Economics & Management Decisions-Assignment1

Question 1
When marginal product (MP) & average product (AP) both falls
1. TRUE

2. FALSE

Question 2
In Oligopoly market, there are large number of buyers and sellers
1. TRUE

2. FALSE

Question 3
If an industry lacks barriers to entry and each of the many firm faces a demand curve
with a negative slope, the industry is
1. stagflation

2. structural inflation
3. demand side inflation
4. supply side inflation

Question 4
If P0 denotes the price of commodity O and MU indicates the MU derived from
commodity O, the Marginal Utility of O is same as its price, the consumer will be in
equilibrium.
1. TRUE

2. FALSE

Question 5
If demand is inelastic, a change in the price
1. the average variable cost is falling

2. the average variable cost is rising

3. the average total cost is falling
4. Average total revenue is rising

Question 6
In the context of market supply curve, which of the following statements is correct?
1. It slopes upwards

2. It is a graphical presentation of market supply schedule

3. It is a horizontal summation of individual supply curve
4. all of the above
Question 7
Consider the following liquid assets and arrange them in deceasing order of liquidity
1. Demand Deposits with the banks 2.Time deposits with the banks 3.Savings
deposits with the banks 4. Currency
1. 1,4,3,2

2. 4,3,2,1

3. 2,3,1,4

4. 4,1,3,2

Question 8
Once the supply increases, the prices will come down, provided that the demand
remains the same
1. true
2. FALSE

Question 9
Managerial economics is basically micro economic in character.
1. true

2. FALSE

Question 10
An implicit cost is
1. the cost of giving up an alternative

2. cost of the chosen alternative

3. calculated by subtracting the monetary cost.
4. none of the above

Question 11
Which of the following is the second law of Gossen ?
1. Law of equi-marginal utility

2. Law of equi-product
3. Theory of indifference curve
4. Law of diminishing marginal utility

Question 12
Rate of growth of an economy is measured in terms of:
1. per capita income

2. industrial development
 3. number of people who have been lifted above the poverty line
4. national income

Question 13
Firms in monopolistic competition can achieve product differentiation by
1. exploiting economies of scale in production.

2. advertising special characteristics.

3. expanding plant size.
4. setting the price equal to average revenue

Question 14
Monopolistic competition in comparison to perfect competition ensures
1. higher price and lower output

2. lower price and higher output

Question 15
Inflation initiated by the the increase in aggregate demand is termed as
1. Demand Pull inflation
2. Cost push inflation
3. Stagflation

Question 16
A firm in monopolistic competition has some degree of price-setting power because
1. in the long run it earns a normal profit.

2. it must lower its price in order to sell a greater quantity.

3. the price it charges is never more than its marginal cost
4. it can never earn less than normal profit

Question 17
“Human Welfare is the subject of Economics.” This statement is associated with the
name of which of the economists ?
1. Marshall

2. Pigou

3. Penson

4. All of the above

Question 18
The value of NNP at consumer point is
1. NNP at factor cost

2. NNP at Market Price

 3. GNP at Market Price
4. GNP at Factor Cost

Question 19
A good with a vertical demand curve has a demand with
1. infinite elasticity

2. unit elasticity
3. zero elasticity
4. varying elasticity

Question 20
Demand is inelastic if
1. a large change in quantity demanded results in a small change in price

2. the price elasticity of demand is greater than 1

3. the quantity demanded is very responsive to changes in price
4. the price elasticity of demand is less than 1

Question 21
Two goods have to be consumed simultaneously are
1. substitutes

2. complementary

3. identical

4. none of these

Question 22
Name the note issuing authority in India.
1. RBI

2. SBI

3. PNB

4. Syndicate Bank

Question 23
A tax imposed on monopoly profits
1. can be shifted forward

2. can be shifted backward

3. can be shifted both forward and backward
4. cannot be shifted

Question 24
Marginal cost pricing method leads to
 1. frequent price changes
2. stable prices in the market
3. marketing mix strategy
4. None of the above

Question 25
Managerial economics generally refers to the integration of economic theory with
business
1. Ethics

2. management

3. Practice

4. all of the above

Question 26
In order to mximize profits , a manufacturer, under perfect competition will charge a
price
1. equal to marginal cost

2. equal to total cost

3. equal to TFC
4. equal to AVC

Question 27
Elasticity of demand at different points on a demand curve
1. remains same at each point

2. keeps changing at different points

3. changes after an interval
4. None of the above

Question 28
In using the expenditure approach to GDP consumption
1. includes consumer durables, semidurables, non-durable goods, but excludes

2. includes houses and services

3. includes houses and all purchases by business firms
4. includes consumers spending on durable goods and non-durable goods and services

Question 29
The demand for movies is unit elastic if
1. any increase in the price leads to a 1 percent decrease in the quantity demanded

2. a 5 percent decrease in the price leads to an infinite increase in the quantity demanded
 3. a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded
4. a 5 percent increase in the price leads to a 5 percent increase in total revenue

Question 30
“Economics is the Science of Wealth” who gave this definition ?
1. J.K Mehta

2. Marshall

3. Adam Smith
4. Robbins

Question 31
What are open market operations?
1. exchange of goods for goods

2. selling of currency by the RBI

3. Selling of gilt edged securities by the government
4. Sale of shares by FIIS

Question 32
A characteristic of monopolistic competition is
1. a low ratio of fixed to variable costs.

2. a high capital-output ratio.

3. product differentiation.
4. the absence of advertising

Question 33
Reserve Bank of India is the Central bank of India
1. TRUE
2. FALSE

Question 34
The law of Demand states that
1. Demand increases with increase in income

2. when price falls, demand increases

3. when price increases, demand increases
4. when income and prices rise, the demand also rises

Question 35
The apex organization of Industrial Fianance in India is
1. IDBI
 2. SIDBI

3. RBI

4. SBI

Question 36
Other things being equal, what causes a decrease in demand
1. Fall in the price of the commodity

2. Rise in the price of the commodity

3. Rise in the income of the substitute
4. None of the above

Question 37
What is Repo Rate?
1. it is the rate at which RBI sells government securities from banks

2. it is the rate at which RBI buys government securities from banks

3. it is the rate at which RBI allows small loan in the market
4. None of the above

Question 38
The most appropriate measure of a country's economic growth is
1. GDP

2. NDP

3. Per Capita Real Income

4. GNP

Question 39
An automatic stabiliser is
1. the tendency for inflation to fall as unemployment rises

2. a monetary or fiscal policy that aims to smooth out the business cycle
3. a tax or form of government expenditure that has the effect of reducing the size of
businesscycle fluctuations.
4. a policy for growth of an economy where the current account of the balance of
payments is kept inbalance.

Question 40
Name the major components of money supply.
1. currency and deposit components
2. currency

3. deposits and coins

4. coins
Question 41
What is the modern form of money?
1. paper and plastic money

2. grain and cattle

3. metallic money
4. cowrie shells

Question 42
The price elasticity of demand equals
1. the percentage change in the quantity demanded divided by the percentage change in
the price.
2. the change in the quantity demanded divided by the change in price

3. the percentage change in the price divided by the percentage change in the quantity
demanded
4. the change in the price divided by the change in quantity demanded

Question 43
An explicit cost is
1. the cost of giving up an alternative
2. the cost of a chosen alternative
3. calculated by subtracting the monetary cost of an alternative by the time invested
4. none of the above

Question 44
Elasticity of demand for a pair of substitute goods is
1. 0

2. infinity

3. positive

4. negative

Question 45
Which one of the following is not the objective of monetary policy in India?
1. to issue notes

2. To achieve price stability

3. to regulate foreign trade
4. to stabilise exchange rate
Question 46
What does money serve?
1. a unit of accounting

2. monetary base

3. high powered money

4. cheap money

Question 47
Shut down point is one where a firm
1. cannot cover its variable costs

2. can cover variable costs and fixed costs

3. cannot cover fixed cost
4. none of the above

Question 48
the mean square is the sum of squares divided by
1. the total number of observations

2. its corresponding degrees of freedom

3. its corresponding degrees of freedom minus one
4. None of these alternatives is correct

Question 49
A firm that break even after all the economic costs are paid in earning
1. Economic Profit

2. Accounting profit
3. Normal Profit
4. Supernormal profit

Question 50
Real National Income measures
1. Nominal National Income adjusted for Inflation

2. national income not adjusted for inflation

Question 51
It is likely that the cross-price elasticity of demand between two goods produced by
different firms in the same industry will be positive and large.
1. true

2. FALSE

Question 52
Car and Petrol have negat9ive cross elasticity of demand.
1. true

2. FALSE

Question 53
What affects the production possibilities?
1. resources

2. technology

3. price

4. demand

Question 54
Can two indifference curves intersect each other?
1. No.

2. yes

Question 55
Income refers to which type of concept?
1. Flow Concept

2. Stock Concept

Question 56
Economies of Scale refer to a situation where output grows proportionately faster
than the use of inputs
1. true

2. FALSE

Question 57
In short run, a firm has to decide about the output it should produce at the market
price so that the profit is maximum.
1. true

2. FALSE
Question 58
A budget line shows all possible combinations between how many goods?
1. two goods

2. three goods
3. four goods
4. five goods

Question 59
low priced commodities have inelastic demand
1. TRUE

2. FALSE

Question 60
What is inflation?
1. persistent and continuous rise in prices

2. rise in price
3. fall in price
4. continuous fall in prices

Question 61
Write the formula of NNP?
1. C+I+G+(X-M)+NFIA-depreciation

2. C-I-G+(X-M)

3. C+I+G(X-M)+subsidies

4. C+I+G-X-M+subsidies

Question 62
Highly priced commodities have which kind of demand?
1. Inelastic

2. Elastic

3. unitary elastic
4. perfectly inelastic

Question 63
Give examples of substitute goods.
1. tea and coffee

2. bread and butter

3. car and petrol
4. ink and pen