Managerial Economics - 18

LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME2

Question A responsible factor for inflation is
Correct Answer hike in prices
Your Answer hike in prices

Question Economists call all human resources as
Correct Answer labor
Your Answer labor

Question The wage and salary earners who get fixed income in terms of money are benefited during inflation.
Correct Answer False
Your Answer False

Question Over the years in India the govt. expenditure is
Correct Answer increasing
Your Answer increasing

Question Given the price, if the cost of production increases because of higher price of raw materials, the supply
Correct Answer decreases
Your Answer decreases

Question All the man made resources which are used in the process of making other goods and services are called
Correct Answer capital
Your Answer capital

Question Micro-economics is primarily concerned with the problem of what, how and for whom to produce?
Correct Answer False
Your Answer False

Question Inflation is characterized by excess of demand.
Correct Answer True
Your Answer True

Question Individual Demand Schedule
Correct Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased
Your Answer Is in tabular form , It shows the prices of goods , It shows the quantities of a commodity purchased

Question Measurement of profit becomes difficult because of the difficulty involved in the calculation of depreciation.
Correct Answer True
Your Answer False

Question Main aims of the New Industrial Policy (1991) are
Correct Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act
Your Answer To unshackle the indian industrial economy from the cobwebs of unnecessary bureaucratic control , To introduce liberalization with a view to integrate the indian economy with the world economy , To remove restrictions on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP act

Question Free riders' is a term associated with the people who would like to have benefit of a good without sharing the cost of its supply.
Correct Answer True
Your Answer True

Question Managerial economics aims at providing help in the firms is
Correct Answer decision making
Your Answer decision making

Question The persons who own the ________hip concern are called Partners.
Correct Answer Partners
Your Answer Partners

Question The minimum number of directors which private limited should have is ________.
Correct Answer 2
Your Answer 2

Question Generally, the larger the income of a consumer, his demand for overall commodities tends to be relatively elastic.
Correct Answer False
Your Answer True

Question Correct Answer Your Answer

Resource allocation decisions in free market economy Theory of price Theory of price

Economic problem Universal Universal

Managerial Economics Applied branch of knowledge Applied branch of knowledge

Inflation Reduction in purchasing power Reduction in purchasing power

Waste of resources Involuntary unemployment Involuntary unemployment

Question In the context of externalities, driving the smoke-emitting buses and trucks in the cities is an example of ________ cost.
Correct Answer social
Your Answer environmental

Question Correct Answer Your Answer

Variable cost can refer to operating costs alone. operating costs alone.

The relationship between price and the quantity supplied of a product is indicated by upward sloping curve. upward sloping curve.

Elasticity of supply means change in supply due to change in price of commodity. price of commodity.

Fixed cost is known as prime cost. prime cost.

Question Cost-benefit analysis refers to the analysis undertaken to judge any projects ________ whether government or private and find out its worth.
Correct Answer investments
Your Answer investments

Question Variable cost are those costs which vary with the level of
Correct Answer output
Your Answer output

Question An individual consumer or particular market for a given commodity are the subject matter of
Correct Answer Micro Economics
Your Answer Micro Economics

Question In the Dynamic Theory of Profit, Prof. Clark has pointed out the types of changes, which are
Correct Answer Changes in the supply of capital , Changes in population , Changes in the techniques of production
Your Answer Changes in the supply of capital , Changes in population , Changes in the techniques of production

Question Given the price, if the cost of production of a commodity decreases because of the use of improved technique of production, there will be increase in supply.
Correct Answer True
Your Answer True

Question True inflation starts only after reaching the level of full
Correct Answer Employment
Your Answer Employment

Question All the free gifts of nature which are commonly called natural resources are known to economists as
Correct Answer Land
Your Answer Land

Question Reasons for need of public distribution system are
Correct Answer To maintain stable price conditions , To bring an efficient management of the supply , To supply the necessary goods to people at reasonable price
Your Answer To maintain stable price conditions , To bring an efficient management of the supply , To supply the necessary goods to people at reasonable price

Question Production Function implies relationship between
Correct Answer input & output
Your Answer input & output

Question The important determinants of supply are
Correct Answer Always referred to in relation to price & time , Government policy , Availability of factors of production
Your Answer Always referred to in relation to price & time , Government policy , Availability of factors of production

Question In economics the questions related to the division of society’s output of goods and services among its members are topics in
Correct Answer theory of distribution
Your Answer theory of distribution

Question Demand for a commodity depends on the relative price of its ________
Correct Answer substitute goods
Your Answer substitute goods

Question In case of the co-operative societies supplying cheap inputs or supplying consumer products at fair prices, a system of subsidized pricing is followed.
Correct Answer True
Your Answer False

Question During periods of inflation, the income of farmers as a class decreases.
Correct Answer True
Your Answer True

Question By ' profits', the accountant means total revenue minus________.
Correct Answer Explicit costs
Your Answer Sunk cost

Question The index numbers which measure the changes in the general price level of a country refers to ________
Correct Answer Wholesale prices index
Your Answer Commodity prices index

Question The study of the working and allocation of resources in the free market economies is the topic in the
Correct Answer theory of price
Your Answer theory of price

Question According to the Government, the buildup of inflationary pressure during the Nineties was attributed to
Correct Answer Higher Fiscal deficit
Your Answer Higher Fiscal deficit

Question In economics the questions related to the dynamic or static ( otherwise) capacity of the economy to produce goods and services are topics in the
Correct Answer theory of economic growth
Your Answer theory of economic growth

Question Increasing Returns explains
Correct Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP
Your Answer Total product increases at an increasing rate , Marginal product increasing and it is maximum , Average product is increasing but it is below MP

Question Implicit costs are
Correct Answer Cost on self owned resources , Costs of salary of the proprietor , Interest on the entrepreneur's own investment
Your Answer Cost on self owned resources , Costs of salary of the proprietor , Interest on the entrepreneur's own investment

Question Characteristics of the phase of Depression are
Correct Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly
Your Answer Decrease in economic activities , The growth rate becomes negative , The level of national income declines rapidly

Question Micro-economic theory studies how a free enterprise economy determines the price of economic resources
Correct Answer False
Your Answer True

Question Economists like A.C.Harberger have shown that the cost benefit analysis can be applied to ________ analysis.
Correct Answer general equilibrium
Your Answer general equilibrium

Question Break-Even analysis is derived by
Correct Answer Fixed cost , Average variable cost , Quantity of goods and price
Your Answer Fixed cost , Average variable cost , Quantity of goods and price

Question Managerial economics deals with
Correct Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution
Your Answer Integration of economic theory with business practice , Using logic of economics, mathematics & statistics , The use of economic modes of thought to analyze business solution

Managerial Economics - 19

LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME3

Question In the context of formulation of an investment project, ________ feasibility means the availability of land, plant, machinery, raw materials and technical know how etc.
Correct Answer technical
Your Answer infrastructure

Question Scarcity of resources is the root cause of economic problem.
Correct Answer True
Your Answer True

Question Inflation reduces the purchasing power of people's income and savings.
Correct Answer True
Your Answer True

Question Demand for safety pins is ________
Correct Answer inelastic
Your Answer relatively inelastic

Question Reasonable profit target as an alternative to the objective of profit maximization was suggested by ________.
Correct Answer Joel Dean
Your Answer Joel Dean

Question Correct Answer Your Answer

Motor cars Tangible goods Tangible goods

Wants Insatiable Insatiable

Managerial Economics Prescriptive in nature Prescriptive in nature

Resources Alternative uses Alternative uses

Division of society’s output of goods and services The theory of distribution The theory of distribution

Question Output rises in a lesser proportion to that of the increase in input, under the case of ________.
Correct Answer decreasing returns to scale
Your Answer decreasing returns to scale

Question Social costs cannot be included in a firm's account book.
Correct Answer True
Your Answer False

Question Economic problem arises only in case of an overpopulated country.
Correct Answer False
Your Answer False

Question The cost which enter the accounts book of the firm are referred as ________.
Correct Answer Accounting cost
Your Answer Accounting cost

Question The question regarding the nature and quantities of commodities to be produced is solely restricted to capitalist economies.
Correct Answer False
Your Answer True

Question There are no real exceptions to the law of demand
Correct Answer False
Your Answer False

Question The federal government of U.S.A. does not face the basic economic problem.
Correct Answer False
Your Answer False

Question The subject matter of managerial economics covers two important areas namely decision-making and
Correct Answer forward Planning
Your Answer forward Planning

Match The Following
Question Correct Answer Your Answer

Decrease in Demand Leftward shift of the demand curve Leftward shift of the demand curve

Contraction of Demand Upward movement on the demand curve Upward movement on the demand curve

Increase in demand Upward shift of the demand curve Upward shift of the demand curve

Extension of demand Downward movement on the demand curve Downward movement on the demand curve

Question The promoters of a company can get incorporated by filing with the registrarof companies various documents such as
Correct Answer Memorandum of Association , Articles of Association , Prospectus
Your Answer Articles of Association , Prospectus

Question Features of public sector enterprises
Correct Answer it is controlled by the state , separate funds to undertake their activity , they are accountable to public
Your Answer it is controlled by the state , separate funds to undertake their activity , they are accountable to public

Question The production function studies
Correct Answer Input and out put relation , Factors of production and final production , Technology used in production
Your Answer Input and out put relation , Factors of production and final production , Demand for production

Question In the 3rd stage of operation of the law of variable proportions, the marginal product becomes ________.
Correct Answer negative
Your Answer negative

Question In a market economy ________ is the best judge of personal interest.
Correct Answer individual
Your Answer public

Question All the buyers and sellers operating under perfect competition have knowledge which is
Correct Answer perfect
Your Answer perfect

Question In a market system of an economy, producers are guided by ________ motive.
Correct Answer profit
Your Answer profit

Question The cost recorded in the books of accounts are considered as
Correct Answer explicit costs
Your Answer explicit costs

Question Demand forecasts are necessary for
Correct Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms
Your Answer Fulfillment of objective of the plans , Preparation of a budget , Expansion of firms

Question Inflation reduces the purchasing power of money and savings.
Correct Answer True
Your Answer True

Question Features of an Industry are
Correct Answer All firms dealing in the same line of business , The ownership and management of each firm is different , Is a group of firms
Your Answer All firms produce different goods , All firms dealing in the same line of business , The ownership and management of each firm is different

Question The characteristics of a sole proprietorship firm is
Correct Answer Unlimited Capital , Ownership by a single person , Easy to form
Your Answer Ownership by a single person , Easy to form

Question Normally, a larger quantity is demanded at
Correct Answer lower price
Your Answer lower price

Question When a company rasies additional finance by borrowing from the public for a specific period of time at a particular rate of interest, it is called as
Correct Answer Debentures
Your Answer Debentures

Question In cost benefit analysis, in the valuation of costs and benefits, for finding the present value, one has to make use of
Correct Answer discount rate
Your Answer discount rate

Question Like a particular street in a city , the entire city may sometimes specialize in the production of a particular commodity . The city acquire the status of a
Correct Answer national market
Your Answer capital market

Question Types of Share capital of Joint-Stock Company are
Correct Answer registered or authorized capital , issued capital , paid-up capital
Your Answer registered or authorized capital , issued capital , paid-up capital

Question An upward sloping demand curve is called ________
Correct Answer exceptional demand curve
Your Answer exceptional demand curve

Question Different types of Elasticity of Demand are
Correct Answer Price elasticity of demand , Income elasticity of demand , Cross elasticity of demand
Your Answer Price elasticity of demand , Income elasticity of demand , Cross elasticity of demand

Question Cournot' , the economists who defined the term 'market' different from that of the traditional sense is an
Correct Answer French economists
Your Answer French economists

Question Demand forecasting is predicting for the demand of a firm’s product in
Correct Answer future
Your Answer future

Question Pure inflation starts only after reaching the full employment level.
Correct Answer True
Your Answer True

Question A monopolist in a price maker.
Correct Answer True
Your Answer True

Question The demand curve (A.R.) of a firm under perfect competition is
Correct Answer perfectly elastic
Your Answer perfectly elastic

Question Managerial economics aims at providing guidance to the firms for
Correct Answer decision making
Your Answer decision making

Question In case of defense services, all the sections of the society are equally protected and benefited. The defense services in other words is
Correct Answer indivisible in character , cannot be priced in the market , a public good
Your Answer indivisible in character , cannot be priced in the market

Question A fall in quantity demanded without a fall in price shows decrease in demand.
Correct Answer True
Your Answer True

Question The subject matter of macro - economics includes the theory of income and employment at an individual level.
Correct Answer False
Your Answer False

Managerial Economics - 17

LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME1

Question In India, the first phase of economic reforms is believed to have begun in 1985 when Vishwanath Pratap Singh was the Prime Minister of the country.
Correct Answer False
Your Answer False

Question Price discrimination is possible in case of
Correct Answer public utilities with legal sanction , personnel services sold , geographical barriers
Your Answer public utilities with legal sanction , personnel services sold , geographical barriers

Question The methods of calculating depreciation is
Correct Answer Diminishing Balance Method , Annuity Method , Service Unit Method
Your Answer Diminishing Balance Method , Annuity Method , Service Unit Method

Question Correct Answer Your Answer

Break even point T.R. = T.C. T.R. = T.C.

Normal profit Implicit cost Short run cost

Average variable cost (A.V.C.) Short run cost Explicit cost

Change in supply Increase and decrease in supply Expansion and contraction of supply

Question A competitive industry has three basic characteristics
Correct Answer Large Number of Firms , Homogeneous Product , Free entry and exit
Your Answer Large Number of Firms , Homogeneous Product , Free entry and exit

Question To solve the unemployment problem , the level of effective demand must decrease.
Correct Answer False
Your Answer True

Question The act of using goods and services to satisfy wants is called
Correct Answer consumption
Your Answer consumption

Question The minimum number of directors which public limited should have is ________.
Correct Answer 3
Your Answer 3

Question The factors of production are
Correct Answer Labour , Land , Capital
Your Answer Labour , Land , Profit

Question Economists have pointed out that the real world is full of
Correct Answer Imperfect competition
Your Answer Monopolistic competition

Question According to J.M. Keynes, the equilibrium between the aggregate demand function and the aggregate supply function can, and often does take place at
Correct Answer less than full employment
Your Answer full employment

Question Important theories of profits are
Correct Answer Uncertainty-bearing theory of profit , Dynamic theory of profit , Life cycle theory
Your Answer Risk taking theory , Uncertainty-bearing theory of profit , Dynamic theory of profit

Question The things that are produced by factors of production are called
Correct Answer commodities
Your Answer commodities

Question Demand is determined by
Correct Answer Price of the product , Relative prices of other goods , Tastes and habits
Your Answer Price of the product , Relative prices of other goods , Tastes and habits

Question The necessary condition of profit maximization of a firm is that Marginal Revenue (M.R) must be equal to ________.
Correct Answer Marginal cost (M.C)
Your Answer Marginal cost (M.C)

Question The concept of just distribution of national product is a
Correct Answer normative
Your Answer objective

Question Dalal Street in Bombay is known as
Correct Answer Bombay Stock Exchange
Your Answer Bombay Stock Exchange

Question The type economic problem is
Correct Answer universal
Your Answer universal

Question Preference share holders get a rate of dividend which is
Correct Answer fixed
Your Answer high

Question The act of making goods and services is called
Correct Answer production
Your Answer production

Question Contraction of supply is traced by the downward movement on the supply curve
Correct Answer True
Your Answer True

Question Baumol has suggested as an alternative objective for profit maximization , the maximization of ________
Correct Answer sales
Your Answer sales

Match The Following
Question Correct Answer Your Answer

Commodities goods and services goods and services

Human wants unlimited unlimited

General Theory of Employment, Interest and Money J. M. Keynes J. M. Keynes

Managerial economics Decision making and forward planning Decision making and forward planning

Resources scarce scarce

Question In the traditional concept of equilibrium, a firm attains the equilibrium when the firm’s Total Revenue (T.R.) =Total Cost (T.C.).
Correct Answer False
Your Answer True

Question Under cost plus pricing
Correct Answer The price is set to cover material, labour cost , Actual costs, standard costs are included , Certain percentage of profit also included
Your Answer The price is set to cover material, labour cost , Actual costs, standard costs are included , Certain percentage of profit also included

Question In economics, supply is considered to be a
Correct Answer relative term
Your Answer relative term

Question In economics the question related to the selection of methods with which commodities are produced is a subject matter of
Correct Answer theory of production
Your Answer theory of production

Question Under the decreasing returns to scale, the marginal output curve slopes ________.
Correct Answer downward
Your Answer downward

Question Managerial economics generally refers to the integration of economic theory with business
Correct Answer Practice
Your Answer Practice

Question Steps in cost benefit analysis
Correct Answer Identification of a project , Formulation of the project , Appraisal and selection of the project
Your Answer Identification of a project , Formulation of the project , Appraisal and selection of the project

Question Slope of supply curve is
Correct Answer positive
Your Answer positive

Question The salary of the proprietor or rent on own land are the ________.
Correct Answer Implicit cost
Your Answer Implicit cost

Question The profits which must be deducted from the gross profits to arrive at net profits are
Correct Answer Monopoly Profits
Your Answer Monopoly Profits

Question We say that a nation faces economic problems , under following conditions
Correct Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited , These resources are not specific but have alternative uses
Your Answer Man has unlimited wants or ends , The means or resources to satisfy them are limited , These resources are not specific but have alternative uses

Question A shift in the demand curve to the left shows increase in demand.
Correct Answer False
Your Answer False

Question The sum of total fixed costs and total variable costs is the total cost.
Correct Answer True
Your Answer True

Question A Joint- Stock Company is owned by its share holders but it is managed by
Correct Answer Board of Directors
Your Answer Non-government organization

Question The liability of a Karta in a Joint Hindu Family Business firm is ________.
Correct Answer limited
Your Answer joint

Question A fall in price tends the demand for goods to ________
Correct Answer expand
Your Answer increase

Question The supply curve slopes downwards from left to right.
Correct Answer False
Your Answer False

Question Poverty is the root cause of Economic problem.
Correct Answer False
Your Answer False

Question Every nation’s resources which are used to produce the quantities of goods and services that would be required to satisfy all its citizen’s wants are
Correct Answer insufficient
Your Answer insufficient

Question In case of a proprietory firm, the liability for all his debts is
Correct Answer unlimited
Your Answer unlimited

Question The city of Kashmir has specialized in the manufacture of
Correct Answer shawls
Your Answer shawls

Question The Laws of Returns to scale are
Correct Answer Law of Increasing Returns to Scale , Law of Constant Returns to Scale , Law of Decreasing Returns to scale
Your Answer Law of Increasing Returns to Scale , Law of Constant Returns to Scale , Law of Decreasing Returns to scale

Question Managerial economics is also understood to refer to
Correct Answer applied economics
Your Answer applied economics

Question The registration of a partnership firm is voluntary
Correct Answer True Your Answer True