Charges Multiple Choice Multiple Answer Question Types of income elasticity of demand :Correct Answer Negative income elasticity , Zero income elasticity , Unit income elasticity Your Answer Negative income elasticity , Unit income elasticity , Neutral income elasticity Multiple Choice Single Answer Question In general, the demand for necessaries is relatively :Correct Answer Inelastic Your Answer Inelastic Multiple Choice Multiple Answer Question The causes of inflation are :Correct Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign

demand Your Answer Increase in public expenditure , Increase in private expenditure , Increase in foreign demand True/False Question Institution of private property is not an essential feature of Capitalism. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question In case of defense services, all the sections of the society are equally protected and benefited. The defense services in other words is :Correct Answer Indivisible in character , Cannot be priced in the market , A public good Your Answer Indivisible in character , Cannot be priced in the market , A public good Multiple Choice Multiple Answer Question Methods of forecasting demand for new products are :Correct Answer Product life cycle analysis , Test marketing , Evolutionary approach Your Answer Product life cycle analysis , Test marketing , Evolutionary approach Multiple Choice Single Answer Question Peas & beans, groundnut oil & til oil, tea & coffee are examples of :Correct Answer Substitute goods Your Answer Substitute goods Multiple Choice Single Answer Question When with a rise in price, the total outlay falls, or with a fall in price, the total outlay rises, elasticity of demand is :Correct Answer Greater than one Your Answer Infinite

LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Single Answer Question Pure public goods are subject to the law of decreasing average cost, because of the Correct Answer economies of scale Your Answer economies of scale Multiple Choice Multiple Answer Question Features of Long run market are Correct Answer It is durable goods market , Supply can be increased or reduced according to the demand , Sellers at least recover minimum price for their goods Your Answer It is durable goods market , Supply can be increased or reduced according to the demand , Sellers at least recover minimum price for their goods True/False Question In case of indivisible goods, which are not priced, the decisions regarding their demand preferences are taken through price mechanism. Correct Answer False Your Answer True Multiple Choice Single Answer Question A responsible factor for inflation is Correct Answer hike in prices Your Answer hike in prices True/False Question A monopolists product is a unique product. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Important theories of profits are Correct Answer Uncertainty-bearing theory of profit , Dynamic theory of profit , Life cycle theory Your Answer Risk taking theory , Uncertainty-bearing theory of profit , Dynamic theory of profit Multiple Choice Multiple Answer Question The promoters of a company can get incorporated by filing with the registrarof companies various documents such as Correct Answer Memorandum of Association , Articles of Association , Prospectus Your Answer Memorandum of Association , Articles of Association Select The Blank Question The cost which enter the accounts book of the firm are referred as ________.

Correct Answer Accounting cost Your Answer Accounting cost Multiple Choice Single Answer Question The indivisible goods whose benefits cannot be priced are called Correct Answer Pure public goods Your Answer Pure private goods Select The Blank Question The partnership between private sector & government is called ________ Correct Answer Joint sector enterprise Your Answer Joint sector enterprise Multiple Choice Single Answer Question The main objective of a co- operative organization is Correct Answer service Your Answer service Multiple Choice Multiple Answer Question The features of business or trade cycle are Correct Answer It is a wave like movement , These fluctuations are recurrent in nature , Expansion and contraction in trade cycle are cumulative in effect Your Answer It is a wave like movement , These fluctuations are recurrent in nature , Expansion and contraction in trade cycle are cumulative in effect Match The Following Question Correct Answer Your Answer Pollution control certificate Government action Government action Air pollution Negative externality Measure to reduce externality Radio or TV signal Positive externality Private Action Negotiation Private Action Perfect Competition in the market Multiple Choice Single Answer Question The profits which must be deducted from the gross profits to arrive at net profits are Correct Answer Monopoly Profits Your Answer Accounting Profit True/False Question The products sold by different sellers under pure competition are heterogeneous.

Correct Answer False Your Answer True Match The Following Question Correct Answer Your Answer Public Sector Life Insurance Corporation Life Insurance Corporation Competitive Industry Homogenous Product Non capitalist in nature Monopoly Firm One Firm One Firm Plant Technical Unit Technical Unit Multiple Choice Single Answer Question Cournot , the economists who defined the term market different from that of the traditional sense is an Correct Answer French economists Your Answer German economists Multiple Choice Single Answer Question According J.B.Clark, profit is the reward paid for Correct Answer dynamism Your Answer risk bearing Select The Blank Question The goods become ________ only when each individual has an access to the entire amount of it and its use by the individual does not reduce its availability to others. Correct Answer indivisible Your Answer divisible Multiple Choice Multiple Answer Question The advantage of cost-benefit analysis are Correct Answer Maximization of social welfare , Objective measurement of the tradeoff , Maximization of difference between total benefits & total costs Your Answer Objective measurement of the trade-off , Maximization of difference between total benefits & total costs , Applicable only in partial equilibrium framework. True/False Question Supply management is related to the volume ofsupply & its distribution system. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The important determinants of supply are Correct Answer Always referred to in relation to price & time , Government policy ,

Availability of factors of production Your Answer Availability of factors of production , Tastes and preferences of producer Multiple Choice Multiple Answer Question The features of a Joint Stock-Company are Correct Answer perpetual succession , limited liability , free transferability of shares Your Answer perpetual succession , limited liability , free transferability of shares Select The Blank Question If the output rises in the greater proportion than that of the increase in factor inputs, it is referred to as ________. Correct Answer increasing returns to scale. Your Answer increasing returns to scale. Select The Blank Question A fall in price tends the demand for goods to ________ Correct Answer expand Your Answer increase Multiple Choice Multiple Answer Question Average propensity to consume is characterized as follows Correct Answer the ratio of consumption expenditure to any particular level of income , It is found by dividing consumption expenditure by income , It is expressed as the percentage of income consumed Your Answer the ratio of consumption expenditure to any particular level of income , It is found by dividing consumption expenditure by income , It is expressed as the percentage of income consumed True/False Question In case of the co-operative societies supplying cheap inputs or supplying consumer products at fair prices, a system of subsidized pricing is followed. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Individual Demand Schedule Correct Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Your Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased Select The Blank Question Perfectly elastic demand curve is ________ Correct Answer horizontal Your Answer horizontal

Multiple Choice Multiple Answer Question Methods of measurement of elasticity are Correct Answer Percentage method , Point elasticity method , Total outlay expenditure method Your Answer Percentage method , Point elasticity method , Unitary elastic demand method Select The Blank Question In the context of externalities, driving the smoke-emitting buses and trucks in the cities is an example of ________ cost. Correct Answer social Your Answer social True/False Question There are no real exceptions to the law of demand Correct Answer False Your Answer False True/False Question The divisible goods, whose benefits can be priced, are called pure public goods. Correct Answer False Your Answer True True/False Question In the measurement of profit, the differences in the concept of profit arise due to differences in cost concepts. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Demand forecasts are necessary for Correct Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms Your Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms Select The Blank Question Economists like A.C.Harberger have shown that the cost benefit analysis can be applied to ________ analysis. Correct Answer general equilibrium Your Answer general equilibrium Multiple Choice Single Answer Question The economists who defined the term market different from that of the traditional sense is

Correct Answer Jevons & Cournot Your Answer Marshall Multiple Choice Single Answer Question The act of manufacturing goods and services is called Correct Answer production Your Answer production True/False Question Price discrimination is possible in perfect competition Correct Answer False Your Answer False Select The Blank Question Supply is predominantly determined by ________. Correct Answer stock Your Answer demand Select The Blank Question The social costs and benefits are the external economies and diseconomies resulting from the ________ activities, which are known as, externalities Correct Answer firms Your Answer government True/False Question Free riders is a term associated with the people who would like to have benefit of a good without sharing the cost of its supply. Correct Answer True Your Answer True Multiple Choice Single Answer Question Change in income of a person may result in demand for goods to Correct Answer change Your Answer change Multiple Choice Single Answer Question Managerial economics aims at providing guidance to the firms for Correct Answer decision making Your Answer decision making Multiple Choice Single Answer Question When in order to satisfy a given want , 2 or more goods are needed in combination, these goods are called Correct Answer complimentary goods Your Answer complimentary goods

Multiple Choice Multiple Answer Question Forecasts can be made at the level of Correct Answer A firm , An industry , The nation Your Answer A firm , An industry Select The Blank Question Cost-benefit analysis refers to the analysis undertaken to judge any projects ________ whether government or private and find out its worth. Correct Answer investments Your Answer investments LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question During inflation, the pensioners whose income is permanently fixed, are substantially benefited. Correct Answer False Your Answer True Multiple Choice Single Answer Question During the period of depression various factors of production are Correct Answer exhausted Your Answer unutilized True/False Question When demand and supply rise and fall in the same proportion, the equilibrium price changes. Correct Answer False Your Answer False Select The Blank Question Homeostatic Approach as an alternative objective of firms was suggested by ________. Correct Answer Prof. Kenneth Boulding Your Answer Joel Dean Select The Blank Question The social costs and benefits are the external economies and diseconomies resulting from the ________ activities, which are known as, externalities Correct Answer firms Your Answer firms Multiple Choice Single Answer Question Economists call all human resources mental, physical , inherited and acquired as

Correct Answer Labour Your Answer Labour Multiple Choice Single Answer Question According to Prof. F.H. Knight, profit is a reward for Correct Answer uncertainty bearing Your Answer risk bearing Multiple Choice Multiple Answer Question Internal Economies involves Correct Answer Advantages of large-scale production , Low cost of production , It avails benefits of cheaper finance Your Answer Low cost of production , It avails benefits of cheaper finance , Availability of banking facility Select The Blank Question Demand for safety pins is ________ Correct Answer inelastic Your Answer relatively inelastic Select The Blank Question By profits, the economist means total revenue minus ________. Correct Answer All costs Your Answer All costs Multiple Choice Multiple Answer Question Distinction between private sector and public sector is determined Correct Answer on the basis of economic system , on the basis of motive , on the basis of principle of pricing Your Answer on the basis of economic system , on the basis of motive , on the basis of infrastructure Select The Blank Question The liability of a Karta in a Joint Hindu Family Business is ________. Correct Answer limited Your Answer unlimited True/False Question When a change in income has no effect upon the quantity demanded of a product, the income elasticity of demand is zero Correct Answer True Your Answer True Select The Blank Question The externality which causes an economic gain or an economic loss to other

economic units is also referred to as ________ externality. Correct Answer Pecuniary Your Answer Economic True/False Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce? Correct Answer False Your Answer True True/False Question During period of depression various factors of production lie unutilized. Correct Answer True Your Answer True True/False Question In case of sole proprietorship the owner and organization are same Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Increasing Returns explains Correct Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP Your Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is above MP Match The Following Question Correct Answer Your Answer Price leadership Oligopoly Monopoly Surgical equipment Refusal pricing psychological & subjective approach Intuitive pricing psychological & subjective approach selection of sample tests markets Experimental pricing selection of sample tests markets Oligopoly Multiple Choice Single Answer Question During a period of rising prices (inflation), the goods and services are Correct Answer scarce Your Answer scarce Select The Blank Question The financing of ________ goods is done through public expenditure.

Correct Answer public Your Answer public Multiple Choice Multiple Answer Question Reasons for change in Demand (Increase or Decrease in Demand) Correct Answer Change income of consumer , Change in population , Change in fashion and customs Your Answer Change income of consumer , Change in fashion and customs Select The Blank Question The form of organization which is best for self employment is ________. Correct Answer Sole trader Your Answer Joint sector enterprise Multiple Choice Multiple Answer Question Price discrimination is possible in case of Correct Answer public utilities with legal sanction , personnel services sold , geographical barriers Your Answer monopolistic market , personnel services sold True/False Question The short run Average Cost (A.C.) curve is U shaped. Correct Answer True Your Answer True True/False Question Demand for luxury goods is inelastic Correct Answer False Your Answer True True/False Question Market price fluctuates very often. Correct Answer True Your Answer True Multiple Choice Single Answer Question According to J.M.Keynes, the equilibrium is established at the level Correct Answer less than full employment Your Answer equal to full employment Match The Following Question Correct Answer Your Answer The point of effective demand is the point when A.D. = A.S. A.D. = A.S. Trade Cycle Recession Recession

Rise in costs due to an increase in factor prices a cause of inflation from supply side. a cause of inflation from supply side. According to J. M. Keynes, there are two factors determining the investment function, namely i) the M.E.C. and ii) the rate of interest. namely i) the consumption. and ii) the rate of savings. Multiple Choice Single Answer Question Joint Stock Company is an incorporated association with a Correct Answer perpetual succession Your Answer perpetual succession Select The Blank Question Sole Proprietorship which is also called sole ________ Correct Answer tradership Your Answer tradership Multiple Choice Single Answer Question The market which covers capital market & all banking and non-banking institutions are together taken as Correct Answer Financial Market Your Answer Financial Market Multiple Choice Multiple Answer Question According to Keynes there are three motives for holding cash for liquidity preference Correct Answer the transactions motive , the precautionary motive , the speculative motive Your Answer the transactions motive , the precautionary motive , the speculative motive Multiple Choice Multiple Answer Question The total output of all the commodities in one country over some period, usually taken as a year is called as Correct Answer Gross National Product , National Product , National Income Your Answer Gross National Product , National Product Multiple Choice Multiple Answer Question Co-operative organizations is Correct Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members Your Answer voluntary organization , managed by democratic principle , non profit motive organization Select The Blank Question The indivisible goods to which the principle exclusion does not apply are called ________ goods.

Correct Answer pure public Your Answer pure public Select The Blank Question In a market system of an economy, producers are guided by ________ motive. Correct Answer profit Your Answer profit Multiple Choice Single Answer Question Economic problem does not recognize the boundaries of caste,creed,culture Thus economic problem is always considered as the Correct Answer universal problem Your Answer universal problem Multiple Choice Multiple Answer Question Conditions of Price Discrimination are: Correct Answer The two markets in which the product is sold should be kept separate , The elasticity of demand in different markets should be different , Market must be imperfect Your Answer The two markets in which the product is sold should be kept separate , The elasticity of demand in different markets should be different , Market must be imperfect True/False Question Pure (Net) profit contains an element of monopoly profit. Correct Answer False Your Answer True Multiple Choice Multiple Answer Question Accounting profit includes Correct Answer wages , rent , interest Your Answer wages , rent , interest Multiple Choice Single Answer Question Depreciation is the value caused by the continuous use of a capital asset, which indicates Correct Answer loss Your Answer loss Multiple Choice Multiple Answer Question The railways use a lot of coal in firing the steam locomotives. This act causes Correct Answer a lot of sufferings to the people near the railway. , cost to the society. , no cost to the railways. Your Answer a lot of sufferings to the people near the railway. , affects the railways Multiple Choice Single Answer Question J.M. Keynes, on the basis of a fundamental psychological law of consumption,

observed that as income increases, consumption also increases, but proportionately Correct Answer less Your Answer less Multiple Choice Single Answer Question Slope of supply curve is Correct Answer positive Your Answer positive Multiple Choice Multiple Answer Question Types of imperfect competition are Correct Answer Monopoly , Duopoly , Oligopoly Your Answer Monopoly , Duopoly , Oligopoly Multiple Choice Single Answer Question In the Long run perfect competition and monopolistic competition the firm make profits which are Correct Answer normal Your Answer normal

LIST OF ATTEMPTED QUESTIONS AND ANSWERS Multiple Choice Single Answer Question In cost benefit analysis, after the step of appraisal and selection of the project is the step of Correct Answer comparison of the cash flow Your Answer comparison of the cash flow Select The Blank Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally. Correct Answer management Your Answer management True/False Question The externalities that may be an economic gain or economic losses to other economic units are referred to as technological externalities. Correct Answer False Your Answer False Select The Blank Question The minimum number of directors which private limited should have is ________.

Correct Answer 2 Your Answer 3 Multiple Choice Multiple Answer Question Co-operative organizations is Correct Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members Your Answer voluntary organization , managed by democratic principle , organization, which performs its business within the members Multiple Choice Multiple Answer Question Main aims of the New Industrial Policy (1991) are Correct Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Your Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Multiple Choice Multiple Answer Question Quantitative credit control measures are Correct Answer open market operations , changes in bank rates , changes in statutory reserve ratio Your Answer open market operations , changes in bank rates , changes in statutory reserve ratio Multiple Choice Single Answer Question The principle of full employment equilibrium was stated by Correct Answer Says Law of Market Your Answer Says Law of Market Select The Blank Question Increase in consumers income leads in the demand for inferior goods to ________ Correct Answer decrease Your Answer decrease True/False Question The congress government led by Narsimha Rao announced the New Industrial Policy in July 1991. Correct Answer True Your Answer True

Select The Blank Question The index numbers which measure the changes in the general price level of a country refers to ________ Correct Answer Wholesale prices index Your Answer Wholesale prices index Multiple Choice Single Answer Question Peas & beas, groundnut oil & til oil, tea & coffee are examples of Correct Answer substitutes goods Your Answer substitutes goods Multiple Choice Multiple Answer Question Exceptions to the Law of Demand are Correct Answer Giffen goods , Articles of snob appeal , Speculation Your Answer Giffen goods , Articles of snob appeal , Speculation Multiple Choice Single Answer Question Variable cost are those costs which vary with the level of Correct Answer output Your Answer output Multiple Choice Single Answer Question Costs which increase because of the expansion of a firm are called Correct Answer incremental Your Answer incremental Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Your Answer applied economics Multiple Choice Single Answer Question The suggestion of reasonable profit target as an alternative to the objective of profit maximization is by Correct Answer Joel Dean Your Answer Joel Dean Multiple Choice Multiple Answer Question Different types of business organizations are Correct Answer private sector , public sector , joint sector Your Answer public sector , joint sector , private sector Select The Blank Question Defence service is an example of ________ good. Correct Answer indivisible Your Answer indivisible

Multiple Choice Multiple Answer Question The advantage of cost-benefit analysis are Correct Answer Maximization of social welfare , Objective measurement of the tradeoff , Maximization of difference between total benefits & total costs Your Answer Maximization of social welfare , Objective measurement of the trade-off , Maximization of difference between total benefits & total costs Multiple Choice Single Answer Question The income which a businessman might expect from the second best alternative use of his resources is called as Correct Answer opportunity cost Your Answer opportunity cost Match The Following Question Correct Answer Your Answer Motor cars Tangible goods Tangible goods Wants Insatiable Insatiable Managerial Economics Prescriptive in nature Prescriptive in nature Resources Alternative uses Alternative uses Division of societys output of goods and services The theory of distribution The theory of distribution Multiple Choice Single Answer Question The type economic problem is Correct Answer universal Your Answer universal True/False Question The defence services are indivisible in the sense that they cannot be priced in the market in order to deprive some members of the society from its use or benefits. Correct Answer True Your Answer True Select The Blank Question The good becomes ________ so far as its use is concerned only when it is priced in the market and the principle of exclusion is applied to it. Correct Answer divisible Your Answer divisible Select The Blank Question Output rises in a lesser proportion to that of the increase in input, under the case

of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale True/False Question The law of supply is not hypothetical. Correct Answer False Your Answer False True/False Question In a free-enterprise economy, the problems of what how and for whom are solved by a planning committee Correct Answer False Your Answer False Multiple Choice Single Answer Question Dalal Street in Bombay is known as Correct Answer Bombay Stock Exchange Your Answer Bombay Stock Exchange True/False Question Accounting profit takes in to account opportunity cost. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Types of Share capital of Joint-Stock Company are Correct Answer registered or authorized capital , issued capital , paid-up capital Your Answer registered or authorized capital , issued capital , paid-up capital True/False Question A Joint Stock Company is managed by the Board of Directors elected by shareholders. Correct Answer True Your Answer True True/False Question A plant is an economic unit which takes various decisions related to production and distribution. Correct Answer False Your Answer False Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizens wants are

Correct Answer insufficient Your Answer insufficient Multiple Choice Single Answer Question A firm gets an opportunity to produce multiple products because changes in business activity in a firms is Correct Answer cyclical Your Answer cyclical Multiple Choice Multiple Answer Question Major types of costs are Correct Answer Accounting costs , Economic costs , Opportunity costs Your Answer Accounting costs , Economic costs , Opportunity costs Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Your Answer Practice Select The Blank Question The liability of a Karta in a Joint Hindu Family Business firm is ________. Correct Answer limited Your Answer limited Multiple Choice Multiple Answer Question The production function studies Correct Answer Input and out put relation , Factors of production and final production , Technology used in production Your Answer Input and out put relation , Factors of production and final production , Technology used in production Select The Blank Question An upward sloping demand curve is called ________ Correct Answer exceptional demand curve Your Answer exceptional demand curve Select The Blank Question Economists like A.C.Harberger have shown that the cost benefit analysis can be applied to ________ analysis. Correct Answer general equilibrium Your Answer general equilibrium Select The Blank Question The necessary condition of profit maximization of a firm is that Marginal Revenue (M.R) must be equal to ________.

Correct Answer Marginal cost (M.C) Your Answer Marginal cost (M.C) Multiple Choice Multiple Answer Question Managerial economics deals with Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution Match The Following Question Correct Answer Your Answer Implicit costs are the cost of resources owned by the firm. of resources owned by the firm. Opportunity costs are also known as alternative costs alternative costs The difference between average total cost &average fixed cost shows variable cost variable cost The difference between average cost and average revenue is average profit average profit Multiple Choice Single Answer Question In a market economy, a firm in the private sector basically aims at maximization of Correct Answer money profits Your Answer money profits Multiple Choice Single Answer Question Under pure competition, the entry & exit of firms is Correct Answer free Your Answer free True/False Question A supply schedule is a graphical presentation of supply patterns. Correct Answer False Your Answer False True/False Question When a firms average revenue (A.R) is less than its average cost, it earns only normal profit. Correct Answer False Your Answer True

Multiple Choice Single Answer Question The indivisible goods whose benefits cannot be priced are called Correct Answer Pure public goods Your Answer Pure public goods True/False Question The opportunity cost of a product is the opportunity gained of being able to produce some other product. Correct Answer False Your Answer True Select The Blank Question The indivisible goods to which the principle exclusion does not apply are called ________ goods. Correct Answer pure public Your Answer private True/False Question Giffen goods are superior goods. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Defects of market system: Correct Answer Inequalities of income and wealth , Emergence of monopolies , Failure to provide full employment Your Answer Inequalities of income and wealth , Emergence of monopolies Multiple Choice Single Answer Question The number of sellers operating under monopolistic competition as compare to oligopoly is Correct Answer larger Your Answer smaller True/False Question The distinction between fixed costs and variable costs is relevant in the short period only. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The promoters of a company can get incorporated by filing with the registrarof companies various documents such as Correct Answer Memorandum of Association , Articles of Association , Prospectus

Your Answer Memorandum of Association , Articles of Association , Prospectus Multiple Choice Single Answer Question The General Theory of Employment, Interest and Money in 1936 was published by Correct Answer J.M. Keynes Your Answer J.M. Keynes Select The Blank Question Modern economists treat social cost and benefits as ________ of private investment and production decisions. Correct Answer externalities Your Answer advantages Multiple Choice Single Answer Question The Risk Taking Theory was developed by Hawley, who was an Correct Answer American Economist Your Answer American Economist Match The Following Question Correct Answer Your Answer Motor cars Tangible goods Alternative uses Wants Insatiable Prescriptive in nature Managerial Economics Prescriptive in nature Tangible goods Resources Alternative uses The theory of distribution Division of societys output of goods and services The theory of distribution Insatiable Multiple Choice Single Answer Question When input and output increase in the same proportion, the phase of returns are Correct Answer constant Your Answer increasing True/False Question Demand and desire are one and the same. Correct Answer False Your Answer False

True/False Question The demand curve has a negative slope. Correct Answer True Your Answer False Select The Blank Question Homeostatic Approach as an alternative objective of firms was suggested by ________. Correct Answer Prof. Kenneth Boulding Your Answer Prof. Kenneth Boulding True/False Question Price is the, only determinant of demand Correct Answer False Your Answer False Select The Blank Question Output rises in a lesser proportion to that of the increase in input, under the case of ________. Correct Answer decreasing returns to scale Your Answer decreasing returns to scale Multiple Choice Single Answer Question Besides private sector, the other type of business organization is Correct Answer joint sector Your Answer co-operative organizations Multiple Choice Single Answer Question Jevons , the economists who defined the term market different from that of the traditional sense is an Correct Answer English economists Your Answer English economists Multiple Choice Single Answer Question If a person is habituated to the consumption of a commodity and if he cannot easily give up its use, demand for it is generally Correct Answer inelastic Your Answer unitary elastic Multiple Choice Multiple Answer Question Features of an Industry are Correct Answer All firms dealing in the same line of business , The ownership and management of each firm is different , Is a group of firms Your Answer All firms produce different goods , All firms dealing in the same line of business

True/False Question Measurement of profit becomes difficult because of the difficulty involved in the calculation of depreciation. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Conditions of Price Discrimination are: Correct Answer The two markets in which the product is sold should be kept separate , The elasticity of demand in different markets should be different , Market must be imperfect Your Answer The elasticity of demand in different markets should be different , Market must be imperfect Match The Following Question Correct Answer Your Answer Depression Unemployment Increases purchasing power Moral suasion Persuasive method Low purchasing power Bank rate Quantitative credit control measure Persuasive method Inflation Low purchasing power Unemployment Multiple Choice Multiple Answer Question Features of Pure Competition are Correct Answer Large number of buyers and sellers , Homogeneous products , Free entry and free exit of firms Your Answer Transportation cost , Large number of buyers and sellers , Homogeneous products Multiple Choice Single Answer Question According to Prof. F.H. Knight, profit is a reward for Correct Answer uncertainty bearing Your Answer innovation Select The Blank Question The out of pocket costs are ________. Correct Answer Explicit costs Your Answer Explicit costs Select The Blank Question On the ________ level, the summation of maximum individual welfare does not automatically lead to maximum social welfare.

Correct Answer macro Your Answer micro Multiple Choice Multiple Answer Question Internal Economies involves Correct Answer Advantages of large-scale production , Low cost of production , It avails benefits of cheaper finance Your Answer Advantages of large-scale production , Low cost of production , It avails benefits of cheaper finance Multiple Choice Multiple Answer Question We say that a nation faces economic problems , under following conditions Correct Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited , These resources are not specific but have alternative uses Your Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited Select The Blank Question In the 3rd stage of operation of the law of variable proportions, the marginal product becomes ________. Correct Answer negative Your Answer zero Multiple Choice Multiple Answer Question Main aims of the New Industrial Policy (1991) are Correct Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act Your Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy Multiple Choice Single Answer Question The relation between variable input and ouput Correct Answer is direct Your Answer is direct Multiple Choice Multiple Answer Question Government intervention is needed in free market mechanism to Correct Answer To provide employment to all who willing to work at prevailing wage rate , Factors of production are optimally allocated between

the various industries , All will get sufficient income to meet their basic needs Your Answer To provide employment to all who willing to work at prevailing wage rate , Factors of production are optimally allocated between the various industries Select The Blank Question The index numbers which measure the changes in the general price level of a country refers to ________ Correct Answer Wholesale prices index Your Answer Customer price indices True/False Question The rise in prices is basically because of shortages of basic goods & services and a rapid growth of money supply. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The sole proprietorship type of organization is found in Correct Answer Agriculture, , Retail trade, , Hotel, Your Answer Agriculture, , Retail trade, Multiple Choice Multiple Answer Question According to Keynes there are three motives for holding cash for liquidity preference Correct Answer the transactions motive , the precautionary motive , the speculative motive Your Answer the transactions motive , the precautionary motive , the speculative motive Select The Blank Question Cost-benefit analysis refers to the analysis undertaken to judge any projects ________ whether government or private and find out its worth. Correct Answer investments Your Answer profits Multiple Choice Single Answer Question In the law of variable proportion, a stage is reached when marginal product is Correct Answer zero Your Answer zero True/False Question Profit should be large enough for a plough back for

business expansion. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Average propensity to consume is characterized as follows Correct Answer the ratio of consumption expenditure to any particular level of income , It is found by dividing consumption expenditure by income , It is expressed as the percentage of income consumed Your Answer the ratio of consumption expenditure to any particular level of income , It is found by dividing consumption expenditure by income Multiple Choice Single Answer Question Market mechanism is characterized by Correct Answer instability Your Answer stability Select The Blank Question Supply is predominantly determined by ________. Correct Answer stock Your Answer demand Select The Blank Question The externality which causes an economic gain or an economic loss to other economic units is also referred to as ________ externality. Correct Answer Pecuniary Your Answer Financial Multiple Choice Single Answer QuestionThe externality in which the consumption or production levels of an economic unit affect the other economic units in the economy is called :Correct Technological externality Answer Your Technological externality Answer Select The Blank QuestionBy profits, the economist means total revenue minus ________. Correct All costs Answer Your All costs

Answer Multiple Choice Single Answer QuestionThe act of using goods and services available in the market to satisfy wants is called :Correct Consumption Answer Your Consumption Answer True/False QuestionMarginal Cost (M.C.) is the rate of change of fixed cost. Correct False Answer Your False Answer Select The Blank QuestionThe factors of production are called inputs and may be combined to yield the maximum ________. Correct Output Answer Your Output Answer Multiple Choice Single Answer QuestionDepreciation is the value caused by the continuous use of a capital asset, which indicates :Correct Loss Answer Your Loss Answer True/False QuestionThe externalities or economic effects, which flow from the production or use of the goods to other parties or economic units, are termed as neighborhood effects. Correct True

Answer Your False Answer Multiple Choice Single Answer QuestionWhen a company raises additional finance by borrowing from the public for a specific period of time at a particular rate of interest, it is called as :Correct Debentures Answer Your Redeemable Shares Answer Multiple Choice Multiple Answer QuestionAt the level of the society, the macro economic objectives are :Correct Economic stabilization , Answer Employment generation , Poverty reduction Your Economic stabilization , Answer Employment generation , Poverty reduction True/False QuestionAny point on the production possibility curve indicates under utilization of resources. Correct False Answer Your True Answer Multiple Choice Multiple Answer QuestionIndex numbers may broadly be classified as :Correct Special purpose indices , Price Answer indices , Quantity indices Your Price indices , Quantity indices , Answer Special purpose indices Multiple Choice Single Answer QuestionIn case of a pure public good, its marginal cost is :Correct Zero

Answer Your Low Answer Multiple Choice Single Answer QuestionAn entrepreneur may earn high profits just by luck, say because of outbreak of war. This is known as :Correct Chance Profits Answer Your Chance Profits Answer Multiple Choice Multiple Answer QuestionMethods of measurement of elasticity are :Correct Percentage method , Point Answer elasticity method , Total outlay expenditure method Your Percentage method , Point Answer elasticity method , Total outlay expenditure method Multiple Choice Single Answer QuestionThe firm is an economic unit that makes the decisions regarding employment of :Correct Factors of production Answer Your Factors of production Answer Multiple Choice Multiple Answer QuestionReasons for change in Demand (Increase or Decrease in Demand) are :Correct Change income of consumer , Answer Change in population , Change in fashion and customs Your Change income of consumer , Answer Change in population , Change in fashion and customs True/False QuestionA firm is a technical unit of a

given capacity of output. Correct False Answer Your True Answer Multiple Choice Single Answer QuestionDuring the period of depression various factors of production are :Correct Unutilized Answer Your Exhausted Answer Select The Blank QuestionThe rate of interest, according to Keynes depends upon two factors: the liquidity preference function and ________. Correct The quantity of money. Answer Your The supply of money Answer Select The Blank QuestionBy what methods are commodities produced and the consequences of choices about ________ and the consequences of choice about production methods are topics in Theory of Production. Correct Production Answer Your Production Answer True/False QuestionThe demand for life saving drugs is elastic. Correct False Answer Your True Answer

Select The Blank QuestionThe minimum number of directors which private limited should have is ________. Correct 2 Answer Your 2 Answer Multiple Choice Single Answer QuestionThe market which deals with all the goods as a whole are considered as :Correct Commodity Market Answer Your Commodity Market Answer Multiple Choice Single Answer QuestionIn case of increase in the income, the rich persons demand for goods will be :Correct More Answer Your More Answer Select The Blank QuestionThe supply of agricultural goods is ________. Correct Inelastic Answer Your Inelastic Answer Select The Blank QuestionThe products sold by different sellers under pure competition are ________. Correct Homogeneous Answer Your Homogeneous Answer Select The Blank QuestionFiscal Policy refers to variations

in ________. Correct Levels of taxation Answer Your Total supply of money Answer Multiple Choice Multiple Answer QuestionPrice discrimination is possible in case of :Correct Public utilities with legal Answer sanction , Personnel services sold , Geographical barriers Your Monopolistic market , Public Answer utilities with legal sanction , Geographical barriers True/False QuestionConsumers protection involves protection to the consumers from unfair trade practices. Correct True Answer Your True Answer Multiple Choice Single Answer QuestionIn the Long run, perfect competition and monopolistic competition, the firm make profits which are :Correct Normal Answer Your Super normal Answer True/False QuestionIn case of decrease in supply, the supply curve shifts to left side of the original supply curve. Correct True Answer Your False Answer Multiple Choice Multiple Answer QuestionIn case of defense services, all

the sections of the society are equally protected and benefited. The defense services in other words is :Correct Indivisible in character , Cannot Answer be priced in the market , A public good Your Indivisible in character , Cannot Answer be priced in the market True/False QuestionDemand for luxury goods is inelastic. Correct False Answer Your True Answer Select The Blank QuestionA normal demand curve has ________. Correct Negative slope Answer Your Positive slope Answer Match The Following Question Correct Your Answer Answer Experimental Trial Multiple pricing and products error method A.C.> Two Trial A.R firms and error method Monopoly Low Single cross products elasticity of demand Excess Multiple High capacity products cross elasticity of

demand Select The Blank QuestionIf there is reduction in the taxes levied by the Government, people are left with ________. Correct More money Answer Your Has no effect on the money with Answer people Select The Blank QuestionIn a market economy ________ is the best judge of personal interest. Correct Individual Answer Your Individual Answer Multiple Choice Multiple Answer QuestionUnder cost plus pricing :Correct The price is set to cover Answer material, labour cost , Actual costs, standard costs are included , Certain percentage of profit also included Your The price is set to cover Answer material, labour cost , Full cost is not covered , Actual costs, standard costs are included Multiple Choice Multiple Answer QuestionThe criteria to be taken into account while setting the standards for a reasonable profit are :Correct Capital Attraction , Plough Back Answer , Normal earnings Your Capital Attraction , Plough Back Answer , Normal earnings Multiple Choice Multiple Answer QuestionQuantitative credit control measures are :Correct Open market operations ,

Answer Changes in bank rates , Changes in statutory reserve ratio Your Open market operations , Answer Changes in bank rates , Changes in statutory reserve ratio Multiple Choice Multiple Answer QuestionFeatures of public sector enterprises are as follows :Correct It is controlled by the state , Answer Separate funds to undertake their activity , They are accountable to public Your It is controlled by the state , Answer Separate funds to undertake their activity , They are accountable to public True/False QuestionComplementary goods are jointly demanded but jointly demanded goods may not be Complementary. Correct True Answer Your True Answer Multiple Choice Multiple Answer QuestionTypes of income elasticity of demand :Correct Negative income elasticity , Zero Answer income elasticity , Unit income elasticity Your Negative income elasticity , Zero Answer income elasticity , Unit income elasticity True/False QuestionIn case of a partnership firm, the liability of a partner is limited. Correct False Answer Your False Answer

Match The Following Question Correct Your Answer Answer Break T.R. = T.R. = even T.C. T.C. point Normal Implicit Implicit profit cost cost Average Short Short variable run run cost cost cost (A.V.C.) Change Increase Increase in and and supply decrease decrease in in supply supply Multiple Choice Single Answer QuestionProf. Samuelson calls the air and water pollution or dangers from drunken drivers as economies that are :Correct Negative Answer Your Large scale Answer Multiple Choice Multiple Answer QuestionThe sole proprietorship type of organization is found in :Correct Agriculture , Retail trade , Hotel Answer Your Agriculture , Retail trade Answer

Multiple Choice Single Answer Question Managerial economics generally refers to the integration of economic theory with business Correct Answer Practice Multiple Choice Single Answer Question Every nations resources which are used to produce the quantities of goods

and services that would be required to satisfy all its citizens wants are Correct Answer insufficient Multiple Choice Single Answer Question Managerial economics is also understood to refer to Correct Answer applied economics Multiple Choice Single Answer Question The type economic problem is Correct Answer Universal Multiple Choice Single Answer Question The act of making goods and services is called Correct Answer production Multiple Choice Single Answer Question The act of using goods and services to satisfy wants is called Correct Answer Consumption Multiple Choice Single Answer Question The things that are produced by factors of production are called Correct Answer Commodities Multiple Choice Single Answer Question The concept of just distribution of national product is a Correct Answer normative True/False Question A firm under perfect competition is a price maker Correct Answer False True/False Question When demand and supply rise and fall in the same proportion, the equilibrium price changes. Correct Answer False True/False Question Market means a particular area where buyers and sellers meet Correct Answer False Multiple Choice Single Answer Question Goods which are completely divisible and to them the principle of exclusion applies in full measure are Correct Answer Pure private goods

Multiple Choice Single Answer Question Market system of economy is characterized by consumers Correct Answer sovereignty True/False Question In case of a proprietary firm the liability of the proprietor is limited Correct Answer False Multiple Choice Single Answer Question Macro economics provides an exploration to the functioning of an economy in Correct Answer general True/False Question The subject matter of macro economics includes the theory of income and employment at an individual level Correct Answer False Match The Following Question Correct Answer Dual prices Two different prices Inflation Deficit financing P.D.S. Essential commodities R.B.I. General and selective credit control measures The consumers Protection Act 1986 Right to information Multiple Choice Single Answer Question Depreciation is the value caused by the continuous use of a capital asset is Correct Answer loss True/False Question Accounting profit takes in to account opportunity cost. Correct Answer False True/False Question According to Prof Knight, profit is the reward for uncertainty bearing. Correct Answer True True/False Question According to J.B. Clark, profit is the reward paid to the entrepreneur for dynamism. Correct Answer True Multiple Choice Single Answer Question Complementary goods are demanded Correct Answer jointly

Match The Following Question Correct Answer Cross demand is the change in the quantity demanded of a given commodity in response to the Change in the price of anothercommodity Incase there were no changes in the quantity of food sold even when its price had fallen we would know that Demand was entirely inelastic The elasticity of demand for product will be higher The more available are substitutes for that product The law of demand indicates Relationship between the price of a commodity and the quantity Demanded The law of demand states When price falls demand rises Multiple Choice Single Answer Question As per the law marginal product becomes negative when total product Correct Answer falls Multiple Choice Single Answer Question The law of diminishing returns is applicable to agriculture provided the state of technology is given and Correct Answer constant Multiple Choice Single Answer Question Under the system of dual prices adopted by the Government for essential goods, the weaker sections of the community are supplied those goods through fair price shops which are Correct Answer fair Select The Blank Question Quantitative credit control measures such as ________ operations, change in the bank rate, and changes in the ________ ratios Correct Answer open market Correct Answer statutory reserve Multiple Choice Single Answer Question AVC is the per unit variable cost of Correct Answer production True/False Question Given the price, if the cost of production of a commodity decreases because of the use of improved technique of production, there will be increase in supply. Correct Answer True True/False Question The laws of returns to scale explain the behavior of output in response to changes in scale. Correct Answer True

Multiple Choice Multiple Answer Question An Industry Correct Answer Is a group of firms , All firms dealing in the same line of business , The ownership and management of each firm is different Multiple Choice Multiple Answer Question Dumping Correct Answer It is possible in the case of Monopoly Market , Selling same good at higher price in home market and lower at price in the international market , It is encourage with a view to promote the exports Select The Blank Question Under perfect competition, ________ is determined by the interaction of total ________ and total supply in the market Correct Answer price Correct Answer demand Multiple Choice Multiple Answer Question Advantages of Cost-Benefit Analysis Correct Answer It aims at maximization of social welfare , In following this principle, the problem of infinite target value does not arise , It shows the measures necessary for attaining maximum net wealth Multiple Choice Multiple Answer Question Effective Demand Correct Answer Determine the level of income and output in an economy , Is total expenditure is equal to total income in an economy , Study of aggregate demand and aggregate supply Select The Blank Question According to Prof. Ackley, ________ economics deals with economic affairs in the large it concerns the ________ of economic life. Correct Answer macro Correct Answer overall dimensions Multiple Choice Multiple Answer Question Different types of business organizations are; Correct Answer Private sector. , Public sector. , Joint sector. Multiple Choice Multiple Answer Question Distinction between private sector and public sector is determined Correct Answer On the basis of economic system , On the basis of motive , On the basis of principle of pricing Multiple Choice Multiple Answer Question Methods of Demand forecasting for new Products are:

Correct Answer Product life Cycle Analysis , Test Marketing , Evolutionary Approach Multiple Choice Multiple Answer Question Index numbers may broadly be classified as: Correct Answer Price indices , Quantity Indices , Special purpose indices Select The Blank Question Economics is a ________ , which studies human behaviour as a relationship between ________ , which have alternative uses. Correct Answer science Correct Answer ends and scarce means Select The Blank Question The production function is the name given to the ________ between the rates of ________ of productive services and rate of output of a product Correct Answer relationship Correct Answer input Select The Blank Question Internal economies are those advantages of large- scale ________ , which accrue to a ________ on account of its superior techniques and management Correct Answer production Correct Answer firm Select The Blank Question Elasticity of supply may be defined as the ratio of the percentage ________ or the ________ change in quantity supplied to the percentage or proportionate change in Price. Correct Answer proportionate Correct Answer change Select The Blank Question Costs may be classified as : (a) ________ , including material costs, wage cost and interest cost (b) ________ , including costs of advertising and (c) other costs, including insurance ch Correct Answer Production costs Correct Answer Selling costs