Other MCQ Bank For ME
Other MCQ Bank For ME
Other MCQ Bank For ME
1-Demand is determined by
a. Price of the product
b. Relative prices of other goods
c. Tastes and habits
d. All of the above
(Ans: d)
2-When a firm’s average revenue is equal to its average cost, it gets ________.
a. Super profit
b. Normal profit
c. Sub normal profit
d. None of the above
(Ans: b)
3-Managerial economics generally refers to the integration of economic theory with business
a. Ethics
b. Management
c. Practice
d. All of the above
(Ans: c)
4-Given the price, if the cost of production increases because of higher price of raw materials, the
supply
a. Decreases
b. Increases
c. Remains same
d. Any of the above
(Ans: a)
6-A Joint Stock Company is managed by the Board of Directors elected by _____ .
a. Top management
b. Shareholders
c. Employees of company
d. None of the above
(Ans: b)
7-Under ______, price is determined by the interaction of total demand and total supply in the
market.
a. Perfect competition
b. Monopoly
c. Imperfect competition
d. All of the above
(Ans: a)
8-Under perfect competition, price is determined by the interaction of total demand and ________.
a. Total supply
b. Total cost
c. Total utility
d. Total production
(Ans: a)
11-Distinction between private sector and public sector is determined on the basis of
a. Economic system
b. Motive
c. Principle of pricing
d. All of the above
(Ans: d)
Meaning and scope- Uses and role of public finance in the economy- Public
finance and private finance- The principle of maximum social advantages.
PUBLIC ECONOMICS
MULTIPLE CHOICE QUESTIONS
1. Scope of public finance includes:
(a) Public revenue (b) Public debt (c) Public expenditure (d) All of these
3. Which is the main point on the basis of which public finance can be separated from privatefinance?
(a) Price policy (b) Borrowings (c) Secrecy (d) Elasticity in income
7. Among the following canons of taxation which one has been given by Adam Smith:
(a) Canon of Uniformity (b) Canon of productivity (c) canon of diversity (d) canon of equity
28
(a) Rich person (b) poor person (c) on whom it is levied (d) none of these
29
25. The equity principle of taxation was propounded by:
A) Adam Smith B) Dalton C) J.B. Say D) Marshall
26. “The government which taxes the least is the best”, is the belief of:
A) Mercantilists B) Physiocrates C) Modern D) Classical
27. According to Laffer, when the tax rate is 100 per cent , the tax revenue will be:
A) 100% B) 50% C) Zero D) 10%
29. In the case of regressive tax, the rate of tax---------------------as income increases:
A) increases B)remains constant C) Decreases D) None
30
41. Which one of the following is not a public utility?
A) Electricity B) Water supply C) Gas service D) Tourism
48. The Displacement effect hypothesis was formulated by: A) Peacock and Wiseman B) Pigou
C) Smith D) Musgrave
PUBLIC ECONOMICS
MULTIPLE CHOICE QUESTIONS
Answer Key
1. (d) All of these 2. (d) All of these 3. © Secrecy 4. (b) Dalton 5. (a) Compulsory 6. (c) Raising
public revenue 7. (d) Canon of equity 8. (c) Regressive 9. (c) on whom it is levied 10. (a)
Equitable 11. (c) Progressive 12. (a) Constant 13. (a) Kaldor 14. (d) Companies 15. (d) Indirect
tax 16. (c) Corporation Tax 17. (b) Octroi 18. (a) A tax on special benefits 19. (b) Public goods
20. (b) Merit good 21. (b) Non – excludable 22. (a) Dalton 23. (b) indirect money burden 24. (b)
to shift the tax burden on others 25. (a) Adam Smith 26. D) Classical 27. C) Zero 28. B) Ultimate
29. C) Decreases 30. D) Value 31. B) Legitimate 32. D) France 33. C) National boundaries 34.
D) Keynes 35. (a) Keynes 36. B) Fiscal Policy 37. B) Deficit 38. C) Classical school 39. C)
Utility 40. C) Horizontal 41. D) Tourism 42. B) Interest payments 43. A) Unproductive 44. B)
Public expenditure 45. B) Interest payments 46. B) German 47. D) Wagner 48. A) Peacock and
Wiseman 49. C) 1st April 50. C) Revenue expenditure
31
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SIDDHARTH ACADEMY
CS-Foundation-BUSINESS ECONOMICS
3. When marginal product (MP) & average product (AP) both falls-
a. AP lies below MP
b. AP & MP intersect
c. MP Lies below AP
d. None of above
4. Total Product, Marginal Product & Average Product for 1st unit of labor are-
e. Identical
f. Different
g. Unable to be determined
h. None of above
6. To economists, the common thing between the short run and the long is that:
m. In both, capital is fixed
n. In both, labor is variable
o. In both, production is absent
p. None of above
s. Q= F (L,L,K,E) T
t. None of above
10. Opportunity cost of an unemployed youth in past now getting job worth Rs.
7500/- per month is _________.
a. Nil
b. infinite
c. Rs. 7500
d. Negative
13. What is the Total product of the first three units of labour?
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SIDDHARTH ACADEMY
a. 295
b. 95
c. 195
d. 275
14. If Optimum level of output results at end of 4th unit of labor, TP & MP shall be-
a. 100 & 100 respectively
b. 195 & 0 respectively
c. 0 & 100 respectively
d. 275 & 0 respectively
15. Direction of TP, AP & MP in 3rd stage of Law of variable proportions shall be-
a. All the three Increasing
b. TP increasing, AP & MP falling
c. All the three falling
d. TP & AP increasing, MP falling
16. Uncommon thing between law of variable proportions & returns to scale is-
a. Increasing Returns
b. Decreasing Returns
c. Constant Returns
d. None of above
18. Which one of the following is also known as Long run average cost curve?
a. Basket Curve
b. Wallet Curve
c. Envelope curve
d. None of above
23. With which of the following is the concept of marginal cost closely related?
a. Variable cost.
b. Fixed cost.
c. Opportunity cost.
d. Economic cost.
24. Which of the following does not have non linear shape?
a. Total cost curve
b. Total Variable cost curve
c. Total fixed cost curve
d. None of above
Use the following data to answer question 25-29. (Total Cost in Rs)
Output 0 1 2 3 4 5 6
(Units)
Total Cost 300 350 410 465 515 600 700
(TC)
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SIDDHARTH ACADEMY
b. 410
c. 465
d. 165
30. The rising part of the LAC curve is due to which of the following?
a. Economies of scale.
b. Diminishing returns.
c. The coordination problems in firm
d. Diseconomies of scale
31. A firm’s average total cost is Rs. 300 at 5 units output and Rs. 320 at 6 units of
output. The marginal cost of producing the 6th unit is:
a. Rs. 20
b. Rs. 120
c. Rs. 320
d. Rs. 420
32. A toy manufacturer incurs total cost of Rs, 1, 13,900 per annum at zero level of
output. If the selling price is Rs. 200 per unit and break even quantity is 680 units,
what is the average variable cost per unit for the firm in Rs.?
33. A publisher publishes a book on management. His fixed cost is Rs. 2, 00, 000. If
he sells the book at Rs.250 per unit and incurs a variable cost of Rs. 50 per unit, the
total variable cost at break even shall be______
Use the following data taken from seller of Diamonds to answer question 34-39.
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SIDDHARTH ACADEMY
35. Producer should continue to produce & sell at _____ units of output.
a. 6
b. 2
c. 5
d. None of above
39. If the seller sells 5th & 6th unit, his total profit will_____
a. None of below
b. Rise
c. Be maximum
d. Fall
If TC = 2Q2 + 55Q +150 & TR = 2Q2 + 40Q + 1050, then answer questions (40 to 43)
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SIDDHARTH ACADEMY
c. Rs. 60
d. Rs. 10660
If TFC = Rs.750, TVC = 3Q2 + 50Q, & MR = 15Q + 5, answer questions (44-45)
48. Market structure where goods have close substitutes is best described as-
(a) Perfectly competitive.
(b) Monopolistic.
(c) Monopolistically competitive.
(d) None of above
49. In perfect competition in the short run there will be __________ possibilities
(a) Normal profits.
(b) Supernormal profits.
(c) Loss
(d) All of above
50. If seller’s AR & AC functions are given as 115Q + 290 & 95Q + 305 respectively,
with Output of 19 units, seller is making_____
a. NP
b. SNP
c. Loss
d. None of above
51. __________ is the official minimum rate at which the Central Bank of a
country is prepared to rediscount approved bills held by banks.
a. CRR
b. SLR
c. Bank rate
d. Repo rate
a. 1951-56
b. 1961-66
c. 1947-52
d. None of above
53. Literacy rate calculated considering total population into account is known
as-
a. Crude Literacy Rate, b. Total Literacy Rate c. Mean Literacy Rate, d. None
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SIDDHARTH ACADEMY
54. The National Population Policy (NPP) 2000 set long term objective of
achieving a stable population by-
a. (a-3, b-1, c-2, d-4) b. (a-4, b-3, c-1, d-4) c. (a-2. b-1, c-3, d-4)
d. (a-4, b-1, c-3, d-2)
a. (a-4, b-1, c-2, d-3) b. (a-2, b-4, c-1, d-3) c. (a-3, b-4, c-3, d-1)
d. (a-3, b-4, c-1, d-2)
57. Corporation Bank & Air India are the examples of:
(a) Fixed capital (b) Artificial capital (c) private capital (d) public
capital.
(a) Capitalist economy (b) Socialist economy (c) Mixed economy (d)
None of these
(a) State plays a major role (b) Market plays major role (c) Both a & b (d)
Neither a nor b
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SIDDHARTH ACADEMY
60. . When the price of a complementary of commodity X falls, the demand for X-
61. Which of the following is the method of measuring elasticity of demand when
change in price of a commodity is substantial?
65. If Repo Rate is 2 %, as per RBI policy, Reverse repo rate must be-
a. 1% b. 2% c. 10% d. 0.5%
67. 11th Plan had objective of reducing Infant Mortality rate to _____.
a. 30 b. 28 c. 35 d. 0
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SIDDHARTH ACADEMY
70. A target for creating ________new jobs has been set for the Rural Employment
Generation programme under the Tenth Five Year plan.
a. 25 Lacs b. 30 Lacs c. 100 Lacs d. 1 Crore
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SIDDHARTH ACADEMY
MCQs
a) Statistics is derived from the Latin word 'status' b) statistics is derived from
Italian word 'statista
2) Statistics is applied in
4) The data collected on the height of group of students after recording their heights
with a measuring
tape are
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SIDDHARTH ACADEMY
c) The main part of table d)The upper part of table that describes column
& sub-column
a) Left part of the table describing the Columns b) Right part of the table
describing the Column
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SIDDHARTH ACADEMY
a)4 b) 3 c) 2 d) None
a) 3 b) 5 c) 4 d) none
a) 2 b) 3 c) O d) none
26) Some believe that statistics originated from a German word ........
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SIDDHARTH ACADEMY
Raw material 12
labour 20
direct Production 35
others 23
what is the difference between the central angles for largest & smallest components ?
a) 72 b) 48 c) 56 d) 92
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SIDDHARTH ACADEMY
(MCQ’s)
6. In the five year plan document, the amount of money, is broken down into-
a. public sector outlay and private sector plan outlay.
b. only public sector outlay
c. only private sector outlay
d. none of above
7. The public sector outlay is the most important part in the plan as-
a. the private sector has direct control over the investment during a plan
period
b. the Govt. has direct control over the investment during a plan period
c. the Govt. has no direct control over the investment during a plan period
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SIDDHARTH ACADEMY
d. None of above
8. The first Prime Minister of India, Jawaharlal Nehru presented the first five-year plan
on –
a. December 8, 1951.
b. January 26, 1952
c. January 26, 1951
d. August 15, 1947
9. Target growth Rate & Actual growth Rate for 1st Five Year Plan was -
a. 3% & 3.6% respectively
b. 2.1% & 3% respectively
c. 3.6% & 2.1% respectively
d. 2.1% & 3.6% respectively
10. Target growth Rate & Actual growth Rate for 9th Five Year Plan was –
a. 5.35% & 6.5% respectively
b. 5.5% & 6.35% respectively
c. 6.5% & 5.35% respectively
d. None of above
11. The Tenth Five Year Plan duration covered the period-
a. 2002-07
b. 1997-2002
c. 2002-2012
d. None of above
13. 11th Five Year Plan targeted increase in agricultural growth rate to ___%
a. 10%
b. 1%
c. 4.5%
d. 4%
15. In India, according to the Annual Report 2009-10 of the Ministry of Agriculture-
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SIDDHARTH ACADEMY
16. The 1st Five Year Plan duration covered the period-
a. 1951-56
b. 1947-52
c. 1956-61
d. None of above
18. __________is a process where there is a sharp increase in the industrial share of
GDP
a. Industrialization
b. Commercialization
c. Modernization
d. None of above
19. System where British rulers collected the land taxes from farmers and assigned
responsibility to local zamindars in India is known as__________
a. Mahalwari system
b. Ryotwari system
c. Zamindari system
d. All of above
21. The Industrial Policy Resolution, 1948, had following major feature.
a. State Monopoly in Arms and ammunition, Atomic Energy , Rail Transport
b. Private Monopoly in Arms and ammunition, Atomic Energy, Rail Transport
c. Foreign Direct Investment
d. Disinvestment
18
SIDDHARTH ACADEMY
ADDITIONAL MCQS
19
SIDDHARTH ACADEMY
5. The share of agriculture in India’s national income has ______ over the years.
a. Remained constant.
b. Decreased.
c. Increased.
d. First decreased and then increased.
7. The area under irrigation has ______ over the years in India.
a. Remained constant.
b. Decreased.
c. Increased.
d. First increased and then decreased.
20
SIDDHARTH ACADEMY
11. Which of the following has been specifically established to meet the requirements
of credit of the farmers and villagers?
a. ICICI bank.
b. Regional Rural Banks.
c. State Bank of India.
d. EXIM bank.
14. Three steel plants in Bhilai, Rourkela and Durgapur were set up in the
a. First plan.
b. Second plan.
c. Third plan.
d. Fourth plan.
15. Which of the following has resulted in failure to achieve targets of industrial
Production?
a. Poor planning.
b. Power, finance and labour problems.
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SIDDHARTH ACADEMY
c. Technical complications.
d. All of the above.
16. About _______ per cent of the sick units in India are small units.
a. 10 per cent
b. 5 per cent
c. 30 per cent
d. 98 per cent
17. The Tenth Plan aimed at achieving a growth rate of _______ in the industrial
sector.
a. 5 per cent
b. 8 per cent
c. 10 per cent
d. 6 per cent
18. Oil and Natural Gas Corporation Indian Oil Corporation, Steel Authority of
India, and Bharat Heavy Electricals are all examples of
a. Small scale units.
b. Private sector units.
c. Public sector units.
d. Sick units.
19. Over the planning period the share of industrial sector in the GDP of India
has_________.
a. Increased
b. Decreased
c. Remained constant
d. Remained above 50 per cent
22
SIDDHARTH ACADEMY
24. India has the ______ largest scientific and technical manpower in the world.
a. Fifth
b. Tenth
c. Eighth
d. Second
23
SIDDHARTH ACADEMY
(MCQ’s)
1. India accounts for ______percent of world surface area but it supports _____ percent
of the world population respectively.
a. 3.4 & 16.7 b. 4 & 20 c. 2.4 & 16.7 d. 16.7 &
2.4
3. The National Population Policy (NPP) 2000 outlines the long term objective of
achieving a stable population by-
a. 2045 b. 2020 c. 2030 d. 2015
5. Where as in 1921 the per capita cultivated land was ____ acres, it reduced to ____
acres in 1995 respectively.
a. 1.11 & 1 b. 1 & .048 c. 1.11 & .048 d. 1 & 1.11
V. The country is responsible for _______ %of the total population on earth.
a. 17.5 b. 15 c. 20 d. 100
24
SIDDHARTH ACADEMY
8. Literacy rate calculated by taking the total population into account is known as-
a. Crude Literacy Rate b. No Literacy Rate c. Mean Literacy Rate
9. Literacy rate calculated by considering population aged above 7 years is known as-
a. Crude Literacy Rate b. Effective Literacy Rate c. Adult Literacy Rate
10. As per National Population Policy, 2000 (NPP 2000), following targets are set-
I. Make school education up to age _____free and compulsory
a. 10 b. 15 c. 21 d. 14
II. Reduce infant mortality rate to below _____per 1000 live births.
a. 20 b. 30 c. 40 d. 35
III. Promote delayed marriage for girls, not earlier than age ____.
a. 15 b. 21 c. 18 d. 25
14. National Rural Employment Guarantee Act (NREGA) 2005was passed in-
a. December 2005 b. November 2005 c. May 2005 d.
September 2005
17. A target for creating ______ lakh new rural jobs has been set under the Tenth Five
Year plan
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SIDDHARTH ACADEMY
a. 20 b. 50 c. 25 100
21. The Telecom Regulatory Authority of India (TRAI) was established with effect
from_____
a. 20th Feb 1991 b. 20th Feb 2001 c. 20th Feb 1997 d. 20th February 2007
24. Nearly ______% of the population in India does not have access to essential
medicines.
a. 25 b. 51 c. 75 d. 67
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SIDDHARTH ACADEMY
11. Of late, birth rate in India has _______ and death rate has ________
a. Fallen, fallen
b. Risen, fallen.
c. Risen, risen
d. Fallen, risen.
15. ____________ Unemployment may result when some workers are temporarily out
of work changing job.
a. Cyclical.
b. Voluntary.
c. Frictional
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SIDDHARTH ACADEMY
d. Seasonal
16. According to ___________ measure, a person is said to be employed for the week
even if the employed only for a day during the week.
a. Usual status.
b. Current weekly status.
c. Current daily status.
d. Current yearly status.
a. Private schools.
b. Private airlines.
c. Private ships,
d. Private railways
26. Over the years, the incidence of malaria (cases in million) has ___________
a. Reduced
b. Increased
c. Remained the same
d. Doubled.
30
MANAGERIAL ECONOMICS
BBA(SEM III) Multiple choice questions
MANAGERIAL ECONOMICS
2 If a perfectly competitive firm currently produces where price is greater than marginal
cost it
a. will increase its profits by producing more.
b. will increase its profits by producing less.
c. is making positive economic profits.
d. is making negative economic profits.
3 When a perfectly competitive firm makes a decision to shut down, it is most likely that
a. Price is below the minimum of average variable cost.
b. Fixed costs exceed variable costs.
c. Average fixed costs are rising.
d. Marginal cost is above average variable cost.
4 In the long run, a profit-maximizing firm will choose to exit a market when
a. Fixed costs exceed sunk costs.
b. Average fixed cost is rising.
c. Revenue from production is less than total costs.
d. marginal cost exceeds marginal revenue at the current level of production.
5 When firms have an incentive to exit a competitive market, their exit will
a. Drive down market prices.
b. Drive down profits of existing firms in the market.
c. Decrease the quantity of goods supplied in the market.
d. All of the above are correct.
a. Allocation.
b. Consumption.
c. Scarcity.
d. Money.
e. Production.
14 The total demand for goods and services in an economy is known as:
a. National demand.
b. Economy-wide demand.
c. Gross national product.
d. Aggregate demand.
15 If marginal benefit is greater than marginal cost, a rational choice involves:
a. More of the activity.
b. Less of the activity.
c. No more of the activity.
d. More or less, depending on the benefits of other activities.
16 A student chooses to study because the marginal benefit is greater than the ________
cost.
a. average
b. total
c. marginal
d. expected
18 The circular flow of goods and incomes shows the relationship between:
a. Income and money.
b. Wages and salaries.
c. Goods and services.
d. Firms and households.
19 In a free market system, the amount of goods and services that any one household
gets depends upon its:
a. Income.
b. Wage and interest income.
c. Wealth.
d. Income and wealth.
20 In a planned or command economy, all the economic decisions are taken by the:
a. Consumers.
b. Workers.
c. Government.
d. Voters.
1 The word that comes from the Greek word for “one who manages a household is
a. Market.
b. Consumer.
c. Producer.
d. Economy.
2 Economics deals primarily with the concept of
a. Scarcity.
b. Poverty.
c. Change.
d. Power.
3 Which of the following is NOT included in the decisions that every society must make?
a. what goods will be produced
b. who will produce goods
c. what determines consumer preferences
d. who will consume the goods
7 The subject matter of macro –economic includes the theory of income and employment at an
individual level.
(a)True (b) False
10 Breech identifies four main elements of management. They are planning, control, co-
ordination and:
a. The division of work.
b. Centralization.
c. Discipline.
d. Motivation.
12 Marginal Utility is the utility derived from the additional unit of a commodity consumed.
(a)True (b) False
13 Compared to the static model, the fishing effort in a dynamic model is likely to be
a. Larger.
b. Smaller.
c. Similar.
d. Larger or smaller.
14 Land, labor, and money are the three categories of economic resources.
(a)True (b) False
15 Which of the following is not an interest rate derivative used for interest rate management?
Interest rate guarantee
a. Floor
b. Swap
c. Cap
d. All of the above are interest rate derivatives
17 Which of the factors listed below is not a reason for decision making in organizations
being a complex process?
18 The overall process of decision making in, for example, staff selection includes which
of these stages?
a. Deciding which candidate to appoint
b. Identifying the need for a new member of staff
c. Agreeing the job specification
d. All of the above
19 A manager who is helping a customer return some shoes they purchased last week is
dealing with what type of decision?
a. Uncertainty
b. Non-programmed decision
c. Bounded rationality
d. Programmed decision
20 Decision making situations can be categorized along a scale which ranges from:
a. Uncertainty to certainty to risk
b. Certainty to uncertainty to risk
c. Certainty to risk to uncertainty
d. Certainty to risk to uncertainty to ambiguity
Chapter-3
CONCEPT OF DEMAND
Multiple Choice Questions
1 The quantity demanded of Pepsi has decreased. The best explanation for this is that:
3 When the decrease in the price of one good causes the demand for another good to
decrease, the goods are:
a. Normal
b. Inferior
c. Substitutes
d. Complements
4 Suppose the demand for good Z goes up when the price of good Y goes down. We can
say that goods Z and Y are:
a. Substitutes.
b. Complements.
c. Unrelated goods.
d. Perfect substitutes.
6 Which of the following will NOT cause a shift in the demand curve for compact discs?
a. A change in the price of pre-recorded cassette tapes.
b. A change in income.
c. A change in the price of compact discs.
d. A change in wealth.
9 A movement along the demand curve to the left may be caused by:
a. A decrease in supply.
b. A rise in the price of inputs.
c. A fall in the number of substitute goods.
d. A rise in income.
12 The demand curve will shift to the left for most consumer goods when
(a) Incomes decrease.
(b) The prices of substitutes fall.
(c) The prices of complements increase
(d) All of the above.
14 Consumer goods are alternately called final goods, and the second term makes more
sense in understanding the concept.
(a)True (b) False
15 GDP stands for
a. Gross Domestic Product
b. Gross Deistic Product
c. Gross dynamic product
d. All of these
16 GNP stands for
a. Gross national product
b. Gross natural product
c. Both (a)and (b)
d. None of these
17 When the demand for a product is tied to the purchase of some parent product, its
demand is called induced or derived.
(a)True (b) False
Chapter-4
DETERMINATION OF DEMAND
3 Quantity demand is a specific quantity that buyers are willing and able to buy at a
specific demand price.
(a)True (b) False
5 Which of the following would lead to an INCREASE in the demand for golf balls?
a. An decrease in the price of golf balls.
b. An increase in the price of golf clubs.
c. A decrease in the cost of producing golf balls.
d. An increase in average household income when golf balls are a normal good.
8 When Sonoma Vineyards increases the price of its Chardonnay from $15 per bottle to
$20 per bottle, the result is a decrease in…
a. The quantity of this wine demanded.
b. The quantity of this wine supplied.
c. The demand for this wine.
d. The supply of this wine.
10 In which of the following cases will the effect on equilibrium output be indeterminate
(i.e., depend on the magnitudes of the shifts in supply and demand)?
a. Demand decreases and supply decreases.
b. Demand remains constant and supply increases.
c. Demand decreases and supply increases.
d. Demand increases and supply increases.
11 An increase in the number of firms selling pizza will cause, ceteris paribus,
(a) an increase in supply.
(b) an increase in demand.
(c) a decrease in quantity demanded.
(d) a decrease in the quantity supplied.
17 The demand curve is downward-sloping because at a higher price for a good (ceteris
paribus)
(a) people buy fewer substitutes.
(b) people buy more complements.
(c) people search for substitutes.
(d) income rises.
(e) substitutes become complements.
20 If the price of crackers goes up when the price of cheese goes down, crackers and
cheese are
(a) inferior goods.
(b) substitutes.
(c) both substitutes and complements.
(d) complements
1 If the price elasticity of demand for a good is .75, the demand for the good can be
described as:
a. normal
b. elastic
c. inferior
d. inelastic.
2. When the price of a product is increased 10 percent, the quantity demanded decreases
15 percent. In this range of prices, demand for this product is:
a. elastic
b. inelastic
c. cross-elastic.
d. unitary elastic.
3. If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease
in price will:
a. increase quantity demanded by 5 percent.
b. increase quantity demanded by 0.5 percent.
c. decrease quantity demanded by 5 percent.
d. decrease quantity demanded by 0.5 percent.
4 If an increase in the supply of a product results in a decrease in the price, but no change
in the actual quantity of the product exchanged, then:
a. the price elasticity of supply is zero.
b. the price elasticity of supply is infinite.
c. the price elasticity of demand is unitary.
d. the price elasticity of demand is zero.
5. If 100 units of product K are sold at a unit price of $10 and 75 units of product K are
sold at a unit price of $15, one can conclude that in this price range:
a. demand for product K is elastic.
b. demand for product K is inelastic.
c. demand for product K has shifted to the right.
d. consumers are sensitive to price changes of product K.
6 Total revenue falls as the price of a good increases if price ela sticity of demand is:
a. elastic.
b. inelastic
c. unitary elastic
d. perfectly elastic.
7 The demand for Cheerios cereal is more price-elastic than the demand for cereals as a
whole. This is best explained by the fact that:
a. Cheerios are a luxury.
b. cereals are a necessity.
c. there are more substitutes for Cheerios than for cereals as a whole.
d. consumption of cereals as a whole is greater than consumption of Cheerios.
8 What is the most likely effect of the development of television, videocassette players,
and rental movies on the movie theater industry?
a. decreased costs of producing movies
b. increased demand for movie theater tickets
c. movie theater tickets become an inferior good
d. increased price elasticity of demand for movie theater tickets
9 The price elasticity of demand will increase with the length of the period to which the
demand curve pertains because:
a. consumers' incomes will increase.
b. the demand curve will shift outward.
c. all prices will increase over time.
d. consumers will be better able to find substitutes.
10. A state government wants to increase the taxes on cigarettes to increase tax revenue.
(a)True (b) False
11 This tax would only be effective in raising new tax revenues if the price elasticity of
demand is:
a. unity
b. elastic
c. inelastic
d. perfectly elastic.
12. Sony is considering a 10 percent price reduction on its color television sets. If the
demand for sets in this price range is inelastic:
A) revenues from color sets will remain constant.
B) revenues derived from color sets will decrease.
C) revenues derived from color sets will increase.
D) the number of television sets sold will decrease
15 Three factors that affect the numerical value of the price elasticity of demand are the
a. availability of substitutes
b. time period of analysis
c. proportion of budget
d. All of these
16 The price elasticity of demand is one of four common elasticity’s used in the analysis
of the market.
(a)True (b) False
20 A relatively small change, say 1% on an INR 100,000 house, can make a BIG difference
in the buyer’s decision to buy.
(a)True (b) False
Answers for Self Assessment Questions
1 (d) 2 (a) 3 (a) 4 (d) 5 (a)
6 (a) 7 (c) 8 (d) 9 (d) 10 (a)
11(d) 12(c) 13(a) 14(a) 15(d)
16(a) 17(a) 18(c) 19(c) 20(a)
Chapter-6
1 If it is observed that, in a particular market, price has risen and quantity exchanged has
increased, it is likely that:
a. supply has increased.
b. supply has decreased.
c. demand has increased.
d. demand has decreased.
2 The quantity of a good demanded rises from 1000 to 1500 units when the price falls
from $1.50 to $1.00 per unit. The price elasticity of demand for this product is
approximately:
a. 1.0
b. 16
c. 2.5
d. 4.0
3 If the elasticity of demand for a commodity is estimated to be 1.5, then a decrease in
price from $2.10 to $1.90 would be expected to increase daily sales by:
a. 50%
b. 1.5%
c. 5%
d. 15%
4 A long-run demand curve, as compared to a short-run demand curve for the same
commodity, is generally:
a. more elastic
b. less elastic
c. of the same elasticity
d. none of the above.
5 The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a
a. 2%decrease in quantity demanded.
b. 5%decrease in quantity demanded.
c. 10% decrease in quantity demanded
d. 50% decrease in quantity demanded.
8 The price elasticity of demand measures the sensitivity of demand to price changes.
(a)True (b) False
10 Cross elasticity of demand is the ratio of the percentage change in demand for a good
to the percentage change in price for another.
(a)True (b) False
12 Demands for most goods tend to become more elastic with the passage of time.
(a)True (b) False
13 If two goods are substitutes, then an increase in the price of one good will leads to an
increase in the demand for the other good.
(a)True (b) False
14 If two goods are complements, then a decrease in the price of one good will results in
a decrease in the demand of the other good.
(a)True (b) False
15 The price elasticity of demand is the same as the slope of the demand curve.
(a)True (b) False
19 If the price elasticity of supply of doodads is 0.60 and the price increases by 3 percent,
then the quantity supplied of doodads will rise by
a. 0.60 percent.
b. 0.20 percent
c. 1.8 percent
d. 18 percent.
1 The cost of factor inputs like land, labor, and capital has a major influence on supply.
(a)True (b) False
2 Which of the following factors will make the demand for a product more elastic?
(Assume the product has a straight-line, downward sloping demand.)
a. The product has no close substitutes.
b. A very small proportion of income is spent on the good.
c. A long time period has elapsed since the product’s price changed.
d. A lower price
3 For a given normal supply curve, the amount of a tax paid by the buyer will be larger
a. the more elastic the demand.
b. the more inelastic the demand.
c. the income elasticity is equal to zero
d. when the price is high.
7 The market supply curve is the horizontal sum of the individual supply curve.
(a)True (b) False
8 Supply determinants are five ceteris paribus factors that are held constant when a
supply curve is constructed.
(a)True (b) False
9 Supply is the willingness and ability of producers to make a specific quantity of output
available to consumers at a particular price over a given period of time.
(a)True (b) False
11 The supply curve for tomatoes is not thus more elastic in the short run than in the
momentary period.
(a)True (b)False
14 In the market, anyone who agrees to pay the requisite price of a product would be
excluded from their consumption.
(a) True (b)False
15 Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes.
The demand for aglets is probably
a. perfectly elastic.
b. inelastic.
c. elastic but not perfectly elastic.
d. unit elastic.
16 The cross elasticity of demand measures the responsiveness of the quantity demanded
of a particular good to changes in the prices of
a. Its complements but not its substitutes.
b. its substitutes but not its complements.
c. its substitutes and its complements
d. neither its substitutes nor its complements.
Chapter-8
PRODUCTION DECISION
2 Most operations produce a mixture of both products and services. Which of the
following businesses is closest to producing “pure” services?
a. IT company
b. A Restaurant
c. Counsellor/therapist
d. Steel company
7 A fixed input is one whose quantity cannot be varied during the time under
consideration.
(a)True (b)False
8 Economists find it convenient to distinguish between the ………….and the long run.
a. short run
b. large run
c. big run
d. None of these
9 The law of variable proportions states that as the quantity of one factor is increased,
keeping the other factors fixed, the marginal product of that factor will eventually
decline.
(a)True (b)False
17 Managers should pay little attention to bottleneck operations because they have
limited capacity for producing output.
(a)True (b)False
Chapter-9
ISOQUANT AND PRODUCTION FUNCTION
5 With respect to production, the short run is best defined as a time period
a. lasting about six months.
b. lasting about two years.
c. in which all inputs are fixed.
d. in which at least one input is fixed.
7 The short-run production functions for Albert’s Pretzels. The marginal productivity of
labor equals the average productivity of labor
a. for all levels of labor.
b. at none of the levels of labor.
c. only for the first worker.
d. only for the fifth worker.
8 the short-run production function for Albert’s Pretzels. The law of diminishing
marginal productivity
a. appears with the second worker.
b. has not yet appeared for any of the levels of labor.
c. first appears with the fifth worker.
d. is refuted by this evidence.
9 If the average productivity of labor equals the marginal productivity of labor, then
a. the average productivity of labor is at a maximum.
b. the marginal productivity of labor is at a maximum.
c. Both A and B above.
d. Neither A nor B above.
10 Average productivity will fall as long as
a. marginal productivity is falling.
b. it exceeds marginal productivity.
c. it is less than marginal productivity.
d. the number of workers is increasing.
12 The set of all pairs (z1, z2) of inputs that yield the output y is the y-is quant.
(a)True (b)False
14 Isoquants that are downward-sloping straight lines imply that the inputs
a. are perfect substitutes.
b. are imperfect substitutes.
c. cannot be used together.
d. must be used together in a certain proportion.
15 Isoquants that are downward-sloping straight lines exhibit
a. an increasing marginal rate of technical substitution.
b. a decreasing marginal rate of technical substitution.
c. a constant marginal rate of technical substitution.
d. a marginal rate of technical substitution that cannot be determined.
16 The profit maximization firm will choose the least cost combination of factors to
produce at any given level of output.
(a)True (b) False
18 The additional use of an input factor should be stopped when its marginal revenue
productivity just equals its price.
(a)True (b) False
19 The least cost combination of-factors or producer’s equilibrium is now explained with
the help of …………..curves and iso costs.
a. iso product
b. iso process
c. Both(a) and (b)
d. None of these
20 MRTS stands for……..
a. Marginal rate of technical structure
b. Marginal rate of technical substitution
c. Both(a) and (b)
d. None of these
Answers for Self Assessment Questions
1 (d) 2 (d) 3 (c) 4 (b) 5 (d)
6 (a) 7 (c) 8 (a) 9 (a) 10 (b)
11(c) 12(a) 13(c) 14(a) 15(c)
16(a) 17(a) 18(a) 19(a) 20(b)
Chapter-10
THEORY OF COST
An implicit cost is
a. the cost of giving up an alternative
b. the cost of a chosen alternative
c. calculated by subtracting the monetary cost.
d. none of the above
3 The historical cost of an asset refers to the actual cost incurred at the time the asset was
acquired.
(a)True (b) False
4 An Explicit cost is a business expense accounted cost that can be easily identified such
as wage, rent and materials.
(a)True (b) False
5 Private is the cost that has to be paid by an individual who is directly involved in the
production or consumption of a particular good.
(a)True (b) False
6 Social cost or external cost is not the cost burden carried by individuals who are not
directly involved in the production or consumption of that particular good
(a)True (b) False
7 Average cost is the sum total of Average variable it and average fixed cost.
(a)True (b) False
11 Marginal costs is the change in total cost resulting from unit change in……..
a. output
b. input
c. both(a) and (b)
d. None of these
12 The ………. implies that the cost of production continues to be low till the firm reaches
the optimum scale (Marginal cost = Average cost).
a. V-shape
b. Q-shape
c. U-shape
d. All of these
13 Scale economies and returns to scale generally produce a U-shaped long-run average
cost curve, such as the one displayed to the right.
(a) True (b) False
15 A concept that implies that the firm should consider issues such as protecting the
consumer, paying fair wages, maintaining fair hiring practices, supporting education,
and considering environmental issues.
a. Financial management
b. Profit maximization
c. Agency theory
d. Social responsibility
16 Which of the following is not normally a responsibility of the treasurer of the modern
corporation but rather the controller?
a. Budgets and forecasts
b. Asset management
c. Investment management
d. Financing management
17 The __________ decision involves determining the appropriate make-up of the right-
hand side of the balance sheet.
a. asset management
b. financing
c. investment
d. capital budgeting
20 An explicit cost is
a. the cost of giving up an alternative
b. the cost of a chosen alternative
c. calculated by subtracting the monetary cost of an alternative by the time invested
d. none of the above
Chapter-11
MARKET STRUCTURE, AND PRICING
2 Income and population are two variables that can be used in ______ segmentation:
a. psychographic
b. demographic
c. lifestyle
d. behavioural
6 Oligopoly is a market structure in which a small number of firms account for the whole
industry’s output.
(a) True (b) False
7 The number of firms and product differentiation are extremely crucial in determining
the nature of competition in a market.
(a) True (b) False
8 type of market structure represented by the constant returns to scale (CRS) technology
includes
a. Monopolistic competition
b. Oligopoly
c. Duopoly
d. Perfect competition
9 In industries in which there are scale economies, the variety of goods that a country can
produce is constrained by
a. the fixed cost
b. the size of the labor force
c. the marginal cost
d. the size of the market
10 A monopoly firm engaged in international trade but enjoying a protected home
market will
a. equate marginal costs with foreign marginal revenues.
b. equate marginal costs with marginal revenues in both domestic and foreign
markets
c. equate average costs in local and foreign markets
d. none of the above
11 Minimum efficient scale of production in relation to the overall industry output and
market requirement sometimes play a major role in shaping the market structure.
(a)True (b) False
12 Price and output decisions of firms that want to maximize profits always depend on
costs.
(a) True (b) False
13 Which of the following is NOT a financial objective of pricing?
a. Corporate growth.
b. Return on investment.
c. Profit maximization.
d. None of these
20 In the long run, every cost is variable cost. In this period, all costs ever incurred by the
firm must be recovered.
(a)True (b) False
Answers for Self Assessment Questions
1 (c) 2 (b) 3 (d) 4 (d) 5 (a)
6 (a) 7 (a) 8 (d) 9 (d) 10 (b)
11(a) 12(a) 13(a) 14(a) 15(b)
16(b) 17(b) 18(a) 19(d) 20(a)
Chapter-12
PERFECT COMPETITION
1. A perfectly competitive firm will maximize profit at the quantity at which the firm's
marginal revenue equals
a. price
b. average revenue
c. total cost
d. marginal cost
2 Which of the following is not a valid option for a perfectly competitive firm?
a. Increasing its output.
b. Decreasing its output.
c. Increasing its price.
d. Increasing its resources.
3 In the long run, a perfectly competitive firm will achieve all but which of the following:
a. Economic profit
b. Allocative Efficiency
c. Productive Efficiency
d. Normal profit
4 If the price a firm receives for its product is equal to the marginal cost of producing that
product, the firm is:
a. Always earning an economic profit
b. Always productively efficient.
c. Always allocatively efficient.
d. Always experiencing an economic loss.
16 A monopolist can sell more of his output only at a lower price and can reduce the sale
at a high price.
(a)True (b) False
17 A monopoly is a market structure in which there is not only one producer/seller for a
product.
(a)True (b) False
20 A perfectly competitive firm’s marginal cost curve that lies above the ………..of the
average variable cost curve is its supply curve.
a. minimum
b. maximum
c. both(a) and (b)
d. None of these
Chapter-13
OLIGOPOLY AND PRICING STRATEGIES
2 A group of firms that gets together to make price and output decisions is called:
a. a cartel.
b. price leadership.
c. an oligopoly.
d. a concentrated industry
5 A major threat to longer term profits exists when barriers to entry into an industry are
high.
(a)True (b) False
6 Under kinked demand theory the prices of oligopolists are predicted to be rather rigid
or 'sticky'.
(a)True (b) False
8 Which of the following types of oligopoly competition would you expect to result in
the highest market output, other things equal?
a. Stackelberg.
b. Bertrand.
c. Cornet.
d. Collusion
9 The demand curve has a kink at the price which is equal to full cost price.
(a) True (b) False
11 Cartels are most likely to arise in which of the following market structures?
a. Perfect competition.
b. Monopolistic Competition.
c. Oligopoly.
d. Monopoly.
13 Needs such as training the group, setting standards and maintaining discipline, and
appointing sub-leaders may be called:
a. team functions.
b. work functions.
c. individual functions.
d. task functions.
14 The Hall and flitch model of the kinked demand curve is based on an empirical survey
of a sample of 38 well managed arms in England.
(a) True (b) False
15 The model uses the analytical tools of reaction functions of the duopolists derived on
the basis of is not profit curves.
(a) True (b) False
16 The important models of non-collusive oligopoly are: (a) Cournot model, (b) Kinked
Oligopoly demand curve models.
(a) True (b) False
9. Which one of the following is a name for the range over which a
company expects to operate?
a. Mixed range
b. Fixed range
c. Variable range
d. Relevant range
13. The costing approach that charges all manufacturing costs to the product
is referred to as
a. variable costing
b. contribution margin costing
c. direct costing
d. absorption costing
18. The level of activity at which total revenues equal total costs is the
a. variable point
b. fixed point
c. semi-variable point
d. break-even point
20. Gross profit also includes rent that arises from the entrepreneur’s own
land used in his production of output.
a. True
b. False
Chapter-15
1. There are ……. methods which can be used to appraise any investment project:
(a) 1
(b) 2
(c) 3
(d) 4
2. National income is the total of the value of the goods and the services which are
produced in an economy.
(a) True (b) False
3. Which two of the following are likely to raise the equilibrium value of National
Income?
(a) Rise in savings.
(b) Rise in imports.
(c) Rise in government spending.
(d) Rise in exports.
4. Which two of the following are excluded when measuring National Income?
(a) Value added in the output method.
(b) Value of intermediate inputs in the output method.
(c) Consumer spending in the expenditure method.
(d) Transfer payments in the income method.
5. The return on an investment comes in the form of a stream of earnings in the future.
(a) True (b) False
6. Cost-benefit analysis is a process for evaluating the merits of a particular project or
course of action in a systematic and rigorous way.
(a) True ` (b) False
Chapter-16
1. In period of inflation, phantom or paper profits may be reports as a result of using the:
(a) FIFO costing assumption
(b) Perpetual inventory method
(c) LIDO costing assumption
(d) Periodic inventory method
2. Inflation is:
(a) an increase in the overall price level.
(b) an increase in the overall level of economic activity.
(c) a decrease in the overall level of economic activity.
(d) a decrease in the overall price level.
3. Aggregate supply is the total amount:
(a) produced by the government.
(b) of goods and services produced in an economy.
(c) of labour supplied by all households.
(d) of products produced by a given industry.
4. The value of a dollar does not stay constant when there is inflation.
(a) True (b) False
5. The inflation rate in India was recorded at 7.23% in……………...
(a) April of 2009
(b) April of 2010
(c) April of 2011
(d) April of 2012
6. The function of money that helps assess the opportunity cost of an activity is money's
use as a
(a) medium of exchange.
(b) store of value.
(c) unit of account.
(d) store of debt.
7. An official measure of money in the United States is M1, which consists of the sum of
(a) currency plus traveler's checks.
(b) currency plus checkable deposits.
(c) currency plus traveler's checks plus checkable deposits.
(d) currency plus traveler's checks plus time deposits.
8. Implies no trade-off between unemployment and inflation.
(a) GDP deflator
(b) Shoe leather’ costs
(c) Long-run Phillips curve
(d) ‘Menu’ costs
9. The inflation rate is used to calculate the real interest rate, as well as real increases in
wages.
(a) True (b) False
10……………… the quantity of money in the United States.
(a) The State Department controls
(b) The Department of Treasury controls
(c) The Federal Reserve System controls
(d) Commercial banks control
11. There are broadly ….. ways of controlling inflation in an economy.
(a) 2
(b) 3
(c) 4
(d) 5
12. The balance of payments of a country is said to be in equilibrium when the demand
for foreign exchange in exactly equivalent to the supply of it.
(a) True (b) False
13. A general decline in prices is often caused by a reduction in the supply of………..
(a) money or debit
(b) money or credit
(c) money
(d) None of these
14. The opportunity cost of holding money is the
(a) inflation rate minus the nominal interest rate.
(b) nominal interest rate.
(c) real interest rate.
(d) unemployment rate.
15. If the Fed is worried about inflation and wants to raise the interest rate, it
(a) increases the demand for money.
(b) increases the supply of money.
(c) decreases the demand for money.
(d) decreases the supply of money.
16. The circular flow of goods and incomes shows the relationship between:
(a) income and money.
(b) goods and services.
(c) firms and households.
(d) wages and salaries.
17. Fiscal measures to control inflation include taxation, government expenditure and
public borrowings.
(a) True (b) False
18. Hyperinflation
(a) occurs in the United States during each business cycle.
(b) occurs only in theory, never in reality.
(c) has never occurred in the United States.
(d) happens in all countries at some time during their business cycle.
19. Hyperinflation refers to a situation where the prices rise at an alarming high rate.
(a) True (b) False
20. The inflation rate is used to calculate the real interest rate, as well as real increases in
wages.
(a)True (b) False
Answer
1. (b) 2.(a) 3.(b) 4.(a) 5.(d) 6.(c) 7.(c) 8.(c) 9.(a) 10.(c)
11.(a) 12.(a) 13.(b) 14.(c) 15.(d) 16.(c) 17.(a) 18.(c) 19.(a) 20.(a)
Economic Analysis for Business Decisions
Multiple Choice Questions
Unit-1: Basic Concepts of Economics
3. Economics is a ----- science which deals with human wants and their satisfaction.
8. The ------------------ problem refers to the possibility that owners and their managers may have
different objectives.
9. Economic profit refers to ------------ minus all relevant costs , both explicit and implicit.
11. ----------------- focuses on the behavior of the individual actors on the economic stage , that is,
firms and individuals and their interaction in markets.
12. In free market economy, the organization and interaction of producers and consumers is
accomplished through the -------------- system.
16. From society's point of view the economic function of profits and losses is to:
a. Fact that the U.S. tax system redistributes income from rich to poor.
b. Notion that, under competition, decisions motivated by self-interest promote the social
interest. c. Tendency of monopolistic sellers to raise prices above competitive levels.
d. Fact that government controls the functioning of the market system.
18. The invisible-hand concept suggests that: .
19. Two major virtues of the market system are that it:
a. Households are on the buying side of both product and resource markets.
b. Businesses are on the selling side of both product and resource markets.
c. Households are on the selling side of the resource market and on the buying side of the
product market.
d. Businesses are on the buying side of the product market and on the selling side of the resource
market.
21. The two basic markets shown by the simple circular flow model are:
22. Which of the following is a limitation of the simple circular flow model?
29. The circular flow of goods and incomes shows the relationship between:
30. In a planned or command economy, all the economic decisions are taken by the:
a. The richest 10 per cent of the population has had a bigger percentage increase in incomes over
the past 10 years than the poorest 10 per cent.
b. The proportion of people's income paid in taxes is higher under this government than under
the previous one.
c. Inflation is rising.
d. Inequality in the distribution of income is a more serious problem than unemployment.
42. The branch of economics wherein mathematics and statistics are used to measure and analyze
economics activities is called……………..
43. The opportunity cost of a machine which can produce only one product is:
49. It is the study of economics actions of individuals and small groups of individuals.
a. Micro-Economics b. Macro-Economics c. Managerial Economics d. Business Economics
50. An input should be so allocated that the value added by the last unit is the same in all cases.
51. The term `Economics‟ in English language has its origin in ------word.
53. It refers to the determination of prices of all goods and services by the interaction of the
forces of demand and supply without any external interference.
56. Flows of the factor of production and the goods and services between the different sectors is -
-----.
a. Real flow b. Money flow c. Cash flow d. Product flow
59. According to Professor S.E.Landsbury, “Firm is an organization that produces and sells
goods with the goal of------its profits”.
61. According to Simon if a firm fails to achieve its target initially results in:
63. It is the difference between total revenue and total economic cost
68. Trade-offs are required because wants are unlimited and resources are:
70. Which of the following statements regarding the circular-flow diagram is true?
a. If Vijay works for XYZ Solutions Ltd. and receives a salary payment, the transaction takes
place in the market for goods and services.
b. If XYZ Solutions Ltd. sells a military aircraft, the transaction takes place in the market for
factors of production.
c. None of these answers.
d. The factors of production are owned by households.
e. The factors of production are owned by firms.
a. Labour b. Land c. Money d. Capital e. All of these answers are factors of production.
a. The impact of oil prices on car production b. The impact of money on inflation
c. The impact of technology on economic growth d. The impact of the deficit on saving
73. The word economy comes from the Greek word for
a. Firms are sellers in the resource market and the product market.
b. Households are sellers in the resource market.
c. Firms are buyers in the product market.
d. Spending on goods and services flow from firms to households.
80. Company goals that are concerned with creating employee and customer satisfaction and
maintaining a high degree of social responsibility are called ___________ objectives.
81. The value of an entrepreneur‟s resources that she uses in production are known as:
83. That profit functions as an incentive for innovation was among the key contributions to
economic thought by:
a. Karl Marx. b. Frank Knight. c. Joseph Schumpeter. d. Adam Smith. e. Alfred Marshall.
84. Which two of the following are characteristics of the „principal-agent‟ problem?
a. Calculated by subtracting implicit costs of using owner-supplied resources from the firm's
total revenue.
b. a theoretical measure of a firm's performance and has little value in real world decision-
making.
c. Generally larger than accounting profit. d. Negative when costs exceed revenues.
a. Occurs when managers pursue profit maximization without regard to the interests of society in
general.
b. Is the cause of principal-agent problems.
c. Occurs only rarely in modern corporations.
d. Exists when either party to a contract has an incentive to cancel the contract.
E. Both a and b
91. It is the study of economic actions of individuals and small groups of individuals:
a. When, for whom, and how. b. How, what, and for whom.
c. Who, how, and when. d. What, who, and why.
96. „„Economics is the science, which studies human behaviours as a relationship between ends
and scarce means which have alternative uses.‟‟ This definition of Economics is given by,
97. Which of the following is true regarding the circular flow model?
a. Households provide the demand for the factor market and business provide the supply for the
goods and services market.
b. Households provide the demand for the goods and service market and business provides the
supply for the factor market.
c. Households provide the supply for the factor market and business provides the supply
for the goods and service market
d. Households provide both the supply and demand for the goods and services market
100. Money is
a. Holding money increases people's income b. No other mediums of exchange are available
c. Money eliminates the "double coincidence of wants" problem
d. Holding money increases people's wealth
102. As the interest rate falls, people hold ________ money instead of bonds because the
opportunity cost of holding money has ________.
106. The statement "The unemployment rate for teens is higher than that for adults" is
a. One that does not use the ceteris paribus clause. b. About what ought to be.
c. Always true. d. About what is.
109. The task of economic science is to discover ________ that are consistent with ________.
a. Are better if they include most of the detail of the real economy.
b. Rely on simplification.
c. Do not address questions about the economy.
d. Make no assumptions that have not been prove
a. The accounting cost minus the marginal benefit. b. The highest-valued alternative forgone.
c. The monetary costs of an activity. d. The accounting cost minus the marginal cost
114. Economics is best defined as the study of how people, businesses, governments, and societies
121. Which of the following factor is important for demand along other factors?