Question Bank of Managerial Economics _1Mark

Managerial Economics

Unit1 - 1 Mark Quiz Questions

1.Managerial economics as a new branch of Economics

2.Managerial Economics as a specialized branch of Economics

a. Provide ready-made solutions to business problems

b. Provide logic and methodology to find solutions to business problems

c. provide alternative answers to specific business problems.

d. Provide theoretical background to analyze business problems

3.Managerial Economics is

a. A theory oriented branch of economics

b. A new branch of economics

c. A part of macro economics

d. A part of tradtional economics

4.Managerial economics is

a. A positive science

b. Mainly a positive and a normative science

c. Mainly a normative and a positive science

d. A normative science

a. Uses new techniques to identify business and management problems

b. Highlights on analyzing business problems

c. Applies economic theories and concepts to solve business and management

problems

d. Acts totally independent of other subjects

5.Managerial econonomics deals with the problem of

a. Global economy

b. An industry

c. An economy

d. An individual firm


1.A tabular representation of diiferent quantities of a commodity demanded at different

prices are known as

a. Demand series

b. Demand schedule

c. Demand pattern

d. Statistical demand table

2.An increase in demand

a. Will cause demand curve to shift to the left

b. Means consumers will buy more at a low price

c. Will cause quantity demanded to fall

d. Could be caused by an increase in the incomes of cunsumers

3.Demand for a product refers to

a. Various amounts desired by consumers

b. Total quantity of a product demanded during a given period of time

c. Various quantities that are demanded by consumers

d. Total quantity of a product demanded at a particular price in the marketduring a

given period of time

4.Demand for a product refers to

a. Various amounts which are purchased by consumeres at a particular price during

a given period of time

b. Total quantity of products demanded during a given period of time

c. Various amounts that are desired by consumers

d. Various amounts that are demanded by consumers

5.Demand for a proeuct basically depends on

a. Utility of product

b. Desires of consumers

c. Price of the product

d. Consumers requirements.

6.If we observe the price of a good or service rising then this could have been caused by

a. An increase in demand

b. A temporary surplus

c. A small increase in demand followed by a huge increase in supply

d. An increase in supply

7.In case of decrease in demand,the demand curve

a. Shifts forward

b. shifts backward

c. Slopes negatively

d. Will be a vertical straight line

8.In case of expansion and contraction in demand, the consumer would be moving either

in the upward or downward direction

a. On a higher demand curve

b. On two demand curves

c. On a lower demand curve

d. Along the same demand curve

9.In case of increase in demand the demand curve

a. Will have upward slope

b. Will be horizontal

c. Shifts forward

d. Shifts backwards

10.The demand curve

a. Has a negative slope

b. Has a positive slope

c. is a horizontal line

d. Is a vertical straight line

11.The Law of Demand assuming other things to remain constant, establishes the

relationship between

a. Income of the consumer and the quantity of a good demanded by him

b. Price of a good and the quantity demanded

c. Price of a good and the demand for its substitute

d. Quantity demanded of a good and the relative prices of its complimentary goods.

12.The relationship between price and demand is

a. Inverse

b. positive

c. Direct

d. Proportionate

13.Under exceptional cases, the demand curve slopes

a. Backward

b. Forward

c. Downwards

d. Upwards

14.Which of the assumptions on which the demand is based are

a. Technology

b. Prices of other related goods and tastes and preferences

c. Production Costs

d. Prices of Inputs

15.Which of the following is not a factor which will shift the demand curve for some

product

a. An increase in the price of a substitute good

b. An expectation of a future price decline

c. An increase in consumer income

d. An increase in the price of the given product


1.A firm to formulate its sales policy and sales strategy can make use of

a. Sales forecast made by the other firms.

b. Sales forecast made by the statistical organizations.

c. Sales forecast made by the industry.

d. Sales forecast made by the govt.

2.A good method of demand forecasting should be

a. Coercive

b. Flexible

c. Rigid

d. complex

3.Demand forecasting is generally associated with

a. Forecasting sales and manipulating demand.

b. The estimation of the position of the firm in the market.

c. The estimation of the market share.

d. The estimation of competition in the market.

4.Demand forecasting is made - for the

a. For the substitutes only

b. For the existing products only.

c. New products only.

d. For both the existing products & for the new products.

5.Demand forecasting is made in terms of

a. The quantity that can be produced.

b. Approximate amount

c. Specific quantities.

d. Actual amount.

6.Demand forecasting refers to an estimation of

a. Trends in the market.

b. Future demand for the product.

c. Most likely future demand for a product.

d. Precise demand for a product at a future date.

7.Generally companies plan their business in anticipation of

a. Making huge profits.

b. future growth in the market.

c. Eliminating competition.

d. future demand.

8.Internal factors like money spent on advertising, pricing policy, product improvement,

sales efforts etc., help in

a. Forecasting sales

b. Fixing price of the product

c. Determining the size of the market

d. Manipulating demand

9.Some of the external factors which influence sales forecasts of a firm are

a. Pricing policy.

b. Size of the market, competitors attitude, movement in prices. etc.,

c. Money spent on advertisement.

d. Product improvement and sales efforts.

10.The heart of the survey method is

a. Consumer panel.

b. Direct interview

c. Opinion of the sales representatives

d. Questionnaire


1.A tabular representation of different quantities of a commodity supplied at varying

prices is called

a. Supply schedule

b. Supply series.

c. Supply table.

d. Supply pattern..

2.For perishable commodities like fish and fruits

a. Supply is more than production.

b. Supply and stock are different.

c. Supply and stock are the same.

d. Supply is less than production.

3.Supply of a product basically depends on

a. The availability of other goods in the market.

b. Cost of production and the management decision.

c. Consumers desires.

d. Consumers requirements.

4.The assumptions on which the law of supply is based are

a. The prices of other commodities, incomes of the people etc.,

b. Tastes and preferences of the people.

c. Number of firms, availability of inputs, cost of production, techniques of

production etc.,

d. Availability of substitutes, development of new products.

5.The supply curve

a. Is a vertical straight line.

b. Is negatively sloping.

c. Has a positive slope.

d. Is a horizontal straight line.

6.The supply of a product refers to the

a. Various amounts available with the firm.

b. Various amounts which are produced by a firm.

c. Various amounts which are offered for a sale at a particular price during a given

period of time.

d. Total quantity of the product produced during a given period of time.

7.The total volume of a commodity which can be brought into the market for sale at a

short notice is called

a. Supply.

b. Available supply.

c. Volume of production.

d. Potential supply.

8.The two concepts which link the market behaviour of consumers, producers & sellers

with that of price are

a. Desire & ability.

b. The technique & the cost.

c. Demand & supply.

d. Utility & usefulness.


1.A stage of decreasing returns imply

a. both a and b

b. AP is negative

c. MP is decreasing

d. MP is negative

2.Diminishing marginal return implies

a. Decreasing average fixed costs

b. Decreasing average variable costs

c. Increasing marginal costs

d. Decreasing marginal costs

3.Diminishing return operate in the 2nd stage of the law of variable preportions when

greater quantity of variable input is employed except in one of the case. Identify the

correct answer

a. Greater scope for economies of scale

b. complete utilisation of indivisible factor

c. There is a limit for intensive and effective utilisation of fixed factor inputs

d. Intensive and effective utilisation of fixed factor inputs

4.Fixed inputs are those factors

a. The Qty of which remains neutral with the level of output

b. The Qty of which varies with the level of output

c. The Qty of which does not remain constant with the level of output

d. The Qty of which remains constant irrespective of the level of output

5.Identify the correct answer, short run is a period of time where in

a. Fixed as well as variable factors remain constant

b. Variable factors as well as fixed factors vary

c. Variable factors can be varied while fixed factors remain constant

d. Fixed factors can be varied while variable factors remain constant

6.Identify the incorrect answer, long run is a period of time where in

a. Adequate time is available to make all kinds of changes

b. The distinction between fixed and variable inputs remains the same

c. Adequate time is availablity for entry or exit of firms

d. Plant capacity can be changed

7.If the marginal product of labor is below the AP of labor it must be true that

a. The AP of labor is negative

b. The AP of labor is falling

c. The MP of labor is negative

d. The MP of lobor is zero

8.In case of long run production

a. The Qty of both fixed and variable inputs are kept constant

b. The Qty of both fixed and variable inputs are changed in the same proportions

c. The Qty of both fixed and variable inputs are changed

d. The Qty of both fixed and variable inputs are changed in different proportions

9.Incase of short run production function Qty of fixed input remains constant and

a. The Qty of both fixed as well as variable inputs remains constant

b. Qty of one or two variable inputs are kept constant as Qty of fixed inputs change

c. The Qty of both variable and fixed input change

d. Qty of either one or two variable inputs change

10.Increasing return operate in the 1st phase of the law of variable proportions when

greater quantity of variable input is employed except in one of the case Identify the

correct answer.

a. Limit for intensive and effective utilisation of fixed factor inputs

b. Perfect substitution of factor inputs

c. Complete utilisation of indivisible factors.

d. Limit for division of labor

11.Increasing returns imply

a. Increasing cost per unit of output

b. Diminishing cost per unit of output

c. Optimum use of capital and labor

d. Constant average cost

12.Marginal product is maximum at a point of

a. Equilibrium point

b. Focul point

c. Inflection point

d. Turning point

13.Negative return operate in the 3rd phase of the law of variable proportion when

greater quantity of variable input is employed except due to one of the following reasons

Identify the incorrect answer.

a. The proportion of variable factors is in excess of fixed factors

b. The proportion of both are scare

c. The proportion of both are in excess

d. The proportion of fixed factors is in excess of variable factors

14.Out of the 4 which one of the following production function is the best one ?When an

old production function is replaced by a new one

a. The Qty of output increase while the Qty of input decrease

b. The Quantity of both inputs and output increase with same proportion.

c. The Qty of inputs reduced while the Qty of output remains the same

d. The Qty of output increase while the Qty of input remain the same

15.Out of the four which of the following statement is incorrect ? When a producer

increases the Qty of variable input while keeping fixed factors constant

a. Marginal product increases in the beginning

b. Marginal product become constant in the middle

c. Marginal proiduct diminishes at the end

d. Marginal product reaches the highest point

16.Out of the four which one of the following is not a practical use of production function

a. It is used to work out least cost input combination for a given output or maximum

output-input combination for a given cost.

b. It is used to workout an optimum combination of inputs for getting a certain level

of output

c. It is used to take long run decisions regarding when output is to be increased,

decreased and kept constant

d. It is used to work out least output in put combination for a given cost or

maximum cost input combination for for a given output

17.Out of the four which one of the following statement is incorrect to describe the law of

variable proportions according to Benham

a. First the total product and then the average product of that factor will diminish

b. As the proportion of one factor in a combination of factors is increased, after a

point first the marginal, then the average product of that factor will dimimish

c. As the proportion of one factor in a combination of factors is increased, after a

point first the average and then the marginal product of that factor will diminish

d. The first marginal and then the total product of that factor will diminish

18.Out of the four, which of the following statement is incorrect

a. Total output goes on increasing as long as marginal product is positive

b. Total output is the highest when marginal product is zero

c. Total output is the highest when marginal product is positive

d. Total output diminishes when marginal product becomes negative

19.Production function explains

a. The relationship between Qty of inputs employed and the corresponding total

production cost

b. The relationship between market price charged and quantity supplied

c. The relationship between qty of inputs used and the corresponding output

obtained

d. The relationship between the firms total revenue and total production cost

20.Production function with one variable input is not called as

a. The law of returns to scale

b. Law of variable proportions

c. The law of non-proportional output

d. Law of diminishing returns

21.The Average product of labor is maximum when MP of labor

a. none of the above

b. Equals zero

c. Equals the AP of labor

d. Is maximised

22.The identify the wrong answer. The term production in economics implies

a. Conversion of inputs into outputs

b. creation of new or additional utilities

c. activity directed for satisfaction of want

d. Creation of utilities

23.The marginal product of a variable input is best describe as

a. The addition output resulting from a one unit increase in both the variable and

fixed inputs

b. Total product divided by the number of units of variable input

c. The ratio of the amount of the variable input that is being used to the amount of

the fixed input that is being used

d. The addition output resulting from a one unit increase in the variable input

24.The production function is a relationship between a given combination of input and

a. All level of output that can be generated by those inputs

b. Another combination that yield the same output

c. The increase in output generated by one unit increase in one output

d. The higher resulting output

25.Total output will be the maximum when

a. Marginal output is zero

b. Marginal output is highest

c. Average output is highest

d. Average output is lowest

26.Variables inputs are those factors

a. The Qty of which remains neutral with variations in the level of output

b. The Qty of which remains constant with variation in the level of output

c. The Qty of which does not vary with the level of output

d. The Qty of which varies with variations in the level of output

27.Which of the following is not an economic activity

a. A manager managing his organisation

b. A teacher teaching in a college

c. A chartered accountant doing his own activity

d. A son looking after his ailing mother

28.Which of the following is not considered as production in economics

a. A student playing for his college foot ball team

b. A farmer tilling his land

c. A worker working in HAL

d. A BSF jawan guarding boarder with pakistan

29.Which of the following statements is true

a. Man can create matter

b. When a man creater a table, he creates matter

c. The service of a doctore are considered production

d. The services of a housewife are considered production

30.Which one of the assumption of the law of variable proportion is incorrect

a. Production technology remains constant

b. The law operates the long run

c. Only one variable input is to varied

d. Different units of a variable factor input are homogeneous


1.A firm managed by an individual has certain advantages except one Identify the

incorrect answer

a. He can take quick, immediate and on the spot decisions

b. There is lot of scope for discussions

c. He can enjoy all the profit of the business

d. He has direct centrol over the enterprise

2.Identify incorrect answer, A business unit is

a. An economic unit

b. A producing unit

c. A Profit-Maximising unit

d. A Welfare-Maximising unit

3.Identify the incorrect Answer Objectives of a business firm are-

a. Supplementary to each other

b. Mutually inter connected to each other and a few others are opposing in nature

c. Uni-dimensional in nature

d. Multi-dimensional in nature

4.Identify the one which is incorrect, A classical firm basically engages ifself in

a. Profit optimisation

b. Profit maximisation

c. Wealth creation

d. Surplus creation

5.Out of the following four nature of objectives, identity the incorrect one:

a. They are the end-point towards a rational activity

b. They indicate the specific methods of mobilising financial resources

c. They guide and govern actions and behaviour of business men

d. They indicate the purpose and reasons for the existence of a firm

6.Under MR and MC approach profit maximisation is possible when

a. MC < MR and MC curve cuts MR curve from above

b. MR

c. MC>MR and MC curve cuts MR curve from below

d. MR

e. MC and MC curve cuts MRC from below

f. MC and MC curve cuts MRC from above

7.Under TR and TC approach, Profit -Maximisation is possible when

a. TC

b. TC> TR

c. TR<>

d. TR>TC

e. TR

8.Which of the following is incorrect

a. A firm produce various goods and services to satisty wants of people

b. A firm transforms inputs into outputs

c. A firm is based on commercial principle

d. A firms is based on welfare principle

9.Which one of the following characteristics is incorrect of a firm run and managed by a

owner entrepreneur ?

a. He can enter into contract with any group of people who supply inputs

b. He has the legal permission to run the enterprise

c. He can maximise his profits in any manner

d. He can change the nature of management according to his convercience

10.Which one of the following statement is incorrect ?

a. Profit maximisation immoral

b. Earlier profit maximisation was the sole objective of a firm

c. Profit-maximisation indicates the economic position and status of firm

d. Now it has become one among many objectives


1.A kink at some point on the demand curve exhibit two different characteristics-

a. Increase and decrease.

b. Rigid and flexible.

c. Expansion and contraction.

d. Elastic and inelastic.

2.AR curve of the firm is the same thing as that of the demand curve of the consumer

because

a. The price paid by the buyer is the revenue of the seller

b. The revenue is equal to cost.

c. The AR curve of the firm determine the price of the product..

d. The price paid by the buyer is the cost of the seller.

3.AR is the revenue per unit of the commodity sold. It can be obtained by

a. /_\ TR / /_\ / Q

b. TR / P.

c. TR / TC.

d. TR. / Q

4.Average revenue curve of the firm is the same as the demand curve of the consumer

except in the context of

a. Perfect competition.

b. Discriminatory monopoly.

c. Monopoly.

d. Monopolistic competition.

5.MR is the additional revenue earned by selling an additional unit of a commodity which

means

a. Revenue realized from selling one more unit of a product

b. Revenue realized by raising the price

c. Revenue over and above the total cost

d. Revenue realized from selling more products

6.The sales receipts of the output of a firm depends on the

a. Market price.

b. Reputation of the firm.

c. Hold it has on the market.

d. Size of the firm.

7.TR is the highest when

a. MR is increasing.

b. MR is zero.

c. MR is negative.

d. MR is positive.

8.Under imperfect competition both MR and AR are downward sloping and MR curve

lies below the AR curve which means

a. A firm can sell more at the same price

b. The sales have no relation with the price.,

c. The firm can sell more only by lowering the price.

d. The firm can sell more at a higher price.

9.Under perfect competition

a. AR

b. MR

c. AR>MR

d. MR>AR

<>

e. MR<AR

<>

f. P.

g. P

10.What is MR?

a. TR/AC.

b. MR

c. TRn-TRn-1.

d. MR

e. MR

f. MR

g. TR/TQ.

h. TR/TC.


1.An individual producer cannot influence the market price under

a. Oligopoly.

b. Duopoly.

c. Pure competition.

d. Monopolistic competition.

2.Imperfect market exhibits the characteristics of both

a. Monopoly and duopsony.

b. Monopoly and competition.

c. Monopoly and oligopoly.

d. Duopoly and monopolistic competition.

3.In the long run the firms can earn only normal profit under

a. Monopolistic competition.

b. Perfect competition.

c. Oligopsony.

d. Monopsony.

4.Incase of food grains like rice, wheat, jowar, etc., we find

a. Impure competition.

b. Oligopoly.

c. Pure competition.

d. Imperfect competition.

5.Perfect competition and Monopoly are the two

a. Popular market situations.

b. Actual market situations.

c. Extreme market situations.

d. Major market situations.

6.Perfect competition is

a. An imaginary market.

b. A desired market situation.

c. The actual market condition that exists.

d. An ideal market situation.

7.Perfect competition is a comprehensive term which includes

a. Monopolistic competition also.

b. Duopoly also.

c. Monopoly also.

d. Pure competition also.

8.Pure competition is a

a. Common phenomenon.

b. Rare phenomenon.

c. Very popular.

d. Unrealistic.

9.The price at which demand and supply are equal is known as

a. Equilibrium price.

b. Actual price.

c. Normal price.

d. Market price.

10.The price of the product should not exceed the value of its benefit to

a. The buyer.

b. The seller.

c. The organization.

d. The society.

11.There is no scope for the firms to join together and form cartels or some other form of

organization to restrict competition under

a. Imperfect competition.

b. Monopolistic competition.

c. Oligopoly

d. Perfect competition.

12.Under perfect competition buyers and sellers have

a. Perfect knowledge of the market.

b. Imperfect knowledge of the market.

c. Partial knowledge of the market.

d. Considerable knowledge of the market.

13.Under perfect competition the upper limit to the price of a product is determined by

a. The government.

b. The seller.

c. The demand

d. The cost

14.When there are a large number of buyers and sellers, commodity dealt with is

homogeneous, free entry and exit of firms and absence of any kind of monopoly element

, market is said to be

a. Imperfect.

b. Pure

c. Monopolistic.

d. Perfect.

15.Who compared supply and demand to the two blades of a scissors

a. Ricardo.

b. Marshall.

c. Keynes.

d. Samuel son.


1.Consumers surplus is the difference beween

a. Price gap beween two products

b. Actual satisfaction and unexpected satisfaction

c. Potential price and actual price

d. Optimum price and actual price

2.Consumers surplus means

a. Difference between what a consumer is actually paying for a product and what he

is planning to pay for a product

b. Difference between market price and actual price

c. Difference between what a consumer is willing to pay for a product and what he

actually pay for it.

d. Difference between realised satisfaction and anticipated satisfaction.

3.Consumers' surplus is

a. Surplus amount of money paid over and above the total utility of a product

b. Surplus satisfaction enjoyed by a consumer over and above the price paid for a

product

c. Surplus price paid by a consumer over and above the satisfaction derived from a

product.

d. Surplus amount of satisfaction derived from the consumption of a product the

price he has paid for it.

4.Consumers` surplus is a

a. Relative concept

b. Quantitative concept

c. Qualitatitve concept

d. Objective concept

5.Consumers` surplus is derived from

a. The law of diminising marginal returns

b. The law of diminishing marginal productivity

c. The law of diminishing marginal substitution.

d. The law of diminishing marginal utility

6.Consumers` surplus is highest in case of

a. Comforts

b. Necessaries of life

c. Luxuries

d. Conventional necessaries

7.Consumers` surplus is the area

a. Below market price and a bove demand curve

b. Under demand curve and above market price

c. Above the market price line and above the demand curve.

d. Below demand curve and below the market price line


1.A stock variable is a quantity measured at

a. A point of time

b. At different periods of time

c. At different points of time

d. A period of time

2.During a given period of time a variable is a

a. Constant quantity

b. Quantity which takes different values

c. Changing quanity

d. None of the above

3.Endogenous variables are those

a. The value of a variable is not influenced by either internal or external factors.

b. The value of a variable is determined with in the system or internal factors

c. The value of a variable is determined by both internal and external factors

d. The value of a variable is determined by external factors

4.Exogenous vriables are those

a. The value of a variable is influenced by internal factors

b. The value of a variable is not influenced by either internal or external factors.

c. The value of a variable is influenced by both internal and external factors

d. The value of a variable is influenced by external factors

5.Identify the wrong answer. Macro economics is also described as

a. Partial equilibrium analysis Income method

b. Lumping method

c. Aggregative economics

6.Identify the wrong answer. The scope of macro economics includes the study of

a. The theory of general price level

b. The theory of income and employment

c. The theory of distribution

d. The theory of ecnomic development, growth and planning.

7.Interface of macro economics with business and industry does not deals with

a. Marketing policy of a firm.

b. Size of the market

c. Market strucure

d. Structure of the economy

8.Macro economics deals with the study of

a. Aggregative behaviour of entire economy

b. The behaviour of individual economic units

c. Entire economy

d. Economic problems of individuals

9.Out of the four, which is not a macro variable?

a. General price level

b. Stagflation

c. Deflation

d. Price of Ice-cream

10.Out of the four, which is not a micro variable?

a. Demand

b. supply

c. Cost

d. Inflation


1.Functional relationship between changes in the level of consumption as a result of

changes in the level of income is explained by

a. Price function.

b. Income function.

c. Effective demand.

d. Consumption function.

2.Increase in consumption expenditure is less than proportionate to the

a. Increase in employment.

b. Increase in income.

c. Increase in investment expenditure.

d. Increase in output.

3.MPC of the poor is ----------- than that of the rich

a. Less.

b. Lesser.

c. The same.

d. Greater.

4.Propensity to consume is Keynes greatest contribution to the economists kit of tools in

our generation according to

a. Prof. Timbergen.

b. Prof. Chamberlin.

c. Prof. Samuelson.

d. Prof. Hansen.

5.Ratio of aggregate consumption expenditure to aggregate income is called

a. Rate of consumption.

b. Level of consumption.

c. Average propensity to consume.

d. Marginal propensity to consume.

6.The level of national output, income and employment directly depends on

a. The level of consumption.

b. The level of saving.

c. The level of investment.

d. Effective demand.

7.The marginal efficiency of capital and the rate of interest determine

a. The investment expenditure.

b. The level of income.

c. The level of employment.

d. The level of output.

8.The ratio of change in aggregate consumption to the change in the level of aggregate

income is called

a. Proportion of consumption to the proportion of income.

b. The average propensity to consume.

c. The marginal propensity to consume

d. Aggregate consumption expenditure.

9.The size of income and the consumers propensity to consume determine

a. The investment expenditure.

b. The consumption expenditure.

c. The level of output.

d. The level of saving.

10.When income increases APC as well as MPC

a. Increases proportionately.

b. Increase disproportionately.

c. Increases.

d. Declines

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Question Bank of Managerial Economics _1Mark