MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
- Explain nature and scope of Economics.
- Explain Law of Demand.
- Explain the types of Elasticity of Demand.
- Explain the significance of Elasticity of Demand.
- Explain the Law of Returns.
- Explain the Cobb-Douglas productio9n function.
- Explain the price-out determination under monopoly.
- Explain the methods of pricing.
Multiple Choice Questions
- What is the position of budget line with respect to indifference curve? ( )
(a) Below (b) above
(c) Tangential (d) intersecting
- In short run, firms can adjust their production by changing their ( )
(a) Fixed factors (b) variable factors
(c) Semi-fixed cost (d) both (a) and (b)
- Which of the following pairs of goods is an example of substitutes? ( )
(a) Tea and sugar (b) tea and coffee
(c) Shirt and pant (d) car and petrol
- Consumption of additional apples after reaching the saturation point leads to ( )
(a) fall in total utility and increase in marginal utility
(b) increase in total utility and marginal utility
(c) fall in total utility leading marginal utility to become negative
(d) total utility to become negative and marginal utility tending to fall
- Which of the following has highest consumer surplus? ( )
(a) Necessities (b) Luxury goods
(c) Comforts (d) conventional necessities
- The consumer, according to economic analysis, is expected to behave ( )
(a) Rationally (b) emotionally
(c) Carefully (d) indifferently
- Consumer surplus means ( )
(a) The area outside the budget line
(b) The difference between the AR and MR
(c) The difference between the maximum amounts a person is willing to pay for a good and its market price
(d) The area inside the budget line
- A contraction is the upward movement along a demand curve, indicting that lower quantity demanded for a given change in the price of the good. What is this change? ( )
(a) Decrease (b) increase
(c) Infinite change (d) negligible change
- Total utility is maximum when ( )
(a) Marginal utility is maximum
(b) Marginal utility is minimum
(c) Marginal utility is Zero
(d) Marginal utility is less than average utility
- Incase of Giffen’s goods, the demand curve ( )
(a) Slopes downwards (b) slopes upwards
(c) Intersects supply curve (d) meets cost curve
- When any quantity can be sold at a given price and when there is no need to reduce price, the demand is said to be ( )
(a) perfectly inelastic (b) Perfectly elastic
(c) Relatively elastic (d) relatively inelastic
12. The demand is said to be inelastic when the changes in demand is _______ the change in price, ( )
(a) More than (b) less than
(c) Equal to (d) not related to
13. If the income elasticity is positive and greater than one, it is a ( )
(a) Necessity (b) inferior good
(c) Normal good (d) Superior good
14. When a significant degree of change in price leads to little change in the quantity demanded, then the demand is said to be ( )
(a) Perfectly elastic (b) Perfectly inelastic
(c) Relatively elastic (d) relatively inelastic
- If the prices rises, the demand ( )
(a) Rises (b) falls
(c) First falls then raises (d) first rises and then falls
- Which of the following refers to quantity demanded in response to a given change in price? ( )
(a) Price elasticity (b) Cross elasticity
(c) Income elasticity (d) Advertising elasticity
17. Price elasticity is always ( )
(a) Positive (b) negative
(c) Consistent (d) declining
18. Which of the following does not hold good in case of indifference curve? ( )
(a) sloping downwards (b) sloping upwards
(c) Convex to the origin (d) constant slope
19. A product or service is said to have demand and when ( )
(a) The buyer has the desire
(b) When the does not have money
(c)When the buyer is not willing to pay for it
(d) When the buyer has the desire for the product or service and is capable of paying for it
20. Elasticity computed at a given point on the demand curve for an infinitesimal change in price is called ( )
(a) Unit elasticity (b) arc elasticity
(c) .Point elasticity (d) arc point elasticity
21. Which
of the following is the technical relationship the reveals the maximum
amount of output capable of being produced by each and every set of
inputs? ( )
(a) Cobb-Douglas production function (b) Production function
(c) Theory of production (d) Economies of scale
22. According
to which of the following experts, production function is defined as
the maximum amount of output produced with a given set of inputs? ( )
(a)Samuelson (b) Michael R Baye
(c) Cobb-Douglas (d) Boney M
23. With which of the following is the production function more concerned? ( )
(a)Financial aspects (b) technological aspects
(c) Physical aspects (d) economic aspects
24. In the production function, at any given time, the output from a given set of inputs is ( )
(a) Always fixed (b) always variable
(c) Semi-fixed (d) semi-variable
25. Which of the following is defined at a given stage of technical knowledge? ( )
(a) Theory of production (b) Production function
(c) Law of diminishing Returns (d) Law of constant returns
26. The production function is also known as ( )
(a) Output-costs relationship (b) input-costs relationship
(c) input-output relationship (d) output-input relationship
27. Production function is not a factor of ( )
(a) Land (b) labor
(c) Cost of capital (d) organization
28. The law of returns is also called ( )
(a) Law of fixed proportions (b) law of variable proportions
(c) Law of constant returns (d) law of increasing returns
29. The
law of returns states that when at least one factor of production is
fixed and when others are varied, the total output in the initial stages
will ________ at an increasing rate, and after reaching certain level
of output, the total output will __ at declining rate. ( )
(a)increase, decrease (b) decrease, increase
(c) Decrease, decrease (d) increase, increase
30. Isoquants are also called ( )
(a) Isoproduct curves (b) isocost curves
(c) Price indifference curve (d) indifference curve
31. Which
of the following refers to the characteristics of a market that
influence the behavior and performance of firms that sell in that
market? ( )
(a) Market power (b) market conduct
(c) Market performance (d) market structure
32. The structure of the market is not based on ( )
(a) degree of seller concentration (b) degree of he buyer concentration
(c)Degree of product differentiation (d) condition of exit from the market
33. The
lesser the power an individual power has to influence the market in
which it operates the _______ competitive the market is. ( )
(a) Less (b) Least
(c) Low (d) more
34. Based on which of the following, the market can be divided into perfect markets and imperfect markets? ( )
(a) Degree of concentration (b) degree of differentiation
(c) Degree of condition degree of competition (d) Degree of competition
35. Which of the following is said to exit when conditions are ideal and not realistic?
( )
(a)Imperfect competition (b) Perfect competition
(c)Monopoly competition (d) Monopolistic competition
36. Perfect competition is based on ( )
(a) Few numbers of buyers and sellers
(b) Heterogeneous products and services
(c) Each firm is a price maker
(d) Perfect mobility of factors of production
37. In perfect competition, the industry demand curve represents ( )
(a) The total demand of all buyers at various prices
(b) The total demand of all sellers at various prices
(c) The total demand of all consumers at various prices
(d) The total demand of all investors at various prices
38. In a perfect competition, the demand curve for an individual firm is horizontal and ( )
(a) Perfectly inelastic (b) Perfectly elastic
(c) Unit elasticity (d) none of the above
39. Which of the following refers to the change in revenue by producing and selling one more unit? ( )
(a) Total revenue (b) Average revenue
(c)Marginal revenue (d) Marginal cost
40. Under perfect competition, the price is equal to ( )
(a)AR=MR (b) AR>MR
(c)MR>AR (d) MR not equal to AR
