mb0026-eco questions compiled

8/12/2019 MB0026-Eco Questions Compiled

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Subject : Managerial Economics (MB0026 )

PART A

Q.1 function which shows the relationshipbetween quantity of output and the quantity ofinput is

A) Product Function

B) b.Change Function

C) c.production function

D) d.System production

Q.2 Elasticity which tells how much the demandwill change with change in price is

A) Income elasticity of demand

B) Price Elasticity of demand AnsC) Point elasticity of demand

D) Cross elasticity of demand

Q.3 Prediction of future demand based on currentconditions and calculations is

A) price forecasting

B) Output forecasting

C) Demand Forecasting

D) Production forecasting

Q.4 Specific characteristics of a market structureare

A) Number and size of sellers

B) Number of size distribution of the buyer

C) Product difference

D) condition of entry amd exit

Q.5 Economics which is the study of aggregateslike aggregate demand, aggregate supply etc. is

A) Micro Science

B) Micro Study


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C) Macro Economics

D) Managerial Economics

Q.6 The inverse relationship between price &quantity demanded is

A) Law of Demand

B) Law of supply

C) Law of System

D) Law of Nature

Q.7 Average Revenue, AR =

A) Q / TR

B) TR + Q

C) TR / Q

D) TR * Q

Q.8 In _____ type of market structure, there arelarge numbers of sellers selling slightly differentproducts close substitutes

A) Oligopolistic

B) Monopolistic

C) Commercial

D) Monosonistic

Q.9 Quantity which is always measured at costis

A) DemandB) Desire

C) stock

D) Flow

Q.10 Capital Expenditure or purchasing ofequipment or machinery is

A) a.Income

B) b.Expenditure

C) c Investment

D) d.IncomeQ.11 Total variable cost at each level of output

divide by the number of units produced is

A) Average fixed Costs

B) Average Variable cost Ans

C) average changing costs

D) Long run costs


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Q.12 Private Investment is made by

A) a.government companies

B) b.private Companies ans

C) c.Public Companies

D) d.Change companiesQ.13 The short run cost curves are divided into

_____ and _____

A) AFC, AC

B) TFC, TVC

C) AFC, TVC

D) TFC, AC

Q.14 Cost which are incurred omstationary,electricity bills and electricity are

A) a.Indirect costs

B) b.Direct Costs

C) c.material Costs

D) d.Private Costs

Q.15 Quantity which is always measured at agiven period of time is

A) Cash

B) Stock

C) Flow

D) System

Q.16 _____ is equal to the fixed cost at each levelof output divided by the number of unitsproduced

A) AC

B) AFC

C) SAVC

D) SAC

Q.17 Point where the firm has stopped incurringlosses but start to gain profits is called

A) a.gain pointB) b.change point

C) c.Break even point

D) d.Constant point

Q.18 _____ is again where the law of demanddoes not work

A) Giffens goods


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B) Ignorance effect

C) Status symbol

D) Speculation

Q.19 Charging the different prices to differentbuyers for the same product is called

A) price monopoly

B) price Descrimination

C) Price design

D) Price system

Q.20 When price _____, there is contraction ofsupply

A) Increases

B) Decreases

C) Either A) or B)

D) Both A) and B)

Q.21 _____ deals with aggregate economic activity

A) Managerial Economics

B) Macro Economics

C) Micro Economics

D) All of the above

Q.22 Control over investment must be combinedwith _____ control and regulation of monopoliesand restrictive trade practices

A) PriceB) Import

C) Export

D) Foreign Trade

Q.23 Advertising Elasticity of Demand, Ea = _____

A) (Change in quantity demanded / Change in advertisement expenses) * (Originaladvertisement expenses / Original quantity demanded)

B) (Change in quantity demanded * Change in advertisement expenses) * (Originaladvertisement expenses * Original quantity demanded)

C) (Change in quantity demanded * Change in advertisement expenses) / (Originaladvertisement expenses * Original quantity demanded)

D) (Change in quantity demanded / Change in advertisement expenses) / (Originaladvertisement expenses / Original quantity demanded)

Q.24 _____ exists when there is a single seller orproducer

A) Oligopoly


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B) Monopoly

C) Monopsony

D) Price Discrimination

Q.25 Percentage change in quantity supplied due tothe change in price is

A) a.Income elasticity

B) b.Price Elasticity Ans

C) c.Point elasticity

D) d.Base elasticity

Q.26 _____ lays more emphasis on the managerialfunction in any business firm

A) Managerial Economics

B) Financial Management

C) Distribution

D) Business Economics

Q.27 Exceptions to the law of demand are-(4Marks)

A) Giffens Goods

B) Ignorance effect

C) Status symbol

D) Speculation

Q.28 When the output increases in the sameproportion as the increase in the inputs it is

calledA) a.increasing returns to scale

B) b.Constant returns to scale. Ans

C) c..Decreasing returns to scale

D) d, Same returns to scale

Q.29 _____ are price takers as they cannot affectthe market price

A) Consumers

B) Producers

C) FirmsD) Suppliers

Q.30 The ultimate motive of any firm is maximiseits

A) a.sales

B) b.Returns

C) c.Profits


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D) d.Revenue

Q.31 Any activity which transforms the input intooutput is called

A) consumption

B) Distribution

C) Production

D) Distribution

Q.32 The factors affecting supply are-

A) Change in cost of Production

B) State of technology

C) Political Uncertainty

D) Natural Factors

Q.33 According to _____, consumer surplus is apart of the benefit, which a person derives fromhis environment or conjunctureA) Henri Fayol

B) Cyert & March

C) Cournot

D) Marshall

Q.34 In the law of demands, factors such asincome, taste, fashion and preference etc., are_____

A) Variable

B) ConstantC) Either A) or B)

D) None of the above

Q.35 When the income increases, the consumptionalso increases and the increase in consumption is_____ the increase in income

A) Less than

B) More than

C) Both A) and B)

D) Equal t o

Q.36 _____ is the part of managerial economics,as a manager should have the knowledge ofvarious market structures and how price output isdetermined under the different types of marketstructure

A) Production Analysis

B) Production Structure


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C) Market Analysis

D) Market Structure

Q.37 Economics relating to study of individualconsumer, producer, specific market etc. is

A) Macro economics

B) Mini Economics

C) Micro Science

D) Micro economics

Q.38 The relationship of price & quantity is shownby

A) Positive relationship

B) Inverse relationship

C) Negative relationship

D) Direct Relationship

Q.39 Market structure where there is competitionbetween the few sellers who are producing theclose substitutes of the product is called

A) perfect Competition

B) Monopoly

C) Oligopoly

D) Monopsony

Q.40 Costs which are incurred even when theoutput is zero is

A) a.variable costsB) b.Change costs

C) c.Fixed Costs

D) d.Private costs

Q.41 Amount that is foregone to chooseanactivity over the next best alternative is

A) a.private cost

B) b.System Cost

C) c.Opportunity cost.

D) d.Public CostQ.42 _____ market structure exists when there

are few firms or sellers in the market and theyare selling close substitutes

A) Oligopoly

B) Monopoly

C) Monopsony


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D) Price Discrimination

Q.43 The _____ includes, the cost incurred only ongetting the product advertised in newspaper,magazine, radio and television

A) Advertisement Expenditure

B) Selling Cost

C) Marketing Cost

D) All of the above

Q.44 Wants which are backed by the purchasingpower is

A) Desire

B) Need

C) Requirement

D) demand

Q.45 Those goods which are consumed or utilised ina short period is

A) Consumer Goods

B) b Perishable Goods Ans

C) c Desired goods

D) d Producer Goods

Q.46 Period which is long enough to change allthe factors of production is

A) a.Short run Period

B) b.System periodC) c.Long runPeriod

D) Rigid period

Q.47 _____ is the income received by the firm

A) Revenue

B) Sales

C) Demand

D) Finance

Q.48 In long run, there are no _____ factors

A) FixedB) Variable

C) Uneven

D) Changeable

Q.49 In Perfectly Inelastic curve, Ep = _____

A)


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B) 0

C) > 1

D) < 1

Q.50 Whenever the firms reach the point that isMR=MC, it is _____

A) Optimum Output Level

B) Optimum Production Level

C) Optimum Sales Level

D) Optimum Profit Level

Q.

51

Costs which change with change in outputare called as

A) a.Fixed Costs

B) b.Variable cost Ans

C) c.Social CostD) d.Underestimate costs

Q.

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The economics which gives more importanceto managerial function of business firm.

A) Management economics

B) Managing Economics

C) Managerial Economics

D) Business economics

Q.112 Change in quantity demanded due to the

change in advertisement expenditure isA) Promotional Elasticity

B) Income elasticity of demand

C) Point elasticity of demand

D) Relative elasticity of demand

Q.113 When the supply decreases due to cjange infactors other than price it is called

A) Increase in Supply

B) Decrease in Supply ans

C) Change in SupplyD) Increase in supply

Q.114 The concept of inflationary gap wasintroduced by _____

A) Keynes

B) Cartel

C) Joseph Schumpeter


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D) R. G. Hawtrey

Q.115_____ cost is the amount that is foregone inchoosing an activity over the next bestalternative

A) Opportunity

B) Explicit

C) Sunk

D) Incremental

Q.116NDP Stand for_____

A) Network Domestic Product

B) National Domestic Product

C) National Domestic Price

D) Network Domestic Price

Q.117 Economics necessary to understand forrunning any business isA) Business Environment

B) Business Management

C) Business Economics-

D) Business Science

Q.118 ermanent loss of well being of the societyis

A) average weight loss

B) System weight loss

C) Dead Weight LossD) Design weight loss

Q.119 When the change in price of commoditychanges with the change in demand of relatedcommodity it is called

A) Income elasticity of demand

B) Point elasticity of demand

C) Cross elasticity of demand

D) Relative elasticity of demand

Q.120_____ is nothing but the difference betweentotal revenue and total cost

A) Demand

B) Supply

C) Profit

D) Sales

Q.121 When the degree of price rise is not more


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than 3% and not at all dangerous, the inflation issaid to be _____

A) Creeping

B) Walking

C) Running

D) Galloping

Q.122_____ is an activity, which transforms theinput into output

A) Micro-Economics

B) Production

C) Invention

D) Assembly

Q.123 The price that matches the quantitydemanded and the quantity supplied is called

A) a.Equilibrium ConditionB) b.Equilibrium state

C) c.Equilibrium price .

D) d.Equilibrium state

Q.124_____ cycle is a fluctuation of the economycharacterized by periods of prosperity followed byperiods of depression

A) Industry

B) Commerce

C) BusinessD) Retail

Q.125 Price Elasticity of Demand, Ep = _____

A) (Change in quantity demanded / Change in price) * (Original price / Originalquantity demanded)

B) (Change in quantity demanded * Change in price) * (Original price * Originalquantity demanded)

C) (Change in quantity demanded * Change in price) / (Original price * Originalquantity demanded)

D) (Change in quantity demanded / Change in price) / (Original price / Original

quantity demanded)Q.126 When the production is more than what can

be sold in the market it is called

A) Underproduction

B) Overproduction Ans

C) System production


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D) surplus Production

Q.127 When there is single seller or producer of aproduct or service it is called

A) perfect Competition

B) b Monopoly Ans

C) Monopolistic Competition

D) oligopoly

Q.128 When the seller charges different pricesfrom the consumers in the domestic market andthe sellers in the foreign market is is called as

A) First degree price discrimination

B) Second degree discrimination

C) third degree price descrimination

D) Sytem degree descrimination

Q.129 Fixed cost at each level divided by numberof Units produced is

A) Total Fixed Vosts

B) Variable costs

C) Average fixed cost

D) Matrix costs

Q.130_____ regarded a modern firm as a complexorganization

A) Henri Fayol

B) Cyert & MarchC) Cournot

D) Ernest Dale

Q.131 Tax on airline tickets are _____ tax

A) Indirect

B) Lump Sum

C) Ad Valorem

D) Value Added

Q.132 The price received by seller above the

sellers cost isA) Consumers Surplus

B) Producers Surplus Ans

C) Change surplus

D) Demand surplus

Q.133 In shift in supply curve to right, the Y-axisshows _____


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A) Quantity supplied

B) Production

C) Price


Q.134_____ goal is related to demand of salesmanagement and sales decision

A) Sales

B) Market Share

C) Production

D) Inventory

Q.135 Change in the total product due toadditional unit of Variable factor employed is a

A) a.Average Product

B) b.total product

C) c.System product

D) d.Marginal product

Q.136 Features of the perfect competition are

A) large number of Buyers and sellers

B) Homogeneous products

C) Free entry and exit

D) Firms are price takers

Q.137 When the supply decreases due to thedecrease in the price it is called

A) Decrease in supplyB) Expansion of suply Ans

C) Contraction of supply

D) Decrease in Supply

Q.138 In the Supply Chain Curve, X-axis shows_____

A) Quantity supplied

B) Production

C) Price

D) None of the aboveQ.139 Ratio of change total consumption to change

in total income is

A) a.average propensity to consume

B) Changing propensity to consume

C) c.Marginal propensity to consume


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D) d.Income propensity to consume

Q.140 Using goods and services for satisfying thecurrent wants is

A) a.Investment function

B) b.Income function

C) Consumption

D) d.Change function

Q.141_____ has explained the expansion andcontraction through industrial innovation

A) Marshall

B) Cartel


D) R. G. Hawtrey

Q.142 A price index which measures the averagelevel of prices of all goods and services thatmake up the GDP is

A) a.GDP System

B) b.GDP value

C) c.GDP Inflator

D) d.GDP Changes

Q.143 Decisions taken in macro economics are

A) Decision relating to demand

B) Decision relating to cost & production

C) Decision relating to price & marketD) Decision relating to profit management

Q.144 Cost which are directly attributed to theproduction of the partivular product is

A) a.Indirect Costs

B) b.sytem Costs

C) c.Direct Costs

D) d.Public costs

Q.145 The effect to maintain global energy

balance, where both the atmosphere and thesurface will warm until the outgoing energyequals the incoming energy is called as _____

A) Consumption Effect

B) Extra Effect

C) Spillover Effect

D) Greenhouse Effect


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Q.146 MPC = C / Y

A) Y / C

B) C / Y

C) C * Y

D) Y * CQ.147 WPI Means

A) a.wholesale price table

B) b.Wholesale Price Index Ans

C) c.Wholesale product table

D) d.Wholesale pride table

Q.148 Startegy in which the firm charges low priceas compared already existing firms it is called

A) a.Penetration Strategy

B) b.skimming strategyC) c.Approach strategy

D) d.Pricing strategy

Q.149 When the output doubles more than doubleresulting in

A) a.Decreasing returns to scale

B) b.Constant returns to scale

C) c.Increasing returns to scale

D) d.same returns to scale

Q.150 The price of a commodity and its supply are_____

A) Same

B) Different

C) Inter-related

D) Independent

Q.151 when seller is able to each unit of theproduct at a different price it is called

A) Second degree Descrimination

B) First Degree Descrimination ans

C) Third degree DescriminationD) Systematic Descrimination

Q.152_____ is a type(s) of Collusive Oligopoly

A) Cartel

B) Price Leadership

C) Both A) and B)


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D) Quota

Q.153 Difference between the total revenue andtotal cost is called

A) Cost

B) b.Profit

C) c.Sales

D) d.Revenue

Q.154 Relationship between income(Y) andconsumption (C) is

A) Consumption Income ratio

B) production change ratio

C) Surplus ratio

D) Benefits ratio

Q.155 The relationship between consumption andinvestment is shown byA) a.Income principle

B) b.acceleration principle ans

C) c.System principle

D) d.Income principle

Q.156 The process which tells how much thedemand will change with the change in price todemand is

A) Pattern of Demand

B) Elasticity of Demand AnsC) Point elasticity of Demand

D) Ratio Elasticity

Q.157_____cost is the cost which will not changewith output even if the output is zero

A) Total Fixed

B) Total Variable

C) Average Fixed

D) Average Short Run

Q.158 Inflation is a situation when _____ is highas the demand is high

A) MEC

B) MTP

C) AFC

D) AC

Q.159 The total income of the firm by selling a


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commodity at a price is

A) a.Total Revenue

B) b.total cost ans

C) c.Total changes

D) d.total designQ.160_____ is the study of human behaviour in

producing, distributing and consuming materialgoods and services in the world of scarceresources

A) Economics

B) Financial Management

C) Distribution

D) All of the above

Q.161 The various quantities which a seller is willing

and able to sell at a different price in the marketis

A) Demand

B) Supply Ans

C) Requirement

D) Expectation

Q.162 In Equilibrium under perfect condition, wehave a _____ demand curve

A) Horizontal

B) VerticalC) Parabolic

D) Angular

Q.163 The equation of Trend Method in generalform is _____

A) Y = b - bx

B) Y = b + ax

C) Y = a - bx

D) Y = a + bx

Q.164 According to _____ flow of money supply isthe sole cause for business fluctuations

A) Keynes

B) Cartel


D) R. G. Hawtrey


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PART B

Q.1 If the retention ratio is _____, then there is

fear of job security for the manager; if thedistribution of profit is _____, the market price ofshares goes down and there is fear of take-over

A) High, High

B) Low, Low

C) High, Low

D) Low, High

Q.2 The True points for Economist Theory ofFirm are:1. According to this, a firm is a transformation

unit, which converts input into output and whiledoing so, tries to create surplus value2. This theory of firm centers on the assumptio

A) 1-T, 2-T

B) 1-T, 2-F

C) 1-F, 2-T

D) 1-F, 2-F

Q.3 The Market Structure is determined by:1. Price differentiation2. Number of and size, distribution of the seller

3. Entry conditionsA) 1 and 2

B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.4 The True points of Second degree pricediscrimination are:1. It happens when the monopoly seller willcharge separate price in such a way that thebuyer is divided into different groups according to

the price elasticity of demand forA) 1 and 2

B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.5 _____ means Economics necessary to beunderstood for running any business whereas


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_____ Economics lays more emphasis on themanagerial function in any business firm

A) Business, Managerial

B) Managerial, Business

C) Financial, Business

D) Corporate, Managerial

Q.6 The features of Long Run Equilibrium are:1. In the long run, the firm, which is not evengetting normal profit, will shut down2. In long run, under perfect competition the firmincurs normal profit3. There are no super normal profit

A) 1 and 2

B) 2 and 3

C) 1 and 3D) 1, 2 and 3

Q.7 In Law of Demand, the points to beassumed are:1. Only price affects demand2. All other factors such as income, taste, fashionand preference etc., are constant

A) Only 1

B) Only 2

C) 1 and 2

D) None of the aboveQ.8 _____ deals with aggregate economic

activity; _____deals with individual demand,supply, income etc.; _____ helps the governmentin making appropriate decision and choice dealingwith challenging issues like unemployment,inflation an

A) Macro Economics, Micro Economics, Micro Economics

B) Macro Economics, Micro Economics, Macro Economics

C) Macro Economics, Macro Economics, Macro Economics

D) Micro Economics, Micro Economics, Macro EconomicsQ.9 State the correct statement with respect to

Multiplier and Acceleration Principle1. Multiplier shows the effect of consumption oninvestment2. Acceleration shows the effect of investment onconsumption


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A) 1-T, 2-T

B) 1-T, 2-F

C) 1-F, 2-T

D) 1-F, 2-F

Q.10 Match the SetsSet A1. Market Structure2. ConductPerformanceSet Ba. It is determined by the structure of therelevant marketb. It will determine the behaviour of the firmc. Aspects of the firm will determine this

A) 1-a, 2-b, 3-c

B) 1-a, 2-c, 3-bC) 1-b, 2-c, 3-a

D) 1-b, 2-a, 3-c

Q.11 The criticisms of Williamsons Managerial

Discretionary Theorem are:1. The derivation of curves is not clear2. This model does not include oligopolistic rivalryand interdependence3. Saying such factors such as profit, sales,gr

A) 1 and 2B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.12 When the price of a commodity A is Rs. 5/-per unit, the quantity demanded is 20 units.When the price of A rises from Rs. 5/- to Rs. 10/-and the quantity demanded decreases from 10units. Calculate the price elasticity of demand?

A) 0.5

B) -0.5C) 0.65

D) 0.65

Q.13 The two types of pricing in the pioneeringstages are:

A) Skimming price and Low penetration pricing


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B) Skimming price and High penetration pricing

C) Cost-plus pricing and Low penetration pricing

D) Cost-plus pricing and High penetration pricing

Q.14 _____ costs are the costs that are involvedin actual payment to the other parties whereas_____ costs are the costs that are the value offoregone opportunities and do not involve anactual payment

A) Explicit, Implicit

B) Implicit, Explicit

C) Incremental, Marginal

D) Marginal, Incremental

Q.15 Which of the following equations are True?1. TR = P * Q

2. AR= TR * Q3. MR = TR / Q

A) 1 and 2

B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.16 Which of these situations are correct whenthere is a price increase?1. The farmers earn more income in inflation andit is helpful for them to pay off debts during this

period2. People who live on pension, interest on fixedamou

A) 1 and 2

B) 1 and 3

C) 2 and 3

D) 1, 2 and 3

Q.17 _____ competition has all the features of_____ competition and some more features

A) Perfect, Pure

B) Pure, PerfectC) Monopoly, Oligopoly

D) Oligopoly, Monopoly

Q.18 Match the SetsSet A1. Technical Economies2. Economies of in formation


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3. Economies of By-ProductSet Ba. An industry is in a better position to set upresearch laboratories as they are able to gatherlarge resources


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time, other things remaining constant2. Su

A) 1-T, 2-T

B) 1-T, 2-F

C) 1-F, 2-T

D) 1-F, 2-F

Q.23 Inflation on the basis of causes are:1. Demand pull2. Cost pull3. Time pull

A) 1 and 2

B) 1 and 3

C) 2 and 3

D) 1, 2 and 3

Q.24 Arrange the three stages in the law ofvariable proportion in proper order:

A) Diminishing Returns, Increasing Returns, Negative Returns

B) Increasing Returns, Diminishing Returns, Negative Returns

C) Diminishing Returns, Negative Returns, Increasing Returns

D) Negative Returns, Diminishing Returns, Increasing Returns

Q.25 State the True points with regards toPerfectly Inelastic Curve:1. When the demand for the product isindependent of price, such demand remains

unaffected with any magnitude of change in price2. The demand will not respond to change

A) 1 and 2

B) 1 and 3

C) 2 and 3

D) 1, 2 and 3

Q.26 State the True points with regards to PerfectCompetition where there are large number ofbuyers and sellers:1. If one of the producers produces more or less,that will affect the market supply or the marketprice2. Even the buy

A) 1-T, 2-T

B) 1-T, 2-F

C) 1-F, 2-T


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D) 1-F, 2-F

Q.27 Fill in the blanksIt is easy for sellers to restrict output and raiseprice. This can be possible in _____In the same lines buyers can gang up on sellers

and capture producers surplus. This is possiblein_____

A) Collusive Oligopoly and Monopoly; Monopsony

B) Monopsony and Monopoly; Collusive Oligopoly

C) Collusive Oligopoly and Monopsony; Monopoly


Q.28 The correct formula for Short Run AverageTotal Cost is _____

A) SATC = TFC / Q

B) SATC = TVC / QC) SATC = SAVC + SAFC

D) SATC = SAVC - SAFC

Q.29 The demand and supply for a commoditydepends on _____. The price that matchesquantity demanded and the quantity supplied isthe _____

A) Quantity, Equilibrium Quantity

B) Price, Equilibrium Quantity

C) Quantity, Equilibrium Price

D) Price, Equilibrium PriceQ.30 State the True points with respect to

National Income Deflators:1. It is a price index, which covers all final goodsand services2. It is the ratio of current price NDP to constantprice NDP3. The goods basket entering the calcu

A) 1 and 2

B) 3 and 4

C) 1, 3 and 4D) 1, 2, 3 and 4

Q.31 The Applications of consumer surplus are:1. Cost benefit Analysis2. Evaluating loss and benefit due to tax3. Gains from subsidies

A) 1 and 2


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B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.32 State the True points with regards toExternalities:1. External cost and benefits together are calledexternalities2. External cost are said to be the positiveexternalities and external benefits are said to benegative externali

A) 1 and 2

B) 1 and 3

C) 2 and 3

D) 1, 2 and 3

Q.33 The subjective or internal factors that affectconsumption function are:1. Precaution motive2. Foresight motive3. Motive for independence4. Standard of living5. Status Motive

A) 1, 2 and 4

B) 2, 3 and 5

C) 1, 2 and 3

D) All of the above

Q.34 Which of these points are True with respectto Monetary Policy in Inflation?1. Inflation is faced at the prosperity phase whenMEC is high, rising prices, output andemployment2. In such a situation, the rate of interest islower

A) 1 and 2

B) 1 and 3

C) 2 and 3

D) 1, 2 and 3

Q.35 The different types of lag in monetarypolicies are:1. Inside lag2. Intermediate lag3. Outside lag

A) 1 and 2


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B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.36 Match the SetsSet A1. Experts opinion Survey Method2. Survey of Consumer or Consumers Interview

Method3. Collective Opinion MethodSet Ba. Useful only in a short period and is also basedon value judgmentb. Simp

A) 1-a, 2-b, 3-c

B) 1-a, 2-c, 3-b

C) 1-b, 2-c, 3-aD) 1-b, 2-a, 3-c

Q.37 The objectives of import controls are:1. Earning foreign exchange2. Conserving the stock of raw material and finalproducts for internal consumption3. Enforcing standard of quality and grading

A) 1 and 2

B) 2 and 3

C) 1 and 3

D) 1, 2 and 3

Q.38 The supply curve shifts when there ischange in quantity _____ due to any factor otherthan price. This is when the supply curve shiftsentirely to _____

A) Supplied, Right

B) Purchased, Left

C) Supplied, Right or Left

D) Purchased, Right or Left

Q.39 The bases for Product Differentiation are:1. Characteristic of the product2. Condition surrounding the service of theproduct3. Condition surrounding the sales of the product

A) 1 and 2

B) 2 and 3


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C) 1 and 3

D) 1, 2 and 3

Q.40 The practical significances of Multiplier are:1. Public investment2. Useful in planning employment policies3. Forecasting demand in response togovernment expenditure4. Helps in explaining business cycles

A) 1, 2 and 4

B) 2, 3 and 4

C) 1, 2 and 3

D) All of the above

PART C

Q.1 Match the SetsSet A1. On the basis of causes2. On the basis of time situation3. On the basis of degree of price riseSet Ba. Peace time inflationb. War and post war inflationc. Demand pull inflationd. Cost push

A) 1-a,b ; 2-c,d ; 3-e,fB) 1-c,d ; 2-a,b ; 3-e,f

C) 1-e,f ; 2-c,d ; 3-a,b

D) 1-e,f ; 2-a,b ; 3-c,d

Q.2 Match the SetsSet A1. Nature of commodity2. Availability of substitutes3. Number of uses4. Durability of commodity5. Consumers income

Set Ba. Coal, milkb. The price elasticity is of more than onec. Price e

A) 1-a, 2-b, 3-c, 4-d, 5-e

B) 1-a, 2-c, 3-e, 4-b, 5-d


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C) 1-e, 2-b, 3-a, 4-d, 5-c

D) 1-e, 2-b, 3-c, 4-d, 5-a

Q.3 Match the SetsSet A1. Large number of buyers and sellers2. Homogeneous product3. Free entry and exit of firms4. Firms are price takers5. Perfect mobility of factors of productionSet Ba. Buyers cannot influence the p

A) 1-a, 2-b, 3-c, 4-d, 5-e

B) 1-a, 2-c, 3-b, 4-e, 5-d

C) 1-b, 2-c, 3-a, 4-d, 5-e

D) 1-a, 2-b, 3-c, 4-e, 5-d

Q.4 The characteristics of Business Cycle are:1. The fluctuations are wave like movement andare recurrent in nature2. Business Cycle is characterized by waves ofexpansion and contraction3. There are two phases of business cycle

A) 1, 2, 3, 4

B) 3, 4, 5, 6

C) 1, 2, 5, 6

D) All of the above

Q.5 Match the SetsSet A1. First degree price discrimination2. Second degree price discrimination3. Third degree price discriminationSet Ba. When the seller will be divided into sub-marketand charge different price depending

A) 1-e,f ; 2-c,d ; 3-a,b

B) 1-c,d ; 2-a,b ; 3-e,f

C) 1-a,b ; 2-e,f ; 3-c,dD) 1-c,d ; 2-e,f ; 3-a,b

Q.6 State the True points with respect to DeadWeight Loss:1. A Dead Weight Loss is a permanent loss ofwell being of the society2. It occurs when equilibrium for a commodity is


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not Pareto Optimal3. Monopoly leads to lack of economi

A) 1, 2, 3, 4

B) 2, 3, 4, 5

C) 1, 3, 4, 5

D) 1, 2, 3, 4, 5

Q.7 Match the SetsSet A1. Monetary Policy2. Credit PolicySet Ba. Can affect allocation of bank creditb. Is of greater significancec. Controls total volume of money in maintainingstability in purchasing power of money


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Set A1. Precaution motive2. Foresight motive3. Motive for independence4. Standard of living

5. Status MotiveSet Ba. Every individual has a strong feeling toprepare for unseen emergenciesb. Eve

A) 1-a, 2-b, 3-c, 4-d, 5-e

B) 1-b, 2-a, 3-c, 4-d, 5-e

C) 1-a, 2-e, 3-d, 4-c, 5-b

D) 1-e, 2-b, 3-a, 4-d, 5-c

Q.11 A few characteristics by which Market

Structures can be categorized are:1. Number and size of producers2. Number of size distribution of buyer3. Product Difference4. Condition of Entry and Exit

A) 1 and 2

B) 1, 2 and 4

C) 2, 3 and 4

D) 1, 2, 3 and 4

Q.12 Consumers create negative externalities by

purchasing and consuming certain commoditiesand services like:1. Creating noise pollution from using the carstereos2. Smoking and alcohol3. Crime acts4. Chemical factory throwing

A) Except 3 and 4

B) Except 4

C) Except 5

D) Except 4 and 5Q.13 Match the Sets

Set A1. Evolutionary method2. Substitution method3. Growth pattern4. Opinion polling methodSet B


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a. Demand for cooler can be estimated from thedemand for fansb. This method has wide usec. To g

A) 1-a, 2-b, 3-c, 4-d

B) 1-d, 2-b, 3-c, 4-aC) 1-a, 2-c, 3-b, 4-d

D) 1-d, 2-c, 3-b, 4-a

Q.14 Decisions that a manager need to take canbe classified into:1. Decision relating to demand2. Decision related to cost3. Decision relating to price4. Decision relating to profit management5. Macro economic factor

A) 1, 2, 3, 4B) 1, 2, 3, 4

C) 1, 3, 4, 5

D) 1, 2, 3, 4, 5

Q.15 The criticisms in Marris Growth MaximizationModel are:1. This model does not tell anything about howthe prices are determined; it only assumes thatthe price is given2. They ignore interdependence in oligopoly

market structureA) 1, 2, 3 and 4

B) 3, 4, 5 and 6

C) 1, 2, 5 and 6

D) All of the above

Q.16 The Survey Methods of Demand Forecastingare:1. Experts Opinion Survey

2. Consumers Interview

3. Trend Method

4. Regression Method5. Leading Indicator6. Simulation Equation

A) 1, 2, 3, 4

B) 3, 4, 5, 6

C) 1, 2, 5, 6

D) All of the above


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Q.17 Match the SetsSet A1. Economies of Scale2. Economies of ScopeSet B

a. Applied to efficiencies connected to increaseand decrease in scale of productionb. Shows the change in output of single productc. Indicates the su

A) 1-a,b,c,d ; 2-e,f,g,h

B) 1-e,b,c,d ; 2-a,f,g,h

C) 1-a,f,c,d ; 2-e,b,g,h

D) 1-a,b,g,d ; 2-e,f,c,h

Q.18 Production function is studied in _____ ways1. Law of variable proportion

2. Returns to scale3. Economies of scale4. Economies of price5. Economies of scope

A) 1, 2, 3, 4

B) 1, 2, 3, 5

C) 1, 3, 4, 5

D) 1, 2, 3, 4, 5

Q.19 State the True points with respect to LagsIn Fiscal Policy:

1. Fiscal Policy has lags both inside and outsidelag2. Inside lag of fiscal policy is longer thanmonetary policy, but has shorter outside lag3. Any significant change

A) 1, 2, 3, 4

B) 3, 4, 5, 6

C) 1, 2, 5, 6

D) All of the above

Q.20 The different types of Cost are:

1. Opportunity cost2. Explicit and Implicit cost3. Sunk, incremental cost and marginal cost4. Direct and Indirect cost5. Fixed and Variable cost

A) 1, 2, 3, 4

B) 1, 2, 3, 5


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C) 1, 3, 4, 5

D) 1, 2, 3, 4, 5

Q.21 Match the SetsSet A1. Imposition of taxes2. Property rights3. Selling right to create externality4. Direct government regulationSet Ba. The gains in the external cost should beweighed by the cost to the consumers of

A) 1-a, 2-b, 3-c, 4-d

B) 1-c, 2-a, 3-b, 4-d

C) 1-d, 2-c, 3-a, 4-b

D) 1-a, 2-c, 3-b, 4-d

Q.22 The factors which influence the entry of afirm in an industry are:1. For a firm to produce efficiently, what shouldbe the size of the firm2. How much investment is required to start theoperation3. If it fails after entering t

A) 1, 2, 3, 4

B) 2, 3, 4, 5

C) 1, 2, 4, 5

D) 1, 2, 3, 4, 5Q.23 The factors responsible for inflation in

developing countries are:1. Developing countries need a lot of expenditurein developing projects, but these projects arefinanced by deficit financing which results toincrease in the money s

A) 1, 2, 3, 4

B) 3, 4, 5, 6

C) 1, 2, 5, 6

D) All of the above

Q.24 Different types of Price Leaderships are:1. Price leadership of low cost firm2. Leadership by dominant firm3. Cartel leadership4. Barometric leadership5. Aggressive price leadership


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A) 1, 2, 3, 4

B) 2, 3, 4, 5

C) 1, 2, 4, 5

D) 1, 2, 3, 4, 5

Q.25 Different types of Elasticity of Demand are:1. Price Elasticity of Demand2. Income Elasticity of Demand3. Cross Elasticity of Demand4. Advertisement Elasticity of Demand5. Market Elasticity of Demand

A) 1, 2, 3, 4

B) 1, 2, 3, 5

C) 1, 3, 4, 5

D) 1, 2, 3, 4, 5

Q.26 Exceptions to the Law of Supply are:1. To clear the stock the seller may sell evenwhen the prices are low, but it usually happens inthe short run2. Change in technology affects the cost ofproduction and the supply is influenced in

A) 1 and 3

B) 1, 3 and 4

C) 2 and 4

D) 1, 2, 3 and 4

Q.27 The various Macro Economic Ratios are:1. Consumption Income2. Saving Income3. Capital Output4. Capital Labour5. Value Added Labour6. Capital Added Output7. Input-Output8. Cash Reserve9. Cash Income10. Labo

A) Except 1 and 2B) Except 5 and 6

C) Except 8 and 9

D) Except 10, 11 and 12

Q.28 The limitations to Acceleration Principle are:1. No excess capacity2. Contractionary money policy


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3. Availability of resources4. Nature of demand5. Surplus capacity

A) 1, 2, 3, 4

B) 2, 3, 4, 5

C) 1, 3, 4, 5

D) 1, 2, 3, 4, 5

mb0026-eco questions compiled

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