Professional Documents
Culture Documents
True/False
Question Under perfect competition, price is determined by the
interaction of total demand and total supply in the market.
Correct Answer False
Your Answer True
True/False
Question Macro-economies is a policy oriented science.
Correct Answer True
Your Answer True
True/False
Question The Keynesian theory emphasizes effective supply as a
crucial factor in determining the level of income and employment.
Correct Answer False
Your Answer False
True/False
Question Under perfect competition,firms are free to enter and exit in
the market.
Correct Answer True
Your Answer True
True/False
Question The congress government led by Narsimha Rao announced
the New Industrial Policy in July 1991.
Correct Answer True
Your Answer True
Select The Blank
Question Perfectly elastic demand curve is ________
Correct Answer horizontal
Your Answer horizontal
True/False
Question The distinction between fixed costs and variable costs is
relevant in the short period only.
Correct Answer True
Your Answer True
True/False
Question The sum of total fixed costs and total variable costs is the
total cost.
Correct Answer True
Your Answer True
True/False
Question Private profit motive is an essential feature of Capitalism.
Correct Answer True
Your Answer True
True/False
Question
In case of a proprietary firm the liability of the proprietor is limited.
Correct Answer
False
Your Answer
False
True/False
Question
In experimental price approach the firms takes some cognizance of the
demand for the product and proceeds to fix a price by a trial and error
method.
Correct Answer
True
Your Answer
True
True/False
Question
Consumer’s protection involves protection to the consumers from
unfair trade practices.
Correct Answer
True
Your Answer
True
True/False
Question
The law of supply is not hypothetical.
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
A firm gets an opportunity to produce multiple products because
changes in business activity in a firms is :-
Correct Answer
Cyclical
Your Answer
Cyclical
True/False
Question
When a change in income has no effect upon the quantity demanded
of a product, the income elasticity of demand is zero.
Correct Answer
True
Your Answer
True
True/False
Question
Public enterprises have shown a very high rate of return of the capital
invested.
Correct Answer
False
Your Answer
False
True/False
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
True/False
Question
Supply management is related to the volume of supply & its
distribution system.
Correct Answer
True
Your Answer
True
True/False
Question
The sum of total fixed costs and total variable costs is the total cost.
Correct Answer
True
Your Answer
True
True/False
Question
During the period of depression, a large part of a country’s resources
lie involuntarily idle.
Correct Answer
True
Your Answer
True
True/False
Question
Under the New Industrial Policy, in order to invite foreign investment
in high priority industries, it was decided to provide approval for direct
foreign investment upto 51% equity in such industries.
Correct Answer
True
Your Answer
True
True/False
Question
In macro – economic analysis the behavior of economic agents such as
firms, households and government is seen in total, disregarding details
at particular level.
Correct Answer
True
Your Answer
True
True/False
Question
Changes in the value of money because of inflation, make inventory
valuation of finished products difficult.
Correct Answer
True
Your Answer
True
True/False
Question
The prosperity phase is characterized by rise in the level of
employment.
Correct Answer
True
Your Answer
True
True/False
Question
During the period of depression, a large part of a country’s resources
lie involuntarily idle.
Correct Answer
True
Your Answer
True
True/False
Question
Pure private goods are completely divisible and to them the principle
of exclusion applies in full measure.
Correct Answer
True
Your Answer
False
True/False
Question
There is no separation of ownership and management in case of a
Joint Stock Company.
Correct Answer
False
Your Answer
False
True/False
Question
The demand for life saving drugs is elastic.
Correct Answer
False
Your Answer
False
True/False
Question
Economic problem is faced by poor countrys only.
Correct Answer
False
Your Answer
False
True/False
Question
Micro-economics is primarily concerned with the problem of what, how
and for whom to produce
Correct Answer
True
Your Answer
True
True/False
Question
Pure public goods must be in the hands of public sector only.
Correct Answer
True
Your Answer
False
True/False
Question
In any business, while formulating a profit policy, the possibility of
emergence of rival firms must be taken in to account
Correct Answer
True
Your Answer
True
True/False
Question
Demand curve slopes downwards from left to right.
Correct Answer
True
Your Answer
True
True/False
Question
The supply of factory made goods of daily consumption is inelastic.
Correct Answer
False
Your Answer
True
True/False
Question
A firm under perfect competition is a price maker.
Correct Answer
False
Your Answer
False
True/False
Question
Long period supply is relatively inelastic.
Correct Answer
False
Your Answer
True
True/False
Question
The Keynesian theory emphasizes effective supply as a crucial factor in
determining the level of income and employment.
Correct Answer
False
Your Answer
True
True/False
Question
The government also fixes minimum procurement prices for major
crops on the recommendation of the Agricultural Prices Commission
(APC).
Correct Answer
True
Your Answer
True
True/False
Question
There is considerable slush money with politicians & Government
servants.
Correct Answer
True
Your Answer
True
True/False
Question
Resources are said to be involuntarily un employed when their
wastage occur.
Correct Answer
True
Your Answer
True
True/False
Question
Social costs cannot be included in a firm's account book.
Correct Answer
True
Your Answer
False
True/False
Question
Measurement of profit becomes difficult because of the difficulty
involved in the calculation of depreciation.
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
In economics, demand means desire backed by adequate
Correct Answer
purchasing power
Your Answer
purchasing power
True/False
Question
A shift in the demand curve to the left shows increase in demand.
Correct Answer
False
Your Answer
False
True/False
Question
Demand for luxury goods is inelastic
Correct Answer
False
Your Answer
False
True/False
Question
The demand for life saving drugs is elastic.
Correct Answer
False
Your Answer
False
True/False
Question
During periods of inflation, the income of farmers as a class decreases.
Correct Answer
True
Your Answer
False
True/False
Question
To solve the unemployment problem , the level of effective demand
must decrease.
Correct Answer
False
Your Answer
False
True/False
Question
Market system or market economy suffers from time to time from
economic depressions.
Correct Answer
True
Your Answer
True
True/False
Question
Economic problem arises only in case of an overpopulated country.
Correct Answer
False
Your Answer
False
True/False
Question
The meaning of the word “economic” is most closely associated with
the word unlimited
Correct Answer
True
Your Answer
True
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
Your Answer
True
True/False
Question
Institution of private property is not an essential feature of Capitalism
Correct Answer
False
Your Answer
False
True/False
Question
There never was in any country at any time ‘pure capitalism’ or ‘pure
communism
Correct Answer
True
Your Answer
True
True/False
Question
The railways using a lot of coal in firing the steam locomotives put the
residential and other areas near the loco – shades to a lot of sufferings
on account of smoke nuisance, is an example of pr
Correct Answer
False
Your Answer
True
True/False
Question
A Joint stock company has perpetual succession.
Correct Answer
True
Your Answer
True
True/False
Question
The management of the cooperative form of business organization is
totalitarian in nature.
Correct Answer
False
Your Answer
True
True/False
Question
In macro – economic analysis the behavior of economic agents such as
firms, households and government is seen in total, disregarding details
at particular level
Correct Answer
True
Your Answer
True
True/False
Question
External economies are the advantages of large scale production
enjoyed exclusively an individual firm alone.
Correct Answer
False
Your Answer
False
True/False
Question
Economic problem arises only in case of an overpopulated country.
Correct Answer
False
Your Answer
False
True/False
Question
The meaning of the word “economic” is most closely associated with
the word unlimited
Correct Answer
True
Your Answer
True
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
Your Answer
True
Multiple Choice Single Answer
Question
The price of a good and the exclusion princople together is
Correct Answer
divisibility
Your Answer
indivisibility
True/False
Question
Institution of private property is not an essential feature of Capitalism
Correct Answer
False
Your Answer
False
True/False
Question
There never was in any country at any time ‘pure capitalism’ or ‘pure
communism
Correct Answer
True
Your Answer
True
True/False
Question
The railways using a lot of coal in firing the steam locomotives put the
residential and other areas near the loco – shades to a lot of sufferings
on account of smoke nuisance, is an example of pr
Correct Answer
False
Your Answer
True
True/False
Question
A Joint stock company has perpetual succession.
Correct Answer
True
Your Answer
True
True/False
Question
The management of the cooperative form of business organization is
totalitarian in nature.
Correct Answer
False
Your Answer
True
True/False
Question
In macro – economic analysis the behavior of economic agents such as
firms, households and government is seen in total, disregarding details
at particular level
Correct Answer
True
Your Answer
True
True/False
Question
External economies are the advantages of large scale production
enjoyed exclusively an individual firm alone.
Correct Answer
False
Your Answer
False
True/False
Question Bargaining is one of the remedies of corrective action.
Correct Answer False
Your Answer True
Economic effects of public goods are Spill over effect Spill over effect
True/False
Question Accounting profit takes in to account opportunity cost.
Correct Answer False
Your Answer False
True/False
Question There are no real exceptions to the law of demand
Correct Answer False
Your Answer False
True/False
Question Demand curve slopes downwards from left to right.
Correct Answer True
Your Answer True
Normally the isoquant slopes upward from right to left. downward from
right to left
Any straight line supply curve which cuts y axis will have zero elasticity
of supply. perfectly elastic
The market period supply curve for perishable commodities is perfectly
inelastic. perfectly inelastic.
True/False
Question A firm under perfect competition is a price maker.
Correct Answer False
Your Answer False
True/False
Question Under perfect competition single seller can influence the
price.
Correct Answer False
Your Answer False
True/False
Question During inflation, the pensioners whose income is permanently
fixed, are substantially benefited.
Correct Answer False
Your Answer False
True/False
Question Saving is a private virtue
Correct Answer True
Your Answer True
True/False
Question In general SBI uses its monetary policy to achieve a judicious
balance between the growth of production and control of the general
price level.
Correct Answer False
Your Answer False
True/False
Question Public enterprises have shown a very high rate of return of
the capital invested
Correct Answer False
Your Answer False
True/False
Question
The federal government of U.S.A. does not face the basic economic
problem.
Correct Answer
False
Your Answer
False
True/False
Question
The divisible goods, whose benefits can be priced, are called pure
public goods
Correct Answer
False
Your Answer
True
True/False
Question
In case of a proprietary firm the liability of the proprietor is limited
Correct Answer
False
Your Answer
False
True/False
Question
During the phase of depression, the level of national income and
expenditure rises rapidly
Correct Answer
False
Your Answer
False
True/False
Question
Demand for food grains is inelastic but the demand for wheat is
elastic.
Correct Answer
True
Your Answer
False
True/False
Question
The sum of total fixed costs and total variable costs is the total cost.
Correct Answer
True
Your Answer
True
True/False
Question
Contraction of supply is traced by the downward movement on the
supply curve.
Correct Answer
True
Your Answer
True
True/False
Question
The laws of returns to scale explain the behavior of output in response
to changes in scale.
Correct Answer
True
Your Answer
True
True/False
Question
In the stage I of the law of diminishing returns, the marginal product
goes on increasing
Correct Answer
True
Your Answer
False
True/False
Question
Inflation reduces the purchasing power of money and savings.
Correct Answer
True
Your Answer
False
True/False
Question
Micro-economics is primarily concerned with the problem of what, how
and for whom to produce
Correct Answer
True
Your Answer
True
True/False
Question
The price policy under monopolistic competition is dependent on the
prices charged by other rival firms
Correct Answer
True
Your Answer
False
True/False
Question
Private profit motive is an essential feature of Capitalism
Correct Answer
True
Your Answer
True
True/False
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
False
True/False
Question
Inflation is a great opportunity for merchants to benefit more.
Correct Answer
True
Your Answer
True
True/False
Question
The various phases of business cycles are shown by the line of cycle
which moves up and down the steady growth line
Correct Answer
True
Your Answer
True
True/False
Question
In the measurement of profit, the differences in the concept of profit
arise out of the differences in cost concepts
Correct Answer
True
Your Answer
False
True/False
Question
The opportunity cost of a product is the opportunity gained of being
able to produce some other product.
Correct Answer
False
Your Answer
False
True/False
Question
The supply curve in case of unitary elastic supply is rectangular
hyperbola.
Correct Answer
False
Your Answer
False
True/False
Question
Inflation reduces the purchasing power of money and savings.
Correct Answer
True
Your Answer
False
True/False
Question
Micro-economics is primarily concerned with the problem of what, how
and for whom to produce
Correct Answer
True
Your Answer
True
True/False
Question
The price policy under monopolistic competition is dependent on the
prices charged by other rival firms
Correct Answer
True
Your Answer
False
True/False
Question
Private profit motive is an essential feature of Capitalism
Correct Answer
True
Your Answer
True
True/False
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
False
True/False
Question
Inflation is a great opportunity for merchants to benefit more.
Correct Answer
True
Your Answer
True
True/False
Question
The various phases of business cycles are shown by the line of cycle
which moves up and down the steady growth line
Correct Answer
True
Your Answer
True
True/False
Question
In the measurement of profit, the differences in the concept of profit
arise out of the differences in cost concepts
Correct Answer
True
Your Answer
False
True/False
Question
The opportunity cost of a product is the opportunity gained of being
able to produce some other product.
Correct Answer
False
Your Answer
False
True/False
Question
The supply curve in case of unitary elastic supply is rectangular
hyperbola.
Correct Answer
False
Your Answer
False
True/False
Question
A monopolist in a price maker.
Correct Answer
True
Your Answer
True
True/False
Question
In case of indivisible goods, which are not priced, the decisions
regarding their demand preferences are taken through price
mechanism.
Correct Answer
False
Your Answer
True
True/False
Question
A shift in the demand curve to the left shows increase in demand.
Correct Answer
False
Your Answer
True
True/False
Question
Pure private goods are completely divisible and to them the principle
of exclusion applies in full measure.
Correct Answer
True
Your Answer
True
True/False
Question
External economies are the advantages of large scale production
enjoyed exclusively an individual firm alone.
Correct Answer
False
Your Answer
True
True/False
Question
Generally, the larger the income of a consumer, his demand for overall
commodities tends to be relatively elastic.
Correct Answer
False
Your Answer
False
True/False
Question
Supply management is related to the volume ofsupply & its distribution
system.
Correct Answer
True
Your Answer
True
True/False
Question
There are no real exceptions to the law of demand
Correct Answer
False
Your Answer
False
True/False
Question
The prosperity phase is characterized by rise in the level of
employment.
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
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
True/False
Question
A supply schedule is a graphical presentation of supply patterns.
Correct Answer
False
Your Answer
True
True/False
Question
The subject matter of macro – economics includes the theory of
income and employment at an individual level.
Correct Answer
False
Your Answer
False
True/False
Question
Inflation is a great opportunity for merchants to earn more profit.
Correct Answer
True
Your Answer
True
True/False
Question
A plant is an economic unit which takes various decisions related to
production and distribution.
Correct Answer
False
Your Answer
False
True/False
Question
In case of a Joint Stock Company the liability of the share holders is
unlimited.
Correct Answer
False
Your Answer
False
True/False
Question
Micro-economics is primarily concerned with the problem of what, how
and for whom to produce?
Correct Answer
False
Your Answer
True
True/False
Question
To solve the unemployment problem, the level of effective demand
must decrease.
Correct Answer
False
Your Answer
False
True/False
Question
During the period of recession there is increase in incomes of wage
and interest earners.
Correct Answer
False
Your Answer
False
True/False
Question When a firm's average revenue (A.R) is less than its average
cost, it earns only normal profit.
Correct Answer False
Your Answer True
True/False
Question The opportunity cost of a product is the opportunity gained
of being able to produce some other product.
Correct Answer False
Your Answer True
True/False
Question Giffen goods are superior goods.
Correct Answer False
Your Answer False
True/False
Question The distinction between fixed costs and variable costs is
relevant in the short period only.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
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 Memorandum of Association , Articles of Association ,
Prospectus
True/False
Question Demand and desire are one and the same.
Correct Answer False
Your Answer False
True/False
Question The demand curve has a negative slope.
Correct Answer True
Your Answer False
True/False
Question Price is the, only determinant of demand
Correct Answer False
Your Answer False
True/False
Question Measurement of profit becomes difficult because of the
difficulty involved in the calculation of depreciation.
Correct Answer True
Your Answer True
True/False
Question The rise in prices is basically because of shortages of
basic goods & services and a rapid growth of money supply.
Correct Answer True
Your Answer True
True/False
Question Profit should be large enough for a plough - back for
business expansion.
Correct Answer True
Your Answer True
True/False
Question The externalities that may be an economic gain or economic
losses to other economic units are referred to as technological
externalities.
Correct Answer False
Your Answer False
True/False
Question The congress government led by Narsimha Rao announced
the New Industrial Policy in July 1991.
Correct Answer True
Your Answer True
True/False
Question The defence services are indivisible in the sense that they
cannot be priced in the market in order to deprive some members of
the society from its use or benefits.
Correct Answer True
Your Answer True
True/False
Question In a free-enterprise economy, the problems of what how and
for whom are solved by a planning committee
Correct Answer False
Your Answer False
True/False
Question Accounting profit takes in to account opportunity cost.
Correct Answer False
Your Answer False
True/False
Question A Joint Stock Company is managed by the Board of Directors
elected by shareholders.
Correct Answer True
Your Answer True
True/False
Question A plant is an economic unit which takes various decisions
related to production and distribution.
Correct Answer False
Your Answer False
Implicit costs are the cost of resources owned by the firm. of resources
owned by the firm.
The difference between average total cost &average fixed cost shows
variable cost variable cost
The difference between average cost and average revenue is average
profit average profit
True/False
Question A supply schedule is a graphical presentation of supply
patterns.
Correct Answer False
Your Answer False
True/False
Question
In a market system of economy, there is no harmony between
individual interests and interests of the community.
Correct Answer
False
Your Answer
False
True/False
Question
Institution of private property is not an essential feature of Capitalism.
Correct Answer
False
Your Answer
False
True/False
Question
Inflation reduces the purchasing power of people's income and
savings.
Correct Answer
True
Your Answer
True
True/False
Question
In a free-enterprise economy, the problems of what how and for whom
are solved by a planning committee
Correct Answer
False
Your Answer
False
True/False
Question
Accounting profit takes in to account opportunity cost.
Correct Answer
False
Your Answer
True
True/False
Question
Demand for luxury goods is inelastic
Correct Answer
False
Your Answer
False
True/False
Question
The sum of total fixed costs and total variable costs is the total cost.
Correct Answer
True
Your Answer
True
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
Your Answer
True
True/False
Question
Market price fluctuates very often.
Correct Answer
True
Your Answer
True
True/False
Question Bargaining is one of the remedies of corrective action.
Correct Answer False
Your Answer True
Match The Following
Question Correct Answer Your Answer
Economic effects of public goods are Spill over effect Spill over effect
True/False
Question Accounting profit takes in to account opportunity cost.
Correct Answer False
Your Answer False
True/False
Question There are no real exceptions to the law of demand
Correct Answer False
Your Answer False
True/False
Question Demand curve slopes downwards from left to right.
Correct Answer True
Your Answer True
Normally the isoquant slopes upward from right to left. downward from
right to left
Any straight line supply curve which cuts y axis will have zero elasticity
of supply. perfectly elastic
True/False
Question A firm under perfect competition is a price maker.
Correct Answer False
Your Answer False
True/False
Question Under perfect competition single seller can influence the
price.
Correct Answer False
Your Answer False
True/False
Question Saving is a private virtue
Correct Answer True
Your Answer True
True/False
Question In general SBI uses its monetary policy to achieve a judicious
balance between the growth of production and control of the general
price level.
Correct Answer False
Your Answer False
True/False
Question Public enterprises have shown a very high rate of return of
the capital invested
Correct Answer False
Your Answer False
True/False
Question
The federal government of U.S.A. does not face the basic economic
problem.
Correct Answer
False
Your Answer
False
True/False
Question
Market price fluctuates very often
Correct Answer
True
Your Answer
False
True/False
Question
The divisible goods, whose benefits can be priced, are called pure
public goods
Correct Answer
False
Your Answer
True
True/False
Question
In case of a proprietary firm the liability of the proprietor is limited
Correct Answer
False
Your Answer
False
True/False
Question
During the phase of depression, the level of national income and
expenditure rises rapidly
Correct Answer
False
Your Answer
False
True/False
Question
Demand for food grains is inelastic but the demand for wheat is
elastic.
Correct Answer
True
Your Answer
False
True/False
Question
The sum of total fixed costs and total variable costs is the total cost.
Correct Answer
True
Your Answer
True
True/False
Question
Contraction of supply is traced by the downward movement on the
supply curve.
Correct Answer
True
Your Answer
True
True/False
Question
The laws of returns to scale explain the behavior of output in response
to changes in scale.
Correct Answer
True
Your Answer
True
True/False
Question
In the stage I of the law of diminishing returns, the marginal product
goes on increasing
Correct Answer
True
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 federal government of U.S.A. does not face the basic
economic problem.
Correct Answer False
Your Answer False
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 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 The wage and salary earners who get fixed income in terms
of money are benefited during inflation.
Correct Answer False
Your Answer False
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 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 The persons who own the ________hip concern are called
Partners.
Correct Answer Partners
Your Answer Partners
Variable cost can refer to operating costs alone. operating costs alone.
Question Variable cost are those costs which vary with the level of
Correct Answer output
Your Answer output
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 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 The act of using goods and services to satisfy wants is called
Correct Answer consumption
Your Answer consumption
Question Economists have pointed out that the real world is full of
Correct Answer Imperfect competition
Your Answer Monopolistic competition
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 The sum of total fixed costs and total variable costs is the
total cost.
Correct Answer True
Your Answer True
Question In case of a proprietory firm, the liability for all his debts is
Correct Answer unlimited
Your Answer unlimited
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
Your Answer True
True/False
Question A monopolist in a price maker.
Correct Answer True
Your Answer True
True/False
Question The financing of the pure public goods has to be through
public expenditure and not through market pricing.
Correct Answer True
Your Answer True
True/False
Question Giffen goods are superior goods.
Correct Answer False
Your Answer False
True/False
Question The question regarding the nature and quantities of
commodities to be produced is solely restricted to capitalist economies.
Correct Answer False
Your Answer False
Implicit costs are the cost of resources owned by the firm. of resources
owned by the firm.
True/False
Question During the period of depression, a large part of a country’s
resources lie involuntarily idle.
Correct Answer True
Your Answer True
True/False
Question The short run Average Cost (A.C.) curve is U shaped.
Correct Answer True
Your Answer True
True/False
Question Cyclical fluctuations are recurrent in nature
Correct Answer True
Your Answer True
True/False
Question Private profit motive is an essential feature of Capitalism.
Correct Answer True
Your Answer True
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
Your Answer False
True/False
Question The concept of economic profit differs from that of normal
profit.
Correct Answer False
Your Answer True
Select The Blank
Question Reasonable profit target as an alternative to the objective of
profit maximization was suggested by ________.
Correct Answer Joel Dean
Your Answer Joel Dean
True/False
Question Macro economic studies are based on empirical evidence.
Correct Answer True
Your Answer True
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
Your Answer True
True/False
Question Demand curve slopes upwards from left to right.
Correct Answer False
Your Answer False
True/False
Question Macro-economies is a policy oriented science.
Correct Answer True
Your Answer True
True/False
Question Social costs cannot be included in a firm's account book.
Correct Answer True
Your Answer False
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
Your 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
Your Answer Changes in the supply of capital , Changes in population ,
Changes in the techniques of production
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.
Your Answer increasing returns to scale.
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
Your Answer True
True/False
Question During inflation, the pensioners whose income is permanently
fixed, are substantially benefited.
Correct Answer False
Your Answer False
True/False
Question Generally, the larger the income of a consumer, his demand
for overall commodities tends to be relatively elastic.
Correct Answer False
Your Answer False
True/False
Question Supply management is related to the volume ofsupply & its
distribution system.
Correct Answer True
Your Answer True
True/False
Question Under the disinvestments process, there is full transfer of
ownership
Correct Answer True
Your Answer False
True/False
Question Contraction of supply is traced by the downward movement
on the supply curve
Correct Answer True
Your Answer True
True/False
Question To solve the unemployment problem , the level of effective
demand must decrease.
Correct Answer False
Your Answer False
True/False
Question Demand is related to price, time and place.
Correct Answer True
Your Answer False
True/False
Question During inflation, the pensioners whose income is permanently
fixed, are substantially benefited.
Correct Answer False
Your Answer True
True/False
Question When demand and supply rise and fall in the same
proportion, the equilibrium price changes.
Correct Answer False
Your Answer False
True/False
Question When a change in income has no effect upon the quantity
demanded of a product, the income elasticity of demand is zero
Correct Answer True
Your Answer True
True/False
Question Micro-economics is primarily concerned with the problem of
what, how and for whom to produce?
Correct Answer False
Your Answer True
True/False
Question During period of depression various factors of production lie
unutilized.
Correct Answer True
Your Answer True
True/False
Question In case of sole proprietorship the owner and organization are
same
Correct Answer True
Your Answer True
True/False
Question The short run Average Cost (A.C.) curve is U shaped.
Correct Answer True
Your Answer True
True/False
Question Demand for luxury goods is inelastic
Correct Answer False
Your Answer True
True/False
Question Market price fluctuates very often.
Correct Answer True
Your Answer True
True/False
Question Pure (Net) profit contains an element of monopoly profit.
Correct Answer False
Your Answer True
True/False
Question In case of indivisible goods, which are not priced, the
decisions regarding their demand preferences are taken through price
mechanism.
Correct Answer False
Your Answer True
True/False
Question A monopolist’s product is a unique product.
Correct Answer True
Your Answer True
True/False
Question The products sold by different sellers under pure competition
are heterogeneous.
Correct Answer False
Your Answer True
True/False
Question Supply management is related to the volume ofsupply & its
distribution system.
Correct Answer True
Your Answer True
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
Your Answer True
True/False
Question There are no real exceptions to the law of demand
Correct Answer False
Your Answer False
True/False
Question The divisible goods, whose benefits can be priced, are called
pure public goods.
Correct Answer False
Your Answer True
True/False
Question In the measurement of profit, the differences in the concept
of profit arise due to differences in cost concepts.
Correct Answer True
Your Answer True
True/False
Question Price discrimination is possible in perfect competition
Correct Answer False
Your Answer False
True/False
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
True/False
Question
Demand curve slopes upwards from left to right.
Correct Answer
False
Your Answer
False
True/False
Question
Demand is related to price, time and place.
Correct Answer
True
Your Answer
False
True/False
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
True/False
Question
There is no separation of ownership and management in case of a
Joint Stock Company.
Correct Answer
False
Your Answer
False
True/False
Question
Pure public goods must be in the hands of public sector only.
Correct Answer
True
Your Answer
True
True/False
Question
The short run Average Cost (A.C.) curve is U shaped.
Correct Answer
True
Your Answer
True
True/False
Question
In any business, while formulating a profit policy, the possibility of
emergence of rival firms must be taken into account.
Correct Answer
True
Your Answer
True
True/False
Question A firm under perfect competition is a price maker
Correct Answer False
True/False
Question When demand and supply rise and fall in the same
proportion, the equilibrium price changes.
Correct Answer False
True/False
Question Market means a particular area where buyers and sellers
meet
Correct Answer False
True/False
Question In case of a proprietary firm the liability of the
proprietor is limited
Correct Answer False
True/False
Question The subject matter of macro – economics includes the
theory of income and employment at an individual level
Correct Answer False
True/False
Question Accounting profit takes in to account opportunity cost.
Correct Answer False
True/False
Question According to Prof Knight, profit is the reward for
uncertainty bearing.
Correct Answer True
True/False
Question According to J.B. Clark, profit is the reward paid to the
entrepreneur for dynamism.
Correct Answer True
True/False
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
True/False
Question The laws of returns to scale explain the behavior of
output in response to changes in scale.
Correct Answer True
LIST OF
ATTEMPTED
QUESTIONS
AND
ANSWERS
Multiple Choice Single Answer
Question The externality in which the consumption or production levels of an
economic unit affect the other economic units in the economy is called :-
Correct Technological externality
Answer
Your Technological externality
Answer
True/False
Question Marginal Cost (M.C.) is the rate of change of fixed cost.
Correct False
Answer
Your False
Answer
True/False
Question The externalities or economic effects, which flow from the production or
use of the goods to other parties or economic units, are termed as
'neighborhood effects.'
Q5. Write notes on.
E. Fiscal Policy
Answer:
The ‘fiscal policy’ refers to the variations in taxation and public
expenditure programmes by the government to achieve the
predetermined objectives. Taxation is a measure of transferring funds
from the private purses to the public coffers: it amounts to withdrawal
of funds from the private use. Public expenditure, on the other hand,
increases the flow of funds into the private economy. Thus, taxation
reduces private disposable income and thereby the private
expenditure, end public expenditure increases private incomes and
thereby the private expenditure. Since tax-revenue and public
expenditure form the two sides of the government budget, the
taxation and public expenditure policies are also jointly called as
‘budgetary policy.’
F. Monetary Policy
Answer:
Monetary policy refers to the programme of The Central Bank’s
variations, in the total supply of money and cost of money to achieve
certain predetermined objectives. One of the primary objectives of
monetary policy is to achieve economic stability. The traditional
instruments through which Central Bank carries out the monetary
policies are: -
ASSUMPTIONS
1. The state of technology remains unchanged. If there is an any
improvement in technology, then marginal and average product may
rise instead of diminishing.
2. Alteration or variation in various factor proportion is done by
varying some inputs i.e. some inputs must be kept fixed. This law does
not apply when all factors are varied.
3. The law is also based on the assumption that there is a possibility of
varying the proportions in which the various factors can be combined
to produce a product. If factors were used in fixed proportion then the
increase in one factor would not lead to any increase in the output that
means the marginal product of a factor is zero.
There are three stages of law of variable proportion namely”
Stage of increasing returns where marginal productivity increases
Stage of decreasing returns where marginal productivity decreases
Stage of negative returns where marginal productivity becomes
negative.
Stage-I
Increasing returns:
In this stage, total product to a point increases at an increasing rate.
In the fig. From the origin to the point F, slope of the total TP is
increasing. I.e. Upto point F total product curve increases at an
increasing rate. The point F where the total product stops increasing at
an increasing rate and starts increasing at a diminishing rate is called
as the point of inflexion where corresponding vertically to this point of
inflexion marginal productivity is maximum. Upto the point F marginal
product MP rises. The average product curve rises through out the first
stage Upto the point S. It is notable that the marginal product in this
stage increases but in later part it starts declining but remains greater
than the average product so that the average product continues to
rise.
Stage-2
Stage of diminishing returns:
In this stage, the total product increases but at a stage both the
marginal product and the average product of the variable factor are
diminishing but are positive. At point M marginal product of the
variable factor is zero, which is corresponding to the highest point H of
the total product curve TP.
Stage-3
Stage of negative returns:
In this stage, the total product declines and therefore the TP curve
slopes downward. As a result, marginal product of a variable factor is
negative and the marginal product curve MP goes below X-axis.
Average product curve therefore declines. The stage is called the stage
of negative returns. Since the marginal product of the variable factor is
negative during this stage.
Diminishing returns: The peculiar features of this stage are that the
marginal product falls through out the stage and finally touches to
zero. Corresponding vertically is the point H, which is the highest point
of the TP curve. Where stage two ends.
The third stage is set in by hiring 3rd worker who adds only 3 pairs of
shoes per day as compared to 4v pairs per day added by the 2nd
worker. Total product increases but the gain from third worker is not
as great as gain from second worker. Once the point is reached at
which variable factor is sufficient to ensure full utilization of fixed
factor, then further increase in variable factor will cause MP as well as
AP to fall because fixed factor has not become inadequate relative to
the quantity of variable factors. In stage two-fixed factor is scarce as
compared to variable factor. According to Joe Robinson famous
economist, the factors of production are imperfect substitutes for on
another, the stage of diminishing returns occurs. Fixed factor is scarce
and variable factor is in abundance. If some factors are available that
are perfect substitutes of fixed factor then fixed factor would not have
remained scarce. The paucity of fixed could have been made up by
such perfect substitutes. If one of the variable factors added to the
fixed factor were perfect substitute deficiency of fixed could have been
made up but elasticity of substitute between factors is not infinite,
substitution is not possible and diminishing returns occur.
3. Negative returns: Under this stage, marginal product falls below “X”
axis i.e. negative because total product starts falling. In this example
this is set in by hiring 6th worker. The total product falls from 13 pairs
of shoes per week to 12 pairs of shoes per week. The large number of
variable factors impairs the efficiency of the fixed factor. The excessive
variable factor as compared to less fixed factor results in a fall of total
output. In such a situation, a reduction in the units of the variable
factor will increase the total output.
Answer
Definition of A Business or Trade Cycle
The five phases of a business cycle have been presented in the figure
below.
Since demand for inputs has decreased, input prices. E.g. wages,
interest etc. show a gradual decline leading to a simultaneous
decrease in the incomes of wage and interest earners, This ultimately
causes demand recession, Oil the other band, producers lower down
the price in order to get rid of their inventories and also to meet their
obligations. Consumers in their turn expect a further decrease in price
and hence postpone their purchases. As a result the discrepancy
between demand and supply continues to grow. When this process
gathers speed, it takes the form of irreversible recession. Investments
start declining, the decline in investment leads to decline in Income
and consumption. The process of reverse of (of negative) multiplier
gets underway. (The process is exactly reverse of expansion). When
investments are curtailed, production and employment decline
resulting in further decline in demand for both consumer and capital
goods. Borrowings for investment decreases; bank credit shrinks:
share prices decrease; unemployment gets generated along with a fall
in wage rates. At this stage, the process of recession is complete and
the economy enters the phase of depression.
4) The Recovery
As the recovery gathers momentum, some firms plan additional
investment, some undertake renovation programmes, some undertake
both. These activities generate construction activities in both consumer
and capital good sectors. Individuals who had postponed their plans to
construct houses undertake it now, lest cost of construction mounts
up. As a result, more and more reemployment is generated in the
construction sector, as employment increases despite wage rates
moving upward the total wage income increase at a rate higher than
employment rate. Wage income rises, so does the consumption
expenditure. Businessmen realize quick turn over and an increase in
profitability. Hence, they speed up the production machinery.
2. Production Function
Resources are scarce and also have alternative uses. Inputs play a
vital role in the economics of production. The factors of production,
otherwise called inputs, may be combined in a particular way to yield
the maximum output. Alternatively, when the price of inputs shoot up,
a firm is forced to work out a combination of inputs so as to ensure
that this combination becomes least cost combination.
3. Cost Analysis:
Determinants of cost. Methods of estimating costs, the relationship
between cost & output, the forecast of cost and profit-these are very
vital to a firm.
4. Inventory Management:
An inventory refers to stock of raw materials, which a firm keeps. Now
the problem is how much of the inventory is ideal stock. If it is high,
capital is unproductively feed up, which might, if the stock of inventory
is reduced, be used for other productive purposes. On the other hand,
if level of inventory is low, production will be hampered. Therefore,
managerial economics will use such methods as ABC analysis, a simple
simulation exercise and some mathematical models with a view to
minimize the inventory cost.
5. Advertising
Advertising is an area which managerial economics embraces. While
the copy, illustration. Etc. of an advertisement are the responsibility of
those who get it ready for the press, the problems of cost, The
methods of determining the total advertisement costs and budge, the
measuring of the economic effects of advertising-these are the
problems of the manager.
6. Price System
The central function of an enterprise is not only production but pricing
as well. While the cost of production has to be taken into account while
pricing a commodity, a complete knowledge of the price system is
quite essential to determination of price. Pricing is actually guided by
considerations of cost plus pricing and the policies of public
enterprises.
7. Resources Allocation:
Scarce resources obviously have alternate uses. The aim of course, is
to achieve optimization. For this purpose, some advanced tools, such
as linear programming are used to arrive at the best course of action
for a specified end.
8. Capital Budgeting:
Capital is scarce and it costs something. Now, the problem is how to
arrive at the cost of capita: how to ensure that capital becomes
rational: how to face Upto budgeting problems, how to ensure that
capital becomes rational; how to face Upto budgeting problems, how
to arrive at investment decisions under conditions of uncertainly; how
to effect a cost-benefit analysis etc. Any manager cannot ignore these
areas.
Q2. State and explain the law of demand. What are its exceptions?
Answer:
The law may be stated:”Other things being equal, the higher the price
of a commodity, the smaller is the quantity demanded and lower the
price, larger is the quantity demanded”. In other works, the demand
for a commodity expands as the price falls and contracts as the price
rises. Or briefly stated, the law of demand emphasizes that other
things remaining unchanged, demand varies inversely with price.
The conventional law of demand, however, relates to the much
simplified demand function:
D= f (P)
Where, D represents demand, P the price and f connotes a functional
relationship. It, however, assumes that other determinants of demand
are constant and only price is the variable and influencing factor. The
relation between price and quantity of demand is usually an inverse or
negative relation, indicating a larger quantity demanded at a lower
price and a smaller quantity demanded at a higher price.
The law of demand is usually referred to the market demand. The law
of demand can be illustrated with the help of a market demand
schedule, thus, as the price of commodity decreases, the
corresponding quantity demanded for that commodity increases and
vice-versa.
Price of Commodity X (in Rs.) per unit Quantity Demanded per week
5 10
4 20
3 30
2 40
1 50
________________________________________________________
______________
Y Demand Curve
OX
Quantity Demanded of X
3) Giften goods: Giften goods are special type of cheaper goods. Sir
Robert Fifteen found that in the 19th century Ireland the people were
so poor that they spent the major part of their income on potatoes & a
small part on meat. Potato was cheap but meal was dear. When the
price of potatoes rose, they had to economize on meat. To maintain
the earlier level of consumption or to fill the resulting gap in food
supply more potatoes had to be purchased. Thus, rise in the price of
potatoes led to increased sales of potatoes. This is known as Giften
effect. This effect is usually found in the case of cheap necessary
foodstuffs. Bajra can also be considered as Giften good to which the
law of demand does not apply.
True/False
Question
Inflation reduces the purchasing power of money and savings.
Correct Answer
True
Your Answer
False
True/False
Question
The price policy under monopolistic competition is dependent on the prices
charged by other rival firms
Correct Answer
True
Your Answer
False
True/False
Question
Private profit motive is an essential feature of Capitalism
Correct Answer
True
Your Answer
True
True/False
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
False
True/False
Question
Inflation is a great opportunity for merchants to benefit more.
Correct Answer
True
Your Answer
True
True/False
Question
The various phases of business cycles are shown by the line of cycle which moves
up and down the steady growth line
Correct Answer
True
Your Answer
True
True/False
Question
In the measurement of profit, the differences in the concept of profit arise out of
the differences in cost concepts
Correct Answer
True
Your Answer
False
True/False
Question
The opportunity cost of a product is the opportunity gained of being able to
produce some other product.
Correct Answer
False
Your Answer
False
True/False
Question
The supply curve in case of unitary elastic supply is rectangular hyperbola.
Correct Answer
False
Your Answer
False
True/False
Question Under perfect competition, price is determined by the interaction of
total demand and total supply in the market.
Correct Answer False
Your Answer True
True/False
Question Macro-economies is a policy oriented science.
Correct Answer True
Your Answer True
True/False
Question Under perfect competition,firms are free to enter and exit in the market.
Correct Answer True
Your Answer True
True/False
Question The congress government led by Narsimha Rao announced the New
Industrial Policy in July 1991.
Correct Answer True
Your Answer True
True/False
Question The distinction between fixed costs and variable costs is relevant in the
short period only.
Correct Answer True
Your Answer True
True/False
Question The sum of total fixed costs and total variable costs is the total cost.
Correct Answer True
Your Answer True
True/False
Question
Inflation reduces the purchasing power of money and savings.
Correct Answer
True
Your Answer
False
True/False
Question
Micro-economics is primarily concerned with the problem of what, how and for
whom to produce
Correct Answer
True
Your Answer
True
True/False
Question
The price policy under monopolistic competition is dependent on the prices
charged by other rival firms
Correct Answer
True
Your Answer
False
True/False
Question
Private profit motive is an essential feature of Capitalism
Correct Answer
True
Your Answer
True
True/False
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
False
True/False
Question
Inflation is a great opportunity for merchants to benefit more.
Correct Answer
True
Your Answer
True
True/False
Question
The various phases of business cycles are shown by the line of cycle which moves
up and down the steady growth line
Correct Answer
True
Your Answer
True
True/False
Question
In the measurement of profit, the differences in the concept of profit arise out of
the differences in cost concepts
Correct Answer
True
Your Answer
False
True/False
Question
The opportunity cost of a product is the opportunity gained of being able to
produce some other product.
Correct Answer
False
Your Answer
False
True/False
Question
The supply curve in case of unitary elastic supply is rectangular hyperbola.
Correct Answer
False
Your Answer
False
True/False
Question Under perfect competition, price is determined by the interaction of
total demand and total supply in the market.
Correct Answer False
Your Answer True
True/False
Question Macro-economies is a policy oriented science.
Correct Answer True
Your Answer True
True/False
Question The Keynesian theory emphasizes effective supply as a crucial factor in
determining the level of income and employment.
Correct Answer False
Your Answer False
True/False
Question The congress government led by Narsimha Rao announced the New
Industrial Policy in July 1991.
Correct Answer True
Your Answer True
True/False
Question The distinction between fixed costs and variable costs is relevant in the
short period only.
Correct Answer True
Your Answer True
True/False
Question The sum of total fixed costs and total variable costs is the total cost.
Correct Answer True
Your Answer True