Monday, February 28, 2011

Managerial Economics - 22

Managerial Economics - 22


True/False
Question The damage being done by the factories at and around Agra to Taj Mahal is an example of social cost for private benefit.
Correct Answer True



Multiple Choice Single Answer
Question The Risk theory of profit was developed by
Correct Answer Hawley



Multiple Choice Multiple Answer
Question Index numbers may broadly be classified as
Correct Answer Price indices , Quantity indices , Special purpose indices


Multiple Choice Single Answer
Question Expansion of supply is shown by the movement in the supply curve which is
Correct Answer upward



Multiple Choice Multiple Answer
Question Forms of Public Enterprises
Correct Answer departmental management , company management or management by boards , public corporations


Select The Blank
Question The financing of ________ goods is done through public expenditure.
Correct Answer public



Multiple Choice Single Answer
Question A Joint- Stock Company is owned by its share holders but it is managed by
Correct Answer Board of Directors

Multiple Choice Multiple Answer
Question The examples of negative externalities are
Correct Answer nuclear power plants , gargantuan trucks , unsafe factories

Match The Following
Question- Correct Answer

Reduction in demand due to a new substitute in market- Uncertainity

Accounting profit- Explicit costs

Economic profit -Pure profit

Risk taking theory -Hawley

Multiple Choice Single Answer
Question Peas & beas, groundnut oil & til oil, tea & coffee are examples of
Correct Answer substitutes goods


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


True/False
Question A monopolist in a price maker.
Correct Answer True


Select The Blank
Question The chemical effluents recklessly released by a chemical factory in the river causing water pollution, is an example of ________ cost.
Correct Answer social



True/False
Question The financing of the pure public goods has to be through public expenditure and not through market pricing.
Correct Answer True


Multiple Choice Single Answer
Question A firm is a unit of production, where production is done with the aim to maximize
Correct Answer profits

Select The Blank
Question By ' profits', the economist means total revenue minus ________.
Correct Answer All costs


Multiple Choice Multiple Answer
Question Cost-Benefit Analysis is
Correct Answer The analysis undertaken to judge the investment of any project , Refers to finding out the worth of investment , Enable ranking of optional investments


True/False
Question Giffen goods are superior goods.
Correct Answer False


Multiple Choice Multiple Answer
Question The railways use a lot of coal in firing the steam locomotives. This act causes
Correct Answer a lot of sufferings to the people near the railway. , cost to the society. , no cost to the railways.


Multiple Choice Single Answer
Question All the buyers and sellers operating under perfect competition have knowledge
Correct Answer perfect


Multiple Choice Multiple Answer
Question Marginal cost pricing explains that the
Correct Answer Price charged should be equal to the marginal cost , Cost price sets the lower limits for firm’s price , Cost price ensures the possible level of profitability

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


Match The Following
Question- Correct Answer

Implicit costs are the cost of- resources owned by the firm.

Opportunity costs are also known as- alternative costs

The difference between average total cost &average fixed cost shows- variable cost

The difference between average cost and average revenue is- average profit

True/False
Question During the period of depression, a large part of a country’s resources lie involuntarily idle.
Correct Answer True



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


Select The Blank
Question The externality which causes an economic gain or an economic loss to other economic units is also referred to as ________ externality.
Correct Answer Pecuniary

Select The Blank
Question While discussing the product divisibility of public and private goods, the principle of ________ may be applied in case of only those people who do not agree to pay or who cannot pay the market price
Correct Answer exclusion

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



Multiple Choice Multiple Answer
Question Characteristics of Pure Public goods are:
Correct Answer They are completely indivisible , Their marginal cost would be zero or close to zero , Their benefits cannot be priced

Multiple Choice Multiple Answer
Question Major types of costs are
Correct Answer Accounting costs , Economic costs , Opportunity costs

True/False
Question The short run Average Cost (A.C.) curve is U shaped.
Correct Answer True

True/False
Question Cyclical fluctuations are recurrent in nature
Correct Answer True


Multiple Choice Multiple Answer
Question Quantitative credit control measures are
Correct Answer open market operations , changes in bank rates , changes in statutory reserve ratio


True/False
Question Private profit motive is an essential feature of Capitalism.
Correct Answer True


Multiple Choice Single Answer
Question The number of buyers & sellers operating under perfect competition is
Correct Answer large


Select The Blank
Question The sum of all individual demands constitutes________
Correct Answer market demand

Select The Blank
Question The costs which cover the cost of advertising is ________.
Correct Answer Selling cost



Multiple Choice Single Answer
Question The relation between variable input and ouput
Correct Answer is direct

Multiple Choice Single Answer
Question With decline in price of a commodity, total expenditure spent on the commodity is less than before, then elasticity of demand for the commodity is
Correct Answer < 1


Multiple Choice Single Answer
Question The public sector is owned & controlled by
Correct Answer state enterprises


True/False
Question In the market, any one who agrees to pay the requisite price of a product would be excluded from their consumption.
Correct Answer False

Multiple Choice Single Answer
Question A downward movement from one point to another point on the same demand curve implies
Correct Answer expansion

Multiple Choice Multiple Answer
Question Methods of forecasting demand for new products are
Correct Answer Product life cycle analysis , Test marketing , Evolutionary approach


True/False
Question The concept of economic profit differs from that of normal profit.
Correct Answer False



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

Multiple Choice Single Answer
Question Inflation is characterized by demand which is in
Correct Answer excess of supply

Select The Blank
Question Defence service is an example of ________ good.
Correct Answer indivisible

Managerial Economics - 21
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

True/False
Question Macro economic studies are based on empirical evidence.
Correct Answer True


Select The Blank
Question According to the World Bank's approach, the trade able items would be valued at the corresponding world prices and the non-trade able items at the ________.
Correct Answer shadow prices


Multiple Choice Single Answer
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


Multiple Choice Single Answer
Question Costs which increase because of the expansion of a firm are called
Correct Answer incremental

True/False
Question In the Long- run, supply of goods can be adjusted to the demand and therefore supply curve is horizontal to the X-axis.
Correct Answer False


Select The Blank
Question By ' profits', the accountant means total revenue minus________.
Correct Answer Explicit costs


Multiple Choice Multiple Answer
Question Features of short run period are
Correct Answer Supply of goods can be adjusted to the demand to some extent , Supply and demand determine the price , Some factors can be changed


Select The Blank
Question The law of constant returns to scale is depicted by the marginal output curve which is ________.
Correct Answer horizontal


Multiple Choice Single Answer
Question The method of calculating depreciation in which the actual working hours of a capital asset are taken in to account is
Correct Answer service unit


True/False
Question Demand curve slopes upwards from left to right.
Correct Answer False


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


True/False
Question Macro-economies is a policy oriented science.
Correct Answer True


Multiple Choice Single Answer
Question The assumption of perfect competition in all the analytical theories is made by
Correct Answer Classical economists


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


Multiple Choice Multiple Answer
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


Select The Blank
Question When demand for the product increases in the same proportion in which income increases, Income elasticity of demand will be equal to________
Correct Answer unity


Multiple Choice Multiple Answer
Question Accounting profit includes
Correct Answer wages , rent , interest



Multiple Choice Multiple Answer
Question The fiscal policy includes
Correct Answer Formation of taxation policy , It is an instrument for economic stabilization , Monitoring of public expenditure

Multiple Choice Single Answer
Question The method of inventory valuation in which , the cost of production is calculated on the assumption that the material which was last to enter the inventory of the company was used first is
Correct Answer LIFO


Select The Blank
Question A private limited company can be formed with 2 to 50 members maximum, excluding ________
Correct Answer employee shareholders


Multiple Choice Single Answer
Question The number of sellers operating under monopolistic competition as compare to oligopoly is
Correct Answer larger


Multiple Choice Multiple Answer
Question Causes for rise in prices in India
Correct Answer Mounting government expenditure , Deficit financing and increase in money supply , Role of black money

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



Multiple Choice Single Answer
Question AVC is the per unit variable cost of
Correct Answer production



Multiple Choice Multiple Answer
Question Exceptions to the Law of Demand are
Correct Answer Giffen goods , Articles of snob appeal , Speculation

Question In the cost - benefit analysis, the first step involved is that the investor has to choose a few project alternatives promising a
Correct Answer high rate of return


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


Question Economic problem is faced by poor countrys only.
Correct Answer False


Match The Following
Question- Correct Answer

Pure private goods -Divisible goods

Self -interest -Market economy

Danger from drunken drivers- Negative economies
Impure public goods -Quasi - public goods


Multiple Choice Multiple Answer
Question Types of imperfect competition are
Correct Answer Monopoly , Duopoly , Oligopoly


Question If the output rises in the greater proportion than that of the increase in factor inputs, it is referred to as ________.
Correct Answer increasing returns to scale.


Question Investment is significant because
Correct Answer Addition to the real capital assets , It leads to increase in level of income , Increases accumulated wealth of the society


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


Question According to Lionel Robbins, "Economics is a science which studies
Correct Answer human behavior

Question The out of pocket costs are ________.
Correct Answer Explicit costs


Question A firm gets an opportunity to produce multiple products because changes in business activity in a firms is
Correct Answer cyclical


Question Market system or market economy suffers from time to time from economic depressions.
Correct Answer True


Question Under competitive conditions, market mechanism would automatically bring equilibrium at the level of
Correct Answer full employment


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


Question Factors influencing selling costs are
Correct Answer Type of product , Introduction of new goods , Technology changes


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


Question The slope of Supply curve of labour is always
Correct Answer backward


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


Question Features of monopolistic Competition are
Correct Answer Fairly large number of firms , Product differentiation , Selling costs are existed

Question Under perfect competition,firms are free to enter and exit in the market.
Correct Answer True


Match The Following
Question- Correct Answer

Motor cars -Tangible goods

Wants- Insatiable

Managerial Economics -Prescriptive in nature

Resources -Alternative uses

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

Question Under perfect competition single seller can influence the price.
Correct Answer False

Managerial Economics - 20
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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

Match The Following
Question- Correct Answer

Equilibrium price is the price where the quantity -demanded equals quantity supplied quantity
Excess supply can be defined as- quantity supplied minus quantity demanded.

Tea and sugar- Complimentary goods
Excess demand can be defined as- quantity demanded minus quantity supplied

Multiple Choice Single Answer
Question The act of making goods and services is called
Correct Answer production

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


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


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


Multiple Choice Multiple Answer
Question reasonable profit' are
Correct Answer Capital Attraction , Plough Back , Normal earnings


Multiple Choice Multiple Answer
Question Features of Long -run market are
Correct Answer It is durable goods market , Supply can be increased or reduced according to the demand , Sellers at least recover minimum price for their goods


Multiple Choice Single Answer
Question The type economic problem is
Correct Answer universal


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


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


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

Multiple Choice Single Answer
Question While calculating accounting profit, the costs which are considered are by nature
Correct Answer explicit

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

Multiple Choice Single Answer
Question The things that are produced by factors of production are called
Correct Answer commodities


Multiple Choice Single Answer
Question The concept of just distribution of national product is a
Correct Answer normative

Multiple Choice Single Answer
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


True/False
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



Select The Blank
Question Modern economists treat social cost and benefits as ________ of private investment and production decisions.
Correct Answer externalities

Multiple Choice Multiple Answer
Question The market system of economy is based on the following foundations:
Correct Answer Consumer's Sovereignty , Non-interference by the state. , Private Profit Motive


Select The Blank
Question The indivisible goods to which the principle exclusion does not apply are called ________ goods.
Correct Answer pure public


Select The Blank
Question The goods become ________ only when each individual has an access to the entire amount of it and its use by the individual does not reduce its availability to others.
Correct Answer indivisible


Multiple Choice Single Answer
Question The city of Banaras has specialized in the manufacture of
Correct Answer silk



True/False
Question During inflation, the pensioners whose income is permanently fixed, are substantially benefited.
Correct Answer False


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



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



Multiple Choice Single Answer
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


True/False
Question Supply management is related to the volume ofsupply & its distribution system.
Correct Answer True



Select The Blank
Question Demand for safety pins is ________
Correct Answer inelastic


Multiple Choice Single Answer
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


True/False
Question Under the disinvestments process, there is full transfer of ownership
Correct Answer True


Multiple Choice Single Answer
Question In cost - benefit analysis, after the step of appraisal and selection of the project is the step of
Correct Answer comparison of the cash flow


Multiple Choice Single Answer
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


Multiple Choice Multiple Answer
Question Features of market period are
Correct Answer Related to few hours or few days , Related to perishable goods , The entire supply is to be disposed off on the same day

Select The Blank
Question In the context of formulating an investment project, ________ feasibility means the availability of supervisors for implementing and running the project smoothly and professionally.
Correct Answer management



Multiple Choice Multiple Answer
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


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



Multiple Choice Multiple Answer
Question Scope of Managerial Economics deals with
Correct Answer Demand analysis and forecasting , Production function & cost analysis , Inventory management adverting, price system

Multiple Choice Single Answer
Question The observation of economic histories of the United States & West European countries shows that competition , the heart of market mechanism gives rise to
Correct Answer monopolies


Match The Following
Question -Correct Answer

Chance profit -Outbreak of war

Innovation theory of profit -Joseph Schumpeter


Uncertainly bearing- F. H. Knight theory


Implicit cost -Opportunity cost
Multiple Choice Single Answer
Question During a period of rising prices (inflation), the goods and services are
Correct Answer scarce



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

Multiple Choice Single Answer
Question Over the years in India the govt. expenditure is
Correct Answer increasing


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

True/False
Question Demand is related to price, time and place.
Correct Answer True


Multiple Choice Single Answer
Question Managerial economics is also understood to refer to
Correct Answer applied economics


Select The Blank
Question A fall in price tends the demand for goods to ________
Correct Answer expand

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