Managerial Economics - 19

Managerial Economics - 19


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

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

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


Question Demand for safety pins is ________
Correct Answer inelastic


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



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

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


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


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


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


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


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



Match The Following
Question -Correct Answer


Decrease in Demand -Leftward shift of the demand curve

Contraction of Demand- Upward movement on the demand curve

Increase in demand- Upward shift of the demand curve


Extension of demand- 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


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


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


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


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



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



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


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


Question Demand forecasts are necessary for
Correct 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



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



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


Question Normally, a larger quantity is demanded at
Correct 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



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


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

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


Question An upward sloping demand curve is called ________
Correct 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


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

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

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

Question A monopolist in a price maker.
Correct Answer True


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

Question Managerial economics aims at providing guidance to the firms for
Correct 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

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


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

Managerial Economics - 18
LIST OF ATTEMPTED QUESTIONS AND ANSWERS ME2

Question A responsible factor for inflation is
Correct 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

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



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


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


Question Inflation is characterized by excess of demand.
Correct 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


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


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


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


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



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


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


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


Question -Correct Answer

Resource allocation decisions in free market economy -Theory of price

Economic problem- Universal

Managerial Economics- Applied branch of knowledge

Inflation- Reduction in purchasing power

Waste of resources -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

Question -Correct Answer

Variable cost can refer to- operating costs alone.

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

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

Fixed cost is known as- 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


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


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



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


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



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

Question Production Function implies relationship between
Correct 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



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



Question Demand for a commodity depends on the relative price of its ________
Correct 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
Question During periods of inflation, the income of farmers as a class decreases.
Correct Answer True


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

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


Question According to the Government, the buildup of inflationary pressure during the Nineties was attributed to
Correct 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


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


Question Implicit costs are
Correct 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



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


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


Question Break-Even analysis is derived by
Correct 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

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

Question Price discrimination is possible in case of
Correct 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

Question- Correct Answer

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

Normal profit -Implicit cost


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

Change in supply- Increase and decrease in supply


Question A competitive industry has three basic characteristics
Correct 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


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


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


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


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


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


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


Question Demand is determined by
Correct 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)


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


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


Question The type economic problem is
Correct Answer universal


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


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



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


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


Match The Following
Question- Correct Answer

Commodities -goods and services

Human wants -unlimited

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

Managerial economics- Decision making and forward planning

Resources- 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


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

Question In economics, supply is considered to be a
Correct 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

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



Question Managerial economics generally refers to the integration of economic theory with business
Correct Answer Practice
Question Steps in cost benefit analysis
Correct Answer Identification of a project , Formulation of the project , Appraisal and selection of the project


Question Slope of supply curve is
Correct Answer positive


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


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


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


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



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



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


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


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

Question Poverty is the root cause of Economic problem.
Correct 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

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



Question The city of Kashmir has specialized in the manufacture of
Correct 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


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


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