Managerial Economics Question Bank

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Question Bank on Managerial EconomicsQuestionDescription QuestionMark

1The demand curve faced by a perfectly competitive firm is 1

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1 The demand for a diamond ring is said to be 1

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1For Luxury goods income elasticity is: 1

1

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1Opportunity Cost is also called as______________________. 1

1

1

1Perishable goods have no _______________________. 1Demand for durable goods is more____________________. 1

1

1

Which of the following is not responsible for an increase in demand for a commodity?

In the long-run equilibrium, a perfectly competitive firm produces the output at which price is equal to

Which of the following statements is not true regarding opportunity cost?

The income effect refers to the effect of a change in the price of a product on the

If a 5% increase in price of a commodity X causes quantity to decrease by 20% the elasticity of demand for the commodity X is:

The demand is said to be inelastic when the value income elasticity of demand is:

If the demand for electric cars remain the same,cetiris peribus, even after an increase in price of diesel cars,electric cars and diesel cars are considered to be:

Managerial Economics is the integration of economic principles with ___________________________ practices.

Managerial economics involves anapplicatio of economic theory- especially, microeconomic analysis to practical problem solving in ________________________.

Decision Making & ______________________ are the two key elements in Business Process.

Managerial Economics is a normative science than a _________________________.

Managerial Economists are also called as________________________________.

The Scope of Managerial Economics does not include ________________________.

The subject matter of ______________________ covers two important areas, namely, decision making & Forward Planning.

Decrease in suply accompanied by decrease in demand________________.

____________________ are the goals which are related to money aspects of a business firm.

____________________________ is one of the most fundamental objective of any business firm.

Strategic Objectives or goals are ____________________ focusses. 1Utility refers to: 1

1Which if the following statements is false regarding utility? 1In Economics the central problem is: 1Opportunity cost is : 1The Law of demand states that: 1The demand curve shows relationship between: 1

1

1A “change in demand” means: 1

The demand for a product is said to be inelastic with respect to price if: 1For a linear demand curve: 1

1The concept of price elasticity of demand measures: 1“Economics is the Science of Wealth” who gave this definition ? 1“Economics is what economists do.” It has been supported by— 1Who has given scarcity definition of economics ? 1“Economics is a science” the basis of this statement is— 1Which theory is generally included under micro economics ? 1Under law of demand— 1

When total utility becomes maximum, then marginal utility will be— 1

1

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1

___________________ refers to the sum total of satisfaction which a consumer receives by consuming various units of the same commodity.

One reason why the quantity of a good demanded increases when its price falls is that the:

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

If a demand for a product is said to be “elastic”, the value of the elasticity coeffecient is:

Marginal utility is equal to average utility at that time when average utility is—

Total utility of a commodity is measured by which price of that commodity ?

Which of the following is not responsible for an increase in demand for a commodity?

Which of the following statements is not true regarding opportunity cost?

The law of diminishing marginal utility explains

_____________________ states that the consumer would distribute his money income between the goods in sucu a way that the utility derived from the last rupee spent on each good is equal.

1

1The demand for a durable good tends to be more elastic, when 1

1

1Indifference curve slope ________________. 1Indifference curves are _______________ to the origin. 1

1

1

1

1

A movement along the demand curve for coffee is best described as: 1

1

Which of the following statements defines ‘Production Function’? 1

1The law of equi-marginal utility explains that 1

1

1Which of the following cost curves is not ‘U’ shaped? 1

1Which best describes a demand curve? 1A fall in price: 1Demand for a normal product may shift outwards if: 1An increase in price, all other things unchanged, leads to: 1If a product is a Veblen good: 1If a product is an inferior good: 1

Which of the following is NOT included in exceptions of the Law of Diminishing Marginal Utility?

_________________was propounded by Prof.Hicks and Allen and called " ".

________________________ refers to the ordering of different goods and their combination in a set order of preferences.

_________________can be defined as a colletion or group of indifference curves.

Which of the following statements is not true regarding Indifference Curve?

Marginal Rate of Substitution shows the rate at which the consumer is willing to substitute __________________________-.

MRF can be defined as the rate at which an _____________ will exchange successive units of one commodity for another.

The Price line shows all the possible conbinations of two goods that the consumer can buy at a given level of ____________ and prices of two goods.

The positively-sloped part of the long-run average total cost curve is due to which of the following?

Which of the following is true, if a firm does not produce any output in the short run?

Which of the following represents the marginal rate of technical substitution (MRTS)?

A digital diary manufacturing firm is operating in a perfectly competitive market. In the long run, thefirm will continue in business so long as it covers

A wheat producer finds that the price elasticity of demand for wheat is infinity. If the producer decides toincrease the price of the wheat by 14 %, the quantity demanded for wheat will

1

1If the price elasticity of demand is unit then a fall in price: 1If the cross elasticity of demand is -2: 1

1The price elasticity of demand is a negative number this means: 1

1If demand is price inelastic: 1For an inferior good: 1For a normal good: 1If demand increases in a market this will usually lead to: 1An increase in income will: 1A reduction in the costs of production will: 1

1

1

If the price was fixed below the equilibrium price there would be:1

A movement along the demand curve may be caused by: 1Which one of the following statements is true? 1According to the law of diminishing returns: 1The law of diminishing returns assumes: 1When internal economies of scale occur: 1

1The average variable cost curve: 1If marginal cost is positive and falling: 1If marginal product is below average product: 1

1

1

Average income increases from £20,000 p.a. to £22,000 p.a. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?

The price decreases from £2,000 to £1,800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?

The income elasticity is +2 and income increases by 20%. Sales were 5000 units, what will they be now?

Price increases from 10 to 12 pence and the price elasticity of demand is -0.5. The quantity demanded was 500 units. What will it be now?

A shift in supply will have a bigger effect on price than output if demand is:

Assuming a downward sloping demand curve and upward sloping supply curve, a higher equilibrium price may be caused by:

The first level of output at which the long run average costs are minimized is called:

The demand function for a commodity is estimated to beQd = 5,50,000 – 55PThe theoretical highest price that can prevail in the market is

The supply and demand functions of a commodity are estimated as follows:Qd = 1,600 – 200PQs = 1,000P – 2,000At equilibrium, the elasticity of supply for the commodity is

1

1

1

1If firms earn normal profits: 1In the long term a firm will produce provided the revenue covers: 1In the short term a firm will produce provided the revenue: 1The profit per sale is a measure of: 1Total revenue equals: 1If marginal revenue equals marginal cost: 1Price equals: 1Firms in perfect competition face a: 1In perfect competition: 1

A profit maximizing firm in perfect competition produces where: 1In perfect competition: 1In the long run in perfect competition: 1In perfect competition: 1In perfect competition: 1

In the short run firms perfect competition will still produce provided: 1In the long run equilibrium in perfect competition: 1For a perfectly competitive firm: 1X inefficiency occurs when: 2The marginal revenue curve in monopoly: 2In monopoly when abnormal profits are made: 2In monopoly in long run equilibrium: 2A monopolist faces 2In a monopoly which of the following is not true? 2According to Schumpeter: 2A welfare loss occurs in monopoly where: 2If a few firms dominate an industry the market is known as: 2In the Kinked Demand Curve theory it is assumed that: 2The Kinked Demand Curve theory assumes 2In Game Theory: 2

Demand and supply functions for a product are estimated as follows:Qd = 12,000 – 4PQs = 4,000 + 6PIf the government imposes a sales tax of Rs.200 per unit, the new equilibrium price will be

The demand and supply functions of a good are given as follows:Qd = 19,000 – 300PQs = 17,000 + 100PWhat is the equilibrium quantity of the good?

If the marginal revenue is less than the marginal cost then to profit maximize a firm should:

If the price is less than the average costs but higher than the average variable costs:

In the Kinked Demand Curve theory: 2In oligopoly 2A model of Game Theory of oligopoly is known as the: 2In cartels: 2In a cartel: 2

2Which of the following most closely resembles an oligopoly? 2The reward for capital is known as; 2

2

2

2Which of the following is an example of fixed cost? 2Which of the following cost curves is not ‘U’ shaped? 2The verticle difference between TVC and TC is equal to: 2We can say that fresh milk in economics sense is a/an: 2In short run the monopolist can earn: 2Which of the following statements refers to "Price Leadership" 2Which of the following is not a condition of perfect market? 2Price Discrimination is possible under- 2In short run TC is: 2

There is no existance of _______________________ curve in monopoly? 2

2If demand curve has a constant slope, the elasticity of demand: 2Alternative costs are also known as: 2Declining MR implies that: 2

2The point where total cost equals the total revenue is known as: 2When average cost falls, marginal cost is less than: 2Constant Average cost means; 2Paying the labourere is: 2

2Monopoly is a market of a product 2In long run all costs are known as _______________ costs. 2

when price elasticity of demand is equal to two then marginal revenue is:

Which of the following statements is correct concerning the relationships among the firm's total costfunctions?

Which of the following is true of the relationship between the marginal cost function and the averagecost?

Which of the following is not a common characteristic of perfect competition and monopolisticcompetition?

As units of output sold increases, the marginal revenue will be _________________ the average.

When TR is increasing at increasing rate MR Should be ________________.

The difference between ________________ determines the profit or loss condition of the firm

2Which of the following is not a modern theory of Profit? 2The production function represents ________________________. 2

2

2A perfectly competitive firm can increase its sales revenue by: 2Which of the following is not considered as the pricing methods: 2Cost Plus Pricing = 2Actual Cost refers to historical cost for the ________________. 2Mark-up price is ______________________________________. 2The going rate pricing is opposite of _____________________. 2______________________ is managed or prescribed price. 2Administered price is fixed by _______________________. 2

2Blending of two kinds of prices is called as: 2Transfer Pricing is associated with _____________________. 2Transfer Pricing refers to________________________________. 2

2

2

2

2

2

2

2Short run demand refers to ________________________. 2Joint Demand is also called as_______________________. 2

2Price elasticity can be precisely defined as: 2

2

A firm realises the least cost in production if it substitutes the factors until their:

Which of the following does not affect the market demand for a good or a service?

A curve drawn indicating the slope of the total utility closely resembles the :

____________________ are the result of the policy of price control restored by the government for an efficient management for the economy.

A manufacturer produces 1,000 shirts at the total cost of Rs.50,000. The average cost id: 50,000/1,000 = Rs.500. If the return on sales is expected 40%. Then find Mark-up Price.

Expansion and contraction of demand takes place on the ________________________.

Shifts in the position of the demand curve may take place due to the change in the conditions of ____________.

The demand is said to decrease when the consumers _________________________ at the same price or pay less for buying the same quantity as before.

Goods which are used in the production of goods are called as______________________.

____________________ are those goods which satisfy their owners for a long time to come if they are maintained properly.

The total demand for the products of a particular industry refers to _____________________.

If the demand for a product is independent of demand for other goods, then it is called as_________________.

When a small percentage change in price leads to large percentage change, in the quantity demanded, it id called:

Relatively inelastice demand means: 2

3

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3

3

3

3Which among the following is not a method of forecasting: 3Which of the following is not a factor of production: 3

3The law pertaining to the return to a variable factor is called as: 3The marginal product is rising, diminishing and eventually it becomes__ 3Which of the following statement is not the assumption of law of Returns 3

3The equal product curve is also called as ________________. 3

3

3Least cost combination represents: 3Which among the following is not a total cost concept: 3

3

3

_____________________ is the methof used to measure elasticity of demand on an arc of the demand curve.

Income elasticity of demand can be defined as the ratio of proportionate change in the quantity demanded of the commodity to a given proportionate change in _____________________.

A 20% rise in income causes a 30% increase in demand for a product 'X' what will be gthe income elasticity of demand for 'X'?

In which of the following conditions the income elasticity of demand is nagative:

________________ is the most direct approach to demand forecasting in the short run.

A departmental store conducted a study of the demand for men's shirts. It found that the average dailu demand (D) in terms of price (P) is given by equation: D= 700-5P

All factors containing input tend to variable in the process of production refers to:

_________________ refers to the expansion path of optimal factor-input combinations with the increasing scale of production.

In which of the following conditions the Iso-quants have a negative slope:

A line showing all of the combination of the two factors that can be purchased for a given expenditure outlay by the firm.Is called as_____________

A firm operating under perfect competition has the following cost functions:AVC = 200 – 15Q + 0.75Q2 The price below which the firm shuts down its operations in the short run is

In a perfectively competitive market, the demand function for a firm is P = 3Q – 25. If the average costis Rs.5, what is the output at which the firm earns normal profits?

3

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Price rigidity is a common feature of which of the following markets: 3

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3

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3Demand forecasting refers to : 3

3A demand curve faced by a perfectly competitive firm is: 3

3

The total cost function for a firm is estimated to be TC = 100 – 4Q + 8Q 2. If the current output is 8units, the marginal cost is

The average cost function of a firm is given by AC = Q3 – 12Q2 + 300Q + 780 +500Q . The total fixedcost of the firm is

The Long-run Average Cost function of a firm operating under perfect competition isLAC = 20 – 250Q + 10Q2The optimum level of output of the firm is

Mrs.Rajing a fashion designer, who manages a boutique has to forgo her salary which she could have earned if she had worked elsewhere.The forgone cost is referred to as:

Which of the following is not a predominanc factor of oligopolistic market?

Which among the following is not considered one among the forms of price discrimination?

Charging different price for different convert his of output sold to the different buyers is called as:

Third -degree price discrimination strategy is also referred to as _____________________.

The curve have more elastic demand above the kink point and less elastic demand below is called as______________

Because of discontinuous marginal revenue curve there is __________________ in equilibrium output, even though marginal cost changes hence there is price rigidity.

Game theory is introduced by Nash as a frame work towards decision making competitive stragegy in business in oligopolistic market- where:

The price of coffee increases from Rs.60 to Rs.80 per kg as a result of this, demand for tea rises from 5kg to 10kg. What is the cross elasticity fo tea for coffee?

Which of the following methods of forecating helps to do forecasts both for established and new products?

In the long-run equilibrium, a perfectly competitive firm produces the output at which price is equal toI. Short run average cost.II. Long run average cost.III. Short run marginal cost.

3

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3A shortage in the market would result when 3Long-run equilibrium of a competitive industry indicates that 3Excess capacity is the essential characteristic of the firms in 3

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Which one of the following is not one of the basic economic questions? 3Which of the following is a normative statement in economics? 3

The law of diminishing marginal utility explainsI. The derivation of law of demand.II. Paradox of value.III. The redistribution of income.

Which of the following is/are property (ies) of isoquants?I. An isoquant is upward sloping to the right.II. A higher isoquant represents a lower output.III. No two isoquants intersect or touch each other.

Suppose Pepsi, Coke and 7-Up are substitute products. If the price of Pepsi decreases relative to theprice of Coke and 7-Up, the demand for

Consumer expenditure data in East India revealed that gold ornaments are a luxury for them. Theincome elasticity of demand for gold ornament in East India is

The management of a company has finally agreed to increase the salaries of its temporary staff by 10%.Which of the following will not be affected by the decision?

When 10 units of output are produced, the average cost of production (AC) is Rs.30. If average cost ofproduction (AC) increases to Rs.40 with an increase in output by one unit, the marginal cost ofproducing the 11th unit is

The total cost function for a firm is estimated to be TC = 100 – 4Q + 8Q 2. If the current output is 8units, the marginal cost is

Demand functions of a monopolist in two effectively segmented markets are:Qa = 1,000 – 50PaQb = 800 – 25PbTotal cost function of the monopolist is TC = 500 + 10Q.If the monopolist does not practice price discrimination, sales maximizing price is

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867217

868 217869 218870 218871 218872 218873 219874 219875 219876 219877 220878 220879 220880 220881 221882 221883 221884 221885 222886 222887 222888 222889 223890 223891 223892 223893 224894 224895 224896 224897 225898 225899 225900 225901 226

902 226903 226904 226905 227906 227907 227908 227909 228910 228911 228912 228913 229914 229915 229916 229917 230918 230919 230920 230921 231922 231923 231924 231925 232926 232927 232928 232929 233930 233931 233932 233933 234934 234935 234936 234937 235938 235939 235940 235941 236942 236943 236944 236945 237946 237947 237948 237949 238

950 238951 238952 238953 239954 239955 239956 239957 240958 240959 240960 240961 241962 241963 241964 241965 242966 242967 242968 242969 243970 243971 243972 243973 244974 244975 244976 244977 245978 245979 245980 245981 246982 246983 246984 246985 247986 247987 247988 247989 248990 248991 248992 248993 249994 249995 249996 249997 250

998 250999 250

1000 250

Answer An increase in consumers preference for the commodity A decrease in the commodity’s priceA decrease in the price of the complementary good An increase in consumers’ income Vertical HorizontalNegatively sloped Positively slopedI. Short run average cost.II. Long run average cost.III. Short run marginal cost.All the aboveIt is the value of the next best use for an economic good It is the value of a sacrificed alternative It is useful in decision-making It does not take into consideration, the cost of timeConsumer’s purchasing powerConsumer’s bargaining powerConsumer’s willingnessProducer’s bargaining powerPerfectly elasticUnitary elasticRelatively inelasticRelatively elastic5.0020.004.000.25Greater that one Less than one more than ZeroLess than ZeroEqual to 1Substitute GoodsComplementary GoodsIndependent GoodsLuxury GoodsZeroBetween zero and oneOneGreater than one.Management PracticesOrganization PracticesEconomic PracticesBusiness PracticesReal Business LifeIn day to day BusinessIn Business Life

In Rael Business LifeBusiness PlanningForward PlanningStrategic PlanningEconomic PlanningNegative oneReal OnePositive OneDescriptive one.Economic AdvisersProblem SolversBusiness AdvisersManagerial AdvisersVariable costEconomic CostAlternative CostFixed CostPerformance Analysis of EmployeesDemand AnalysisProduction FunctionCost AnalysisAgricultural EconomicsWelfare EconomicsEconomic analysisManagerial EconomicsReduces the equilibrium quantity, but price may either increase or decrease or remain the same Reduces the equilibrium price, but quantity may either increase or decrease or remain the sameDefinitely reduces both the equilibrium price and quantityDefinitely increases both the equilibrium price and quantityDurabilityFlexibilityQualityAffordabilityVitalVolatileFluctuatingAll the aboveOrganizational GoalsSocial goalsEconomic GoalsStrategic GoalsSales MaximizationProfit MaximizationWealth MaximazationAll the aboveConsumer FocussedCompetitor FocussedCompetition Focussed

Supplier FocussedWant satisfying capacity of a commoditywant satisfying capacity of a consumerNeed Satisfying Capacity of a commodityDesire satisfying capacity of a commodityTotal UtilityMarginal UtilityIndividual UtilityProduct UtilityThere exists a difference between choice and preference The concept of utility is developed to explain the basic principles of consumer choice and behaviour

According to Ordinalist approach, the utility can be measured in subjective units.ProductionConsumptionScarcityMoneythe additional benefit of buying an additional unit of a product.that which we forgo, or give up, when we make a choice or a decision.the cost incurred in the past before we make a decision about what to do in the future. a cost that cannot be avoided, regardless of what is done in the future.price and quantity demanded are inversely related the larger the number of buyers in a market, the lower will be product priceprice and quantity demanded are directly relatedconsumers will buy more of a given product at high prices than they will at low pricesmoney income and quantity demandedprice and production costs price and quantity demandedconsumer tastes and the quantity demandedprice decline shifts the supply curve to the leftlower price shifts the demand curve to the leftlower price shifts the dema nd curve to the rightlower price increases the real incomes of buyers, enabling them to buy moreconsumer incomes have declined and they now want to buy less of A at each possible price the price of A has increased and, as a result, consumers want to purchase less of it

consumer preferences have changed in favour of A so that they now want to buy more at each possible price. the price of A has declined and, as a result, consumers want to purchase more of itachange in the elasticity of a demand curve the shift of a demand curve a movement along a given demand schedule or curvethe quantity demanded changes as price changesconsumers are largely unresponsive to a per unit price change the elasticity coefficient is greater that 1 a drop in price is accompanied by a decrease in the quantity demanded a drop in price is accompanied by an increase in the quantity demandedelasticity is constant along the curve

A rational consumer is one who allocates his spending in such a way that the preferred combination gives him the maximum satisfaction

elasticity is unity at every point on the curve demand is elastic at low prices demand is inelastic at high pricesZeroGreater than oneEqual to oneLess than one The slope of the demand curve The number of buyers in a market The extent to which the demand curve shifts as the result of a price decline The sensitivity of consumers to price changesJ. K. Mehta Marshall Adam Smith RobbinsRichard Jones Comte Gunnar MyrdalAll of the aboveAdam SmithMarshallRobbins RobertsonRelation between cause and effect Use of deductive method and inductive method for the formations of laws Experiments All of the above Price Theory

Income Theory

Employment Theory

None of the above

Price of commodity is an independent variableQuantity demanded is a dependent variableReciprocal relationship is found between price and quantity demanded All of the aboveMinimum Average Zero NegativeIncreasingMaximumFalling MinimumValue in use Value in exchangeBoth of above None of aboveAn increase in consumers preference for the commodity

A decrease in the commodity’s price A decrease in the price of the complementary good An increase in consumers’ incomeIt is the value of a sacrificed alternativeIt is useful in decision-making It does not take into consideration, the cost of time It is useful for valuing non-marketed goods. The derivation of law of demand.Paradox of value.The redistribution of income.All of the aboveThe Law of Equi-Marginal UtilityThe Law of Diminishing marginal UtilityMarginal UtilityThe Law of Variable ProportionsAlcoholics MisersMoneyGiffen ParadoxMarginal AnalysisUtilitu AnalysisIndifference Curve Analysis Cardinal Utility AnalysisThere are many substitutes for the good There are few substitutes for the goodThere are few complements for the goodThere are many complements for the goodScale of PreferencesScale of IncomeScale of Prefered DemandAll the aboveIndifference MapIndifference CurveDemand CurveSupply CurveUpward to the rightdownward to the rightfrom Left to RightFrom Right to LetdConveclaveConvexStraight Blunt Indifference curve Slope from Right to LeftIndifference curve slope downward to the rightIndifference curves are convex to the originIndifference curves cannot intersect each otherTwo Commodities

One commodity for anotherOne commoodity for otherTwo other commoditiesConsumerOrganizationIndividualBuyerPriceQuantity DemandIncomeA decrease in demand A change in quantity demanded A change in demandAn increase in demandDiseconomies of scaleDiminishing returnsThe firm being able to take advantage of large-scale production techniques as it expands its outputThe increase in productivity that results from specializationThe relationship between market price and quantity supplied The relationship between the firm's total revenue and the cost of productionThe relationship between the firm's marginal revenue and the cost of production

Its total cost will be zeroIts variable cost will be positiveIts fixed cost will be positiveIts average cost will be zeroMarginal utilities of commodity X is positive and Y is negativeMarginal utilities of commodities X and Y are equalMarginal utilities of the last rupee spent on commodities X and Y are equalMarginal utilities of commodities X and Y are negativeSlope of the indifference curveSlope of the isoquantSlope of the budget lineSlope of the average cost curve.Average costsTotal costs Marginal costs Implicit costsShort run average cost curveLong run average cost curve Long run marginal cost curveAverage fixed cost curve.Increase by 14% Remain the same Decline to zero Decrease by 14%

The relationship between the maximum quantity of output that can be produced from a given amounts of various inputs for a given technology.

The quantity consumers would like to buy in an ideal world The quantity consumers are willing to sellThe quantity consumers are willing and able to buy at each and every income all other things unchanged The quantity consumers are willing and able to buy at each and every price all other things unchangedWill cause an inward shift of demandWill cause an outward shift of supplyLeads to a movement along a demand curve Leads to a higher level of productionPrice decreases The price of a substitute risesThe price of a complement risesIncome fallsShift demand outwards Shift demand inwards A contraction of demand An extension of demandDemand is inversely related to incomeDemand is inversely related to priceDemand is directly related to price Demand is inversely related to the price of substitutesDemand is inversely related to income Demand is inversely related to priceDemand is directly related to priceDemand is directly related to the price of substitutesDemand is price inelasticThe good is inferiorIncome elasticity is -2The product is normalThe price elasticity of demand is -2 The good is inferiorIncome elasticity is + 0.5Income elasticity is + 2Reduces revenueLeaves revenue unchangedIncreases revenue Reduces costsThe products are substitutes and demand is cross price elastic The products are substitutes and demand is cross price inelasticThe products are complements and demand is cross price elastic The products are complements and demand is cross price inelastic3000700055004500Demand is price elastic Demand is price inelastic The demand curve is downward sloping An increase in income will reduce the quantity demanded

550 units 500 units450 units490 unitsAn increase in price must raise profitsAn increase in price decreases revenueAn increase in price increases revenueA decrease in price reduces salesThe price elasticity of demand is negative; the income elasticity of demand is negative.The price elasticity of demand is positive; the income elasticity of demand is negative.The price elasticity of demand is negative; the income elasticity of demand is positive. The price elasticity of demand is positive; the income elasticity of demand is positive. The price elasticity of demand is negative; the income elasticity of demand is negative.The price elasticity of demand is positive; the income elasticity of demand is negative.The price elasticity of demand is negative; the income elasticity of demand is positive.The price elasticity of demand is positive; the income elasticity of demand is positive.A higher equilibrium price and output A lower equilibrium price and higher outputA lower equilibrium price and output A higher equilibrium price and lower outputLead to a movement along the demand curveShift the supply curve Shift the demand curve Lead to an extension of demandLead to a movement along the supply curve Shift the demand curveShift the supply curve Lead to an extension of supplyIncome elasticIncome inelastic Price elasticPrice inelastic A fall in demand An increase in supplyImprovements in production technology An increase in demand Excess supply Excess demandEquilibriumDownward pressure on pricesA change in incomeA change in the number of buyersA change in advertising A shift in supply If the marginal cost is greater than the average cost the average cost falls If the marginal cost is greater than the average cost the average cost increasesIf the marginal cost is positive total costs are maximized If the marginal cost is negative total costs increase at a decreasing rate if output increases

The marginal product eventually falls as more units of a variable factor are added to a fixed factor Marginal utility falls as more units of a product are consumedThe total product falls as more units of a variable factor are added to a fixed factor

The marginal product eventually increases as more units of a variable factor are added to a fixed factorThere are no fixed factors of productionThere are no variable factors of productionUtility is maximized when marginal product falls Some factors of production are fixedTotal costs fallMarginal costs increaseAverage costs fallRevenue fallsThe Minimum Efficient Scale The Minimum External ScaleThe Maximum External ScaleThe Maximum Effective ScaleIs derived from the average fixed costs Converges with the average cost as output increases Equals the total costs divided by the outputEquals revenue minus profits Total cost is fallingTotal cost is increasing at a falling rateTotal cost is falling at a falling rateTotal cost is increasing at an increasing rateThe total product will fallThe average product will fall Average variable costs will fallTotal revenue will fallRs. 5,000 Rs. 8,000 Rs. 10,000 Rs. 15,0001356Rs.920 Rs.800Rs.640 Rs.20010,500 units 16,000 units 17,000 units17,500 units. Reduce output Increase output Leave output where it is

Increase costsThe firm is making a loss and will shutdown in the short term The firm is making a profit The firm is making a loss but will continue to produce in the short term The firm is making a loss and is making a negative contribution to fixed costsThey will aim to leave the industryOther firms will join the industryThe total revenue equals total costs No profit is made in accounting terms Fixed costsVariable costsTotal costs Sales Covers fixed costs Covers variable costs Covers total costs Covers salesCash flowProfitabilityFeasibility LiquidityPrice plus the quantity Price multiplied by the quantity soldPrice divided by the quantity soldPrice minus the quantity soldNo profit is being madeTotal revenue equals total costProfits are maximizedProducing another unit would increase profits Total revenue - quantity Total revenue / quantity soldTotal quantity sold * quantity sold Total revenue / total cost Perfectly elastic demand curve Perfectly inelastic demand curvePerfectly elastic supply curve Perfectly inelastic supply curve The price equals the marginal revenueThe price equals the average variable cost The fixed cost equals the variable costsThe price equals the total costsTotal revenue is maximized Marginal revenue equals zeroMarginal revenue equals marginal cost Marginal revenue equals average costThe products firms offer are very similarProducts are heavily differentiatedA few firms dominate the market

Consumers have limited information The price equals the total revenueFirms are allocatively inefficient Firms are productively efficientThe price equals total costShort run abnormal profits are competed away by firms leaving the industryShort run abnormal profits are competed away by firms entering the industryShort run abnormal profits are competed away by the government Short run abnormal profits are competed away by greater advertising A few firms dominate the industry Firms are price makersThere are many buyers but few sellersThere are many buyers and sellersThe price covers average variable costThe price covers variable costThe price covers average fixed costThe price covers fixed costs Price = average cost = marginal costPrice = average cost = total costPrice = marginal revenue = total costTotal revenue = total variable costTotal revenue is a straight line Price is greater than marginal revenue Price equals total revenue Price equals total costThe price is greater than the marginal cost The price is greater than the average cost Costs are higher than they could be due to a lack of competitive pressureThere are external costs Equals the demand curve Is parallel with the demand curve Lies below and converges with the demand curve Lies below and diverges from the demand curveThe price set is greater than the average costThe price is less than the marginalcostThe average revenue equals the marginal costRevenue equals total costThe firm is productively efficientThe firm is allocatively inefficient The firm produces where marginal cost is less than marginal revenue The firm produces at the socially optimal levelAn upward sloping demand curveA perfectly elastic demand curveA downward sloping demand curveA demand curve with a positive price elasticity of demand Products are differentiated There is freedom of entry and exit into the industry in the long runThe firm is a price maker

There is one main sellerMonopolies are inefficient Monopoly profits act as an incentive for innovation Monopolies are allocatively efficient Monopolies are productively efficient The price is greater than the marginal cost The price is greater than the marginal benefitThe price is greater than the average revenue The price is greater than the marginal revenueMonopolistic competition Competitively monopolistic Duopoly Oligopoly An increase in price by the firm is not followed by others An increase in price by the firm is followed by others A decrease in price by the firm is not followed by others Firms collude to fix the price Firms cooperate Firms act as part of a cartel Firms are competitive with each other Firms are not profit maximizersFirms are always assumed to act independentlyFirms are always assumed to cooperate with each otherFirms always collude as part of a cartelFirms consider the actions of others before deciding what to doThe marginal revenue curve is perfectly horizontalDemand is always price inelasticDemand is always price elastic Non price competition is likely The largest four firms are likely to have a small market shareThe price is likely to equal marginal revenue Firms will continue to produce in the long run if price is less than average cost Firms may collude or compete depending on their assumptions about their competitorsPrisoner's Dilemma Monopoly CellJailhouse SentenceJury BoxEach individual firm profit maximizesThere may be an incentive to cheatThe industry as a whole is loss making There is no need to police agreementsFirms compete against each other Price wars are common Firms use price to win market share from competitors Firms colludeNegative Twice the average revenueThrice the average revenue

Half of average revenueThe bike repair stations in Mumbai The economy hotels in Hyderabad The cigarette industry in India The toilet soap industry in India.Rent InterestWagesProfitTC = MC + ACTVC = TFC/TC TC = TFC – TVC TFC = TC – TVCIf MC is greater than ATC then ATC is falling If MC is less than ATC then ATC is increasing If MC is less than ATC then ATC is constant The MC curve intersects the ATC curve at its minimum point.Free entry and exit Homogenous product Large number of buyers Normal profits in long run.Wages and salaries of temporary staff Transportation charges Charges for fuel and electricity Contractual rent for buildingShort run average cost curve Long run average cost curve Long run marginal cost curve Average fixed cost curve.MCAVCTFCNone of the aboveLuxury goodInferior goodNormal goodNothing can be saidSupernormal ProfitsNormal ProfitsLossesAll the aboveForm of price collusionExistence of perfect competitionIntense competitionThe maintenance of a monopolist priceThe homogeneous product Large number of buyers and sellersPerfect Knowledge of the market by buyers and sellers

Downward sloping demand curve for a firmMonopolyMonopolistic competitionOligopolyAll the aboveU shapedConclaveConvexConcavo-convexDemandCostRevenueSupplyMore thanless thanequal toNone of the aboveIncreases at higher pricesincreases at larger quantitiesIs greater than the slopeIs equal to the slopeMoney cost opportunity cost Spill over costExternal CostTR increases at increasing rateTR decreases at constant rateTR increases at the diminishing rateTR increases at constant rateIncreasing DecreasingConstantNone of the aboveExpansion pointBreak-even pointShut down pointBreak Down pointPrime costTotal CostFiced CostAverage CostIncreasing returnsConstant returnsDiminishing returnsNone of the aboveVariable costsFixed costDirect cost

Indirect costMR and ACAR and ACAR and MCNone of the aboveClose complements Close SubstitutesComplementsNone of the aboveFixed costSemi fixedVariableBoth variable and fixedMarginal physical products are equalMarginal physical products are equal to their factor pricesMarginal physical products are equal to ZeroMarginal Physical Products to the factor price ratio is equal for all factor inputsClarks's dynamic theory of profitWalker's rent theory of profitKnights uncertainity theory of profitHawley's risk theory of profitCost DemandOutput TechnologyThe prices of related goodsNumber of buyersNumber of sellersIncome of consumersDemand CurveSupply CurveAverage Utility curveMarginal Revenue CurveReducing the priceIncreasing the priceIncreasing the productionIncreasing the sales forceCost plus pricingGoing Rate Pricing Pricing for rate of returnMarginal PricingCost+ ExpensesCost + ProfitCost+ Marginal RateNone of the abovePresent available periodLatest available periodPerious available period

Last available periodPercentage of profit added to the price of the productPercentage of profit added to the price of productionPercentage of profit added to the Price of the ProducctNone of the aboveFull CostCost plus pricingReturn Pricing Full cost and cost plus plus pricingAdministered PriceCost plus priceSkimming PricePenetration priceProducerConsumerIndustryGovernmentAdministered PriceReturn Pricing Dual PricingExport PricingFormal PricingExport PricingDual PricingPredatory PricingPublic OrganizationsPrivate OrganizationsMultinational CorporationsAll the aboveInter firm PricingExternal Firm PricingIntral firm pricingIntra firm PricingRs.833.33Rs.833.34Rs.843.33Rs. 800Same demand curveDifferend Demand curveIndividual Demand curveMarket Demand CuveDemandSupplyExpansion of DemandContraction of DemandBuy LessBuy MoreBuy Little

Buy LargeProducers' GoodsConsumers GoodsDurable goodsAll the aboveProducers' GoodsDurable goodsPerishable Goodsconsumers' GoodsCompany DemandIndividual DemandIndustry DemandNone of the aboveExisting or current demandComplementary demandIndustry DemandIndividual DemandComplementary demandDual DemandCompisite DemandLong Run demandAutonomous DemandDerived DemandComplementary demandNone of the abovePropoetionate change in quantity demanded in response to proportionate change in priceProportionate change in quantity demanded in response to proportionate change in pricePropoetionate change in qualiuty demanded in response to proportionate change in priceProportionate change in qualtiy demanded in response to proportionate change in pricePerfectly elastic demandPerfectly inelastic demandRelatively elastic demand Relatively inelastic demandProportion of change in the quantity demanded is leass than that of price .Proportion of change in the qualtiy demanded is more than that of priceProportion of change in the quantity demanded is less than that of priceNone of the abovePoint ElaxticityGeometric methodArc elasticity Total outlay methodTaste of the consumerIncome of the comsumerPreference of the consumerDesire of the consumer1.52.525

15

None of the aboveMarket SurveyConsumer surveyCollective opinion methodMarket Experimentation200120139139.8Time series ModelCause-and-effect modelJudgemental MethodSingle forecasing methodLand Labour CapitalLayoutLong Run Production FunctionShort Run Production FunctionMedium Production FunctionCobb-Douglas production FunctionLaw of variable Law of variable Proportionslaw of diminishing ReturnsLaw of DemandNegativePositiveGreaterDiminishesTechnique of production changesTechnique of Production is unchangedAll units of factors are homogeneousreturns are measured in physical termsBudget LineTrend LineScale LineNone of the aboveCost curveproduct CurveIso Cost curveIso-Quant curve

When the demand for a product decreases as income increases and conversely where demand for a product increases as there is fall in income .

When the demand for a product increase as income increases and conversely where demand for a product increases as there is fall in income .

When the demand for a product decreases as income decreases and conversely where demand for a product increases as there is fall in income .

When the amount of one factor input is increased that of the other must be decreased.When the amount of one factor output is decreased that of the other must be decreasedWhen the amount of all factor output is increased that of the other must be decreasedWhen the amount of all factor increased is decreased that of the other must be decreasedPrice LineProduct LineBudget LineIso Cost Line

None of the aboveTotal Fixed CostTotal Variable CostTotal CostTotal Marginal costRs.150 Rs.125 Rs.500 Rs.6003 units 8 units10 units 11 unitsRs. 24 Rs. 48 Rs. 96Rs.124Rs. 100 Rs. 250Rs. 500 Rs.1,00014.0 units 12.5 units20.0 units18.5 unitsSunk costImplicit costExplicit CostTotal CostFree entry and exit of firmsLarge number of buyers and sellersGroup behaviourInterdependence of firmsMonopoly

It represents the highest order of technical efficiency in using factor combination resulting into the minimum cost fo a raget level of output of a product.

It represents the lowest order of technical efficiency in using factor combination resulting into the minimum cost fo a raget level of output of a product.

It represents the highest order of technical efficiency in using factor combination resulting into the minimum cost fo a raget level of input of a product.

MonosponyOligopolyPerfectly competitive Personal DiscriminationAge DiscriminationSize DiscriminationDistance DiscriminationFirst Degree of Price DiscriminationSecond degree of Price DiscriminationThird Degree of Price DiscriminationNone of the aboveGroup PricingBehavioural PricingAverage PricingAll the aboveAverage Cost curveIso cost CurveIndifference CurveKinked Demand CurveIs no ChangeIs ChangeIs small changeNone of the abovethere are many sellersthere less sellers there are many buyersthere are few sellers6349Prediction or estimation of a future situation under given constraintsPrediction of estimmation of a future situation under given constrainsPrediction or estimation of a future situation under given variablesNone of the aboveSurvey methodsControlled ExperimentsBaromatric methodsTrend projections methodVertical Horizontal Negatively sloped Positively slopedOnly (II) above Both (I) and (II) above Both (II) and (III) above All (I), (II) and (III) above.Only (III) above

Both (I) and (II) above Both (I) and (III) above All (I), (II) and (III) aboveOnly (I) above Only (III) above(Both (I) and (II) above Both (II) and (III) aboveCoke and 7-Up will decreaseCoke and 7-Up will increase Coke will decrease 7-Up will decreaseA price ceiling is below the equilibrium price A price ceiling is above the equilibrium priceA price ceiling is equal to the equilibrium price Government cancels a price ceilingSome firms make profits and others make losses It earns super normal profitsSome firms earn normal profits while the rest earn super normal profits All firms earn normal profitsMonopolyPerfect competition Monopolistic competition OligopolyGreater than one Equal to oneZero Greater than zero but less than oneAccounting profitsDirect costsImplicit costsVariable costs.Rs.110 Rs.140 Rs.150 Rs.400Rs. 48 Rs. 96 Rs.124 Rs.580.Rs. 17Rs.900 Rs. 12Rs.525What to produceWho to produce for How to produce How to minimize economic growthMore spending by the government reduces poverty

Higher taxes lead to less desire to workThe government should concentrate on reducing unemploymentNone of the above

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