ECONOMICS 1st REVISION TEST PAPER

FULL MARKS 1*30=30 (DEMAND) TIME ALLOWED 1 HR

1. If the price of coffee falls by 8% and the demand for Tea decline by 2%. The C.P.E of

demand for tea is: a) 0.45 b) 0.25 c) 0.44 d) -0.30.

2. Which of the following is not a type of Elasticity in economics?

a) Income Elasticity b) Price Elasticity c) Utility Elasticity d) Cross Elasticity.

3. Elasticity of demand is a _____ statement.

a)Qualitative b) Quantitative c) both d) none.

4. When price rises, real income falls, ceteris paribus. This is known as :-

a) income effect b) price effect c) substitution effect d) both (a)&(b).

5. At consumer’s equilibrium, consumer surplus is :- a) 0 b) 1 c) infinity d)>1

6. Identify the elasticity – price rises and T.E also rises.

a) >1 b) <1 c) =0 d) =1.

7. If I.C is ‘L’ shaped it indicates goods are :-

a) Perfect substitutes b) Perfect compliments c) Not related d) both (a)&(b).

8. For luxury goods income elasticity is :-

a)>1 b) <1 c) =0 d) =1.

9. Suppose the price of movies seen at a theatre rises from Rs.120 per person to Rs.200 per

a) Person. The theatre manager observes that the rise in price leads to a fall in attendance

at a given movie from 300 to 200 persons, what is then price elasticity of demand for

movies? a) .5 b) .8 c) 1.0 d) 1.2.(Use ARC elasticity)

10. Movement along the same demand curve shows :-

a) Expansion of demand b) Expansion of supply c) Expansion & contraction of demand d)

Increase & decrease of demand .

11. For a commodity with a unitary elastic demand curve if the price of the commodity rises,

then the consumers total expenditure on this commodity would be :-

a) Increase d) Decrease c) Remains constant d) Either increase or decrease.

12. Demand of a commodity depends upon:-

a) Price b) Income c) Price of related good d) All the above.

13. What is the original price of a commodity when price elasticity is 0.71 and demand?

Changes from 20units to 15 units and the new price is Rs.10.

a) Rs.15.4 b) Rs.18 c) Rs.20 c) Rs.8.

14. Demand for electricity power is inelastic be cause__a) It is available at a very high price b)

It is essential for life c) It has many uses d) It has no substitutes.

15. Total utility is maximum when:-

a) Marginal utility is maximum b) Marginal utility is zero c) Average utility is

maximum d) Average utility is zero.

16. An indifference curve is always:-

a) Concave to the origin b) Convex to the origin c) L-shaped d) A vertical straight line.

17. At equilibrium the slope of the indifference curve is:-

a) Equal to the slope of budget line b) Greater than the slop of budget line

c) Smaller than the slope of budget line d) none.

18. Indifference curves are:-

a) Concave b) Convex to the origin c) neither ‘a’ or ‘b’ d) None.

19. A consumer buys two commodities X and Y, he would be in equilibrium when,

a) MU x = MUy b) Mux = MUm c) Mux =- MUy d) Px = MUm

Px Py MUy Px Px Py

20. The substitution effect of fall in the price of the commodity will lead to :-

a) Upward movement in indifference curve b)Downward movement in indifference curve

c) Movement from lower I.C to a higher one d) None.

21 Given the following four possibilities, which one results in an increase in total consumer

expenditure? A) Demand is unitary elastic and price falls. B) Demand is elastic and price rises.

C) Demand is inelastic and price falls. D) Demand is inelastic and prices rises.

22 The price elasticity of demand is defined as the responsiveness of: A) Price to a change in

quantity demanded. B) Quantity demanded to a change in price. C) Price to a change in

income. D) Quantity demanded to a change in income.

23 In the case of an inferior good, the income elasticity of demand is:- a) Positive, b) Zero, c)

Negative, d) Infinite.

24 If the demand for a good is inelastic, an increase in its price will cause the total expenditure of

the consumers of the good to: a) Remain the same, b) Increase, c) Decrease, d) Any of these.

25 Suppose the price of Pepsi increases, we will expect the demand curve of Coca Cola to:- a)

Shift toward left, b) Shift toward right, c) Initially shift towards left and then to right, d)

Remain at the same level.

26) All the following are determinants of demand except:- a) Tastes and Preferences, b) Quantity

supplied, c) Income, d) Price of related goods.

27 A movement along the demand curve for soft drinks is best described as:- a) An increase in

demand, b) A decrease in demand, c) A change in quantity demanded, d) A change in

demand.

28 If the price of Pepsi decreases relative to the price of Coke and 7 UP, the demand for:- a)Coke

will decrease, b) 7 UP will decrease, c) Coke and 7 UP will increase, d) Coke and 7 UP

decrease.

29 If a good is a luxury, its income elasticity of demand is:- a) Positive and less than 1 b) Negative

but greater than -1, c) Positive and greater than 1, d) Zero.

30 Demand for a commodity refers to:- a) Desire for the commodity, b) Need for the commodity,

c) Quantity demanded of that commodity, d) Quantity of the commodity demanded at a

certain price during any particular period of time.

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TOTAL MARKS 1*50 =50 TIME ALLOWED 1 Hr

Q.1 The output and cost pattern of a product are given below:-

Output (Q) 0 1 2 3 4 5

Total in Rs cost (TC) 35 42 53 68 75 88

From the above details what is the fixed cost or sunk cost

a) Rs 25, b) Rs 17.5, c) Rs 22, d) Rs 35

Q.2 In Q No. 1 the marginal cost of producing 2nd unit is:- a) Rs 17.5, b) Rs 11, c) Rs 14, d) Rs 16

Q.3 In Q No. 1 the AFC of producing 3 units is:- a) Rs 17.5, b) Rs 15, c) Rs 10, d) Rs 11.67

Q.4 In Q no. 1 the ATC of producing 3 units is:- a) Rs 14.5, b) Rs 15.5, c) Rs 13, d) Rs 22.67

Q.5 Which of the following cannot be U shaped curve: a) AFC curve, b) AC curve, c) AVC curve, d) AMC

curve.

Q.6 In the short run which of the following is fixed: a) Labour, b) Capital, c) Raw material, d) None

Q.7 Select the odd one: a) Price of the product, b) Cost of production, c) No. of suppliers, d) Taxes.

Q.8 IRS can be explained in terms of:- a) External and internal economics, b) External & internal

Diseconomies, c) External economics & internal diseconomies, d) All of these.

Q.9 At the point of inflexion, the M.P. is:- a) Increasing, b) Decreasing, c) Maximum, d) Negative.

Q.10 If the M.P. of labour is below the A.P. of labour, it must be true that:- a) M.P. of labour is negative,

b) M.P, of labour is zero, c) A.P. of labour is falling, d) A.P. of labour is negative.

Q.11 Consider the following combination of input & output: This production technology satisfies:

Labour:- 5 6 7 8 9 10

Capital:- 10 12 14 16 18 20

Output:- 1 2 3 4 5 6

a) IRS, b) DRS, c) CRS, d) IRS initially following by DRS

Q.12 During 11 stage of law of diminishing returns:- a) MP & TP is maximum, b) MP and AP are

decreasing, c) AP is negative, d) TP is negative.

Q.13 At 10 units >Total cost > 200, 20 units: Total cost Rs 600 M.C.=?

a) 50, b) 40, c) 30, d) 400.

Q.14 Average fixed cost= Rs 20, quantity produced= 10 units, what will be the average Fixed cost of

20th unit=? A) Rs 10, b) Rs 20, c) Rs 5 d) None

Q.15 What is the production in economies:- a) Creation addition of utility, b) Production of food grains,

c) Creation of services, d) Manufacturing of goods

Q.16 If a firm's output is Zero, then:- a) AFC will be positive, b) AVC will be 0, c) Both A & B, d) None of A

& B.

Q.17 What will be the TP, when 2 ;labors are hired according to the table given below:-

No. of Labors:- 0 1 2

Total production:- - 350 -

Marginal product:- - 350 230

Q.18 Which function shows relationship between input & output? A) Consumption function, b)

Investment function, c) Production function, d) Cost function

Q.19 Opportunity cost is :- a) Direct cost, 5) Total cost, c) Accounting cost, d) Cost of foregone

opportunity.

Q.20 AFC curve is: a) Convex & downward sloping, h) Concave & downward sloping, c) Convex & upward

sloping, d) Concave & upward rising.

Q.21 U-shaped average cost curve is based on:- a) Law of increasing cost, b) Law of decreasing cost, c)

Law of constant returns to scale, d) Law of variable proportion.

Q.22 Suppose the total cost of production of commodity X is Rs 1,25,000 out of this cost implicit cost is

Rs 35,000 & normal profit is Rs 25,000. What will be the explicit cost of commodity X=? a) Rs 90,000 b)

Rs 65,000, c) Rs 60,000, d) Rs 1,00,000.

Q.23 Long run does not have:- a) Average cost, b) total cost, c) Fixed cost, d) Variable cost.

Q.24 TC7 = Rs 500, TC8= Rs 600. Find M.C8:- a) 500, b) 200, c) 100, d) 50.

Q.25 The total cost of 7 unit is Rs 700. V.C. is Rs 300. Find out the AFC of producing 2" unit of output.

a) 400, b) 200, c) 100, d) 150

Q.26 Which of the following statements is correct? (a) When the average cost is rising, the marginal

cost must also be rising. (b) When the average cost is rising, the marginal cost must be falling. (c) When

the average cost is rising, the marginal cost is above the average cost. (d) When the average cost is

falling, the marginal cost must be rising,

Q.27 Which of the following is an example of "explicit cost"? (a) The wages a proprietor could have

made by working as an employee of a Large firm. (b) The income that could have been earned in

alternative uses by the resources owned by the firm. (c) The payment of wages by the firm. (d) The

normal profit earned by a firm,

Q 28. Which of the following is an example of an "implicit cost"? (a) Interest that could have been

earned on retained earnings used by the firm to finance expansion, (b) The payment of rent by the firm

for the building in which it is housed. (c) The interest payment made by the firm for funds borrowed

from a bank. (d) The payment of wages by the firm.

Use the following data to answer questions 29-31.

Output (0) 0 1 2 3 4 5 6

Total Cost (TC) : Rs. 240 Rs. 330 Rs. 410 Rs. 480 Rs. 540 Rs. 610 Rs. 690

Q.29. The average fixed cost of 2 units of output is : (a) Rs. 80 (b) Rs. 85 (c) Rs. 120 (d) Rs. 205

Q.30 The marginal cost of the sixth unit of output is : (a) Rs. 133 (b) Rs. 75 (c) Rs. 80 (d) Rs. 450

Q.31 Diminishing marginal returns start to occur between units : (a) 2 and 1 (b) 3 and 4. (c) 4 and 5. (d) 5

and 6.

Q.32. Marginal cost s defined as : (a) the change in total cost due to a one unit change in output. (b)

total cost divided by output. (c) the change in output due to a one unit change in an input. (d) total

product divided by the quantity of input.

Q.33. Which of the following is true of the relationship between the marginal cost function and the

average cost function? (a) If MC is greater than ATC, then ATC is falling. (b) The ATC curve intersects the

MC curve at minimum MC. (c) The MC curve intersects the ATC curve at minimum ATC. (d) If MC is less

than ATC, then ATC is increasing.

Q.34. Which of the following statements is true of the relationship among the average cost functions?

(a) ATC = AFC — AVC. (b) AVC = AFC + ATC. .(c) AFC = ATC + AVC. (d) AFC = ATC — AVC.

Q.35. Which of the following is not a determinant of the firm's cost function? (a) The production

function. (b) The price of labour. (c) Taxes. (d) The price of the firm's output.

Q.36. Which of the following statements is correct concerning the relationships among the firm's cost

functions? (a) TC = TFC — TVC, (b) TVC = TFC — TC. (c) TFC = TC — TVC. (d) TC = TVC — TFC.

Q.37. Suppose output increases in the short run. Total cost will (a) increase due to an increase in fixed

costs only. (b) increase due to an increase in variable costs only. (c) increase due to an increase in both

fixed and variable costs. (d) decrease if the firm is in the region of diminishing returns,

Q.38. Which of the following statements concerning the long-run average cost curve is false?

(a) It represents the least-cost input combination for producing each level of output. (b) It is derived

from a series of short-run average cost curves. (c) The short-run cost curve at the minimum point of the

long-run average cost curve represents the least—cost plant size for all levels of output. (d) As output

increases, the amount of capital employed by the firm increases along the curve.

Q.39. The negatively-sloped (i.e. falling) part of the long-run average total cost curve is due to which of

the following? (a) Diseconomies of scale. (b) Diminishing returns. (c) The difficulties encountered in

coordinating the many activities of a large firm. (d) The increase in productivity that results from

specialization.

Q.40. The positively sloped (i.e. rising) part of the long run average total cost curve is due to which of the

following? (a) Diseconomies of scale. (b) Increasing returns. (c) The firm being able to take advantage of

large-scale production techniques as it expands its output. (d) The increase in productivity that results

from specialization

Q.41. A firm's average total cost is Rs. 300 at 5 units of output and Rs. 320 at 6 units of output. The

marginal cost of producing the 6th unit is : (a) Rs. 20 (b) Rs. 120 (c) Rs. 320 (d) Rs. 420

Q.42. A firm producing 7 units of output has an average total cost of Rs. 150 and has to pay Rs. 350 to its

fixed factors of production whether it produces or not. How much of the average total cost is made up

of variable costs? (a) Rs. 200 (b) Rs. 50 (c) Rs. 300 (d) Rs. 100

Q.43. A firm has a variable cost of Rs. 1000 at 5 units of output. If fixed costs are Rs. 400, what will be

the average total cost at 5 units of output? (a) Rs. 280 (b) Rs. 60 (c) Rs. 120 (d) Rs. 1400

Q.44. A firm's average fixed cost is Rs. 20 at 6 units of output. What will it be at 4 units of output? (a) Rs.

60 (b) Rs, 30 (c) Rs. 40 (d) Rs. 20

Q.45. Which of the following statements is true? (a) The services of a doctor are considered production.

(b) Man can create matter. (c) The services of a housewife are considered production. (d) When a man

creates a table, he creates matter.

Q.46. Which of the following is a function of an entrepreneur? (a) Initiating a business enterprise. (b)

Risk bearing. (c) Innovating. (d) All of the above

Q.47. In describing a given production technology, the short run is best described as lasting: (a) up to six

months from now. (b) up to five years from now. (c) as long as all inputs are fixed. (d) as long as at least

one input is fixed.

Q.48. If decreasing returns to scale are present, then if all inputs are increased by 10% then: (a) output

will also decrease by 10%. (b) output will increase by 10%. (c) output will increase by less than 10%. (d)

output will increase by more than 10%.

Q.49 The production function is a relationship between a given combination of inputs and:

(a) another combination that yields the same output. (b) the highest resulting output. (c) the

increase in output generated by one-unit increase in one output. (d) all levels of output that can be

generated by those inputs.

Q.50. If the marginal product of labour is below the average product of labour, it must be true that: (a)

the marginal product of labour is negative. (b) the marginal product of labour is zero. (c) the average

product of labour is falling. (d) the average product of labour is negative.

CA, CS DIVYA AGARWAL

9830741471

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MICRO ECONOMIC TEST PAPER

TIME ALLOWED 1 HR 1. ‘Economics is a Science which deals with wealth' was referred by (a) Alfred Marshal (b) J.B. Say (c) Adam Smith (d) AC. Pigou.

2. Exploitation and inequality are minimal under: (a) Socialism (b) Capitalism (c) Mixed economy (d) None of the above

3. Which of the fallowing is a cause of an economic problem? (a) Scarcity of Resources (b) Unlimited wants (c) Alternative uses

(d) All of the above.

4. The law of Scarcity (a) Does not apply to rich, developed countries (b) Does not apply to poor, under developed countries (c)

Implies only to socialist economies (d) Implies that all consumer wants will never be completely satisfied.

5. Which of the following in not within the Scope of Business Economics? (a) Capital Budgeting (b) Accounting Standards (c)

Business Cycles (d) Risk Analysis

6. Ina perfectly competitive firm MC curve above AVC is the ___ Curve of the firm (a) Average cost (b) Marginal revenue (c)

Demand (d) Supply

7. In the long run, normal profits are included in the___ curve. (a) LAC (b) LMC (c) AFC (d) SAC

8. Which is not the assumption of Indifference curve Analysis? (a) The consumer is rational and possesses full information

about all the aspects of economic environment (b) The consumer is not capable of ranking all combinations (c) If consumer

prefers combination A to B and B to C, then he must prefer combination A to C (d) If combination A has more commodities

than combination B, then A must be preferred to B.

9. Indicate which of the following is a variable cost? (a) Payment of rent on building (b) Cost of machinery (c) Interest payment

on Loan taken from bank (d) Cost of raw material

10. In case of necessaries the marginal utilities of the earlier units are large. In such cases the consumer surplus will be: (a)

Infinite (b) zero (c) Marginally positive (d) Marginally Negative

11. Price discrimination is not possible (a) Under Monopoly (b) Under Monopolistic competition (c) Under perfect competition

(d) Under any market firm

12. Calculate Income-elasticity for a household when the income of this household rises by 5% and the demand for buttons

does not change at all. (a) Infinity (b) 1 (c) 5 (d) Zero

13. If the goods are perfect substitutes for each other then cross elasticity is (a) Infinite (b) One (c) Zero (d) None of the above

14. A firm encounters its shut down point when: (a) Average total cost equals price at the profit maximizing level of output (b)

Average variable cost equals price at the profit maximizing level of output (c) Average fixed cost equals price at the profit

maximizing level of output (d) Marginal cost equals price at the profit maximizing level of output

15. In which form of the market structure is the degree of control over the price of its product by a firm is very large? (a)

imperfect competition (b) Monopoly (c) Oligopoly (d) Perfect competition

16. Which of the following means an Economic activity? (a) Production of Goods (b) Production of services (c) Consumption of

Goods and Services (d) All of the above

17. The income of a household rises by 20 per cent, the demand for computer rises by 50%, this means computer is a/ an: (a)

Inferior good (b) Luxury good (c) Necessity (d) None of the above

18. The marginal product of a variable input is best described as: (a) Total product divided by the number of units of variable

input (b) The additional output resulting from a one unit increase in the variable input (c) The additional output resulting from

a one unit increase in both the variable and fixed inputs (d) None of the move

19. When we study why saving rates are high or low, we are studying : (a) Macro Economics (b) micro enomics (c)

Econometrics (d) Both (a) and (b)

20. Which of the fallowing statements is false with respect to Business Cycles: (a) They occur periodically. (b) They generally

originate in free market economies. (c) They are international in character. (d) They do not affect capitalist economies.

21. If the price of Banana rises from ' 30 per dozen to ' 40 per dozen and the supply increases from 240 dozen to 300 dozens

elasticity of supply is: (use arc elasticity Method) (a) .7 (b) -.67 (c) .65 (d) .77

22. If as a result of 90 per cent increase in all inputs, the outputs increase by 75 per cent this is a case of (a) Increasing return

of a factor (b) Decreasing return of a factor (c) Diminishing returns to scale (d) None of the above

23. If distribution of income is more equal, then the propensity to consumer of the country is (a) Relatively High (b) Relatively

Low (c) Unaffected (d) None of the above

24. During 1920s, UK saw rapid growth in GDP, production levels and living standards. The economic growth also caused an

unprecedented rise in stock market values. This is an example of: (a) Boom (b) Recession (c) Contraction (d) Trough

25. If demand for a good is elastic, an increase in its price will cause total expenditure of the consumer of the good to:

(a) Increase (b) Decrease (c) Remain the same (d) None of the above.

26. If a good is priced at ' 180 p. u. and its price is increased to ' 240 p. u. Now suppose quantity demanded previously was 100

units and as a result of price increase, the quantity demanded fell to 80 units. \Mat is the price elasticity? (use mid Point

method) (a) .777 (b) 1.4 (c) 1 (d) .8

Use the following table to answers questions 27-28

Hour of labour Total output Marginal Product

0 0 0

1 300 300

2 - 240

3 720 -

27. What is the total output when 2 hours of labour are employed? (a) 160 (b) 200 (c) 360 (d) 540

28. What is the marginal product of the third hour of labour? (a) 120 (b) 160 (c) 200 (d) 180.

29. Which of the following statements if false? (a) An indifference cure is concave to the origin (b) An indifference cure is

convex to the origin (c) A higher indifference curve is better than a lower indifferent curve (d) An indifference curve is a curve

Which represents all those combinations of two goods which give same satisfaction to the consumer.

30. Identify the factor which generally keeps the price-elasticity of a den-and for a good high. (a) its very high price (b) Its very

low price (c) Large number of substitutes (d) None of the above

31. Assume that when price is ' 40 quantity demanded is 9 units, and when price is 38, quantity demanded is 10 units. Based

on this information, What is the marginal revenue resulting from an increase in output from 9 units to 10 units (a) 20 (b) 40 (c)

38 (d) 1

32. Suppose that an owner is earning total revenue of 1,00,000 and is increasing explicit cost of 60,000' if the owner could

work for another company for ' 30,000 a year, we would conclude that: (a) The firm is earning economic profit or 10,000 (b)

The firm is earning accounting profit or ' 40,000 (c) The firm is earning economic profit of 40,000 (d) Both (a) and (b)

33. A monopolist is able to maximize his profit when: a) His output is maximum; b) He charges a higher price; c) His average

cost is minimum; d) His marginal cost is equal to marginal revenue.

34.Law of minimizing marginal utility may not apply to:- a) Money; b) Butter; c) Pepsi, Coke etc.; d) Ice Cream.

35. If the local-cream shop raises the price of a ice cream cup from 10 per cup to 15 per alp, and quantity demanded fails from

500 cups per day to 300 cups per day, the price elasticity of demand for ice-ream cup is: use ARC elasticity method) (a) 1 (b)

2.5 (c) 2 (d) 1.25

36. Suppose the short run cost function be written as TC =250+10Q. Average Fixed cost equals: (a) 250/Q (b) 250 (c) 10 (d)

250/Q+10

37. Gopal inherited 1 acre of land from his father in 1960. Today the value of that land is 90 lakh per acre. What is the

opportunity cost of Gopal for keeping that land? His father paid ' 50,000 for this land. (a) Nothing, since the and was inherited

(b) ' 50,000 Which his father paid (c) ' 90 lakh, since the amount Gopal is getting now if he sells it (d) Both (b) and (c)

38. Suraj is a high school senior thinking about becoming an economic research assistant. Shyam just graduated from college

with an economic degree and is looking for a job as an economic research assistant. For Whom is the college tuition an

opportunity cost? (a) Suraj (b) Shyam (c) Both Suraj and Shyam (d) Suraj nor Shyam

39. Kinked demand curve in oligopoly market explains: (a) Price and output determination (b) Existence of very few firms in

the market (c) Price rigidity (d) Price leadership

40. Shares traded in the stock market depict characteristics dose to (a) Perfect competition (b) Oligopoly (c) Monopolistic

Competition (d) monopoly

41. Consider the following and decide Which, if any, economy is without scarcity: (a) The pre-independence Indian economy.

Where most people were farmers, (b) A mythical economy where everybody is a billionaire. (c) Any economy Where income is

distributed equally among its people. (d) None of the above.

42. When the price of a substitute of X commodity falls, the demand for X (a) Rises (b) Falls (c) Remains unchanged (d) Any of

the above.

43. At the point of inflexion, the marginal product is (a) Increasing (b) Decreasing (c) Maximum (d) Negative

44. Who expressed the view that fluctuations in investments are the prime cause of business cycles? (a) Hawtrey (b) Pigou (c)

Schumpeter (d) Keynes

45. When______ , we know that the firms must be producing at the minimun point of the average cost curve and so there will

be productive efficiency (a) AC = AR (b) MC = AC (c) MC = MR (d) AR = MR

46. Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is

considering raising prices, it can expect a relatively: (a) Large fall in quantity demanded (b) large fail in demand (c) small fall in

quantity demanded (d) small fall in demand

47. According to Schumpeter (a) Trade cycle is purely monetary phenomenon. (b) Trade cycles occur as a result of innovations

which take place in system (c) Trade cycles result clue to faulty business decisions of USA (d) None of the above.

48. Wien the perfectly competitive firm and industry are in long run equilibrium then: (a) P = MR = SAC = LAC (b) D = MR =

SMC =LMC (c) P =MR= lowest point on the LAC curve (d) All of the above

49. Giffen goods are those goods (a) For which demand increases as price increases (b) That have a high income elasticity of

demand (c) That are in short supply (d) None of these

50. in the long run any firm will eventually leave the industry if: (a) Price does not at least over average total cost. (b) Price

does not equal marginal cost(c) Economies of scale are being reaped. (d) Price is greater than long run average cost.

51. You are given the following data:

Table

OUTPUT TOTAL COST

0 0

1 15

2 30

3 45

4 60

5 75

The above data is an example of: (a) Constant returns to scale. (b) Decreasing returns to scale (c) Increasing returns to scale (d)

Globalization

The following Table provides cost and price information for a firm called Comfy Cushions (CC). The firm produces and sells

cushions using a fixed arrant of capital equipment but can change the level of inputs such a labour and materials. Read the

Table and answer questions 52-58

PRODUCTION.

(Q)

PRICE PER

UNIT (P)

Total Cost

(TC)

Average Total

Cost ( ATC)

Marginal Cost

( MC)

Total Revenue

(TR)

Marginal

Revenue (MR)

0 250 500

1 240 730

2 230 870

3 220 950

4 210 1010

5 200 1090

6 190 1230

7 180 1470

8 170 1850

9 160 2410

52. What is the value of fixed cost incurred by CC? (a) 252 (b) ' 730 (c)500 (d) cannot be determined

53. What is the average total cost When 5 units are produced? (a) ' 218 (b) ' 1090 (c) 730 (d) ' 210

54. What is the marginal revenue (per unit) when production increase from 7 units to 8 units? (a) 160 (b) 140 (c) 120 (d) 100

55. What is the marginal cost when production increase from 3 to 4 units? (a) 140 (b) 80 (c) 60 (d) 240

56. To maximize its profit or minimize its loss, what level of production should CC choose? (a) 7 units (b) 6 units (c) 4 units (d) 8

units

57, At the profit maximize level, what price should be charged? (a) 190 (b) 200 (C) 210 (d) 220

58. Calculate CC's maximum profit or minimum loss. (a) Loss of 100 (b) Loss of ' 60 (c) Profit of 90, (d) Loss of ' 90

59. A significant decline in general economic activity extending over a period of time is (a) Business cycle (b) contraction phase

(c) Recession (d) Recovery

60. Economic recession shares all of these features except (a) Fall in the level of investment, employment (b) Incomes of wage

and interest eamers gradually decline resulting in decreased demand for goods and services (c) Investor confidence is

adversely affected and new investments may not be forth coming (d) Increase in the price of inputs due to increase in demand

for inputs.

CA CS DIVYA AGARWAL

9830741471

GENERAL ECONOMICS TEST

TOTAL MARKS 1*50= 50 MARKS TIME ALLOWED 1.30 HRS

1. An example of normative economic analysis would be (a) an analysis of the

relationship between the price of the food and the quantity purchased (b)

determining how much income is generated (c) determining the price of footwear

produced by Bata (d) deciding how to distribute the output of the economy

2. Which of the following illustrates an increase in unemployment using the PPF? (a) A

movement down along the PPF (b) A rightward shift of the PPF (c) A movement from a

point on the PPF to a point inside the PPF (d) A movement from a point inside the PPF

to a point on the PPF

3. Suppose the price of movies seen at a theater rises from Rs 100 per person to Rs 200

per person The theater manager observes that the rise in price causes attendance at a

given movie to fall from 300 persons to 200 persons What is the price elasticity of

demand for movies? (a) 0.6 (b) 0.8 (c) 1.0 (d) 1.2

4. Point elasticity is not useful for which of the following situations? (a) The producer of

personal computers is considering increasing the price of computers from Rs 40000 to

Rs 40050 (b) A restaurant is considering lowering the price of its most expensive

dishes by 50% (c) An auto producer is interested in determining the response of

consumers to the price of cars being lowered by Rs 100 (d) None of the above

5. The quantity purchased falls with increase in income This is known as (a) negative

income elasticity of demand (b) income elasticity of demand less than one (c) zero

income elasticity of demand (d) income elasticity of demand is greater than one

6. If price of computers increases by 10% and supply increases by 5% The elasticity of

supply is (a) 2.0 (b) 0.5 (c) (-) 0.5 (d) (-) 2.0

7. The price of fresh peas increases and people buy frozen peas You infer that fresh peas

and frozen peas are (a) normal goods (b) complements (c) substitutes (d) inferior

goods.

8. Find Average Variable Cost of 3 units from the following data

Output (units): 0 1 2 3 4 5 6

Total Cost (Rs_) 120 165 204 240 270 305 345

(a) Rs 80 (b) Rs 40 (c) Rs 37 (d) Rs 29

9. The supply function is given as Q= -200 + 5P Find the elasticity using point method,

when price is Rs. 100 (a) 1.66 (b) -1.66 (c) -5 (d) 3

10. The short run, as economists use the phrase, is characterized by (a) at least one fixed

factor of production and firms neither leaving nor entering the industry (b) a period

where the law of diminishing returns does not hold (c) no variable inputs — that is all

of the factors of production are fixed (d) all inputs being variable

11. Which of the following curve is never U shaped? A) Average cost curve, b) Average

variable cost curve, c) Average fixed cost curve, d) Marginal cost curve.

12. Which one of the following is not a variable cost? A) cost of wood in production of

chairs. B) Cost of labour, C) Cost of nails in the production of chairs, D) Payment of

rent on building.

13. Use the following data to answer to following question 113-114

Output (O) 0 1 2 3 4 5 6

Total Cost (TC) Rs 240 330 410 480 540 610 690

The average fixed cost of 3 units output is: a) Rs 80, b) Rs 85, c) Rs 120, d) Rs 205

14. The marginal cost of the fifth unit of output is:- a) Rs 133, b) Rs 70, c) Rs 80, d) 450

GENERAL ECONOMICS TEST

15. Which one of the following could explain an upward movement on the supply curve

for a good? A) The imposition of tax on the good, b) A new supplier entering the

market, c) A rise in firms wage costs, d) A rise in the price of the good.

16. A firm has a variable cost of Rs 100000 at 500 units of output If fixed costs are Rs

40000, what wilt be the average total cost at 500 units of output? (a) Rs 280 (b) Rs 200

(c) Rs 120 (d) Rs 140000

17. When a perfectly competitive firm makes a decision to shut down, it is most likely that

(a) price is below the minimum of average variable cost (b) fixed costs exceed variable

costs (c) average fixed costs are rising (d) marginal cost is above average variable cost

18. If marginal product equals average total product: (a) average total product is falling (b)

average total product is rising (c) average total product is maximized (d) average total

product is minimized

19. Constant marginal returns for the first four units of a variable input is exhibited by the

total product sequence (a) 50,50,50,50 (b) 50,110,180,260 (c) 50, 100, 150, 200 (d) 50,

90, 120 140

20. Suppose a firm is producing a level of output such that MR < MC What should be firm

do to maximize its profits? (a) The firm should do nothing (b) The firm should hire less

labour (c) The firm should increase output (d) The firm should decrease output.

21. Which is the second order condition for the profit of a firm to be maximum? (a) AC =

MR (b) MC = MR (c) MC curve should cut MR curve from above (d) MC curve should

cut the MR curve from below

22. Given other things constant, if firms in a perfectly competitive market start

differentiating their products (a) the market will become monopolistically competitive

(b) the market will become like monopoly (c) the market will become like oligopoly (d)

there will be no change

23. Suppose the single monopoly price is Rs 50 and elasticities of demand in markets A

and B are respectively 3 and 5 If the monopolist wants to discriminate between the

markets, in which market should he charge more? (a) Market A (b) Market B (c) Same

price should be charged in both the markets (d) Insufficient data

24. The structure of the toothpaste industry in India resembles_____market (a) perfectly

competitive (b) monopolistic_ (c) monopolistically competitive (d) duopolist

25. Which of the following statements is correct? (a) A firm in a perfectly competitive

market can never earn abnormal profits in the long run (b) A monopolist can never

earn losses in the short-run (c) A monopolist must earn normal profits in the long run.

(d) A firm in a monopolistically competitive market may earn abnormal profits in the

long run

26. The share of services in India's national income has --- over the years (a) remained

constant (b) decreased (c) increased (d) first decreased and then increased

27. Which of the following is not an economic activity? (a) A maid cleaning the house (b)

Teaching in a missionary school (c) Medical facilities rendered by a charitable

dispensary (d) A housewife doing household duties

28. If CRR is to be raised, which of the following banks will do it? (a) State Bank of India (b)

SIDBI (c) NABARD (d) RBI

29. Mahalanobis model stressed upon the establishment of (a) consumer goods industries

(b) export oriented industries (c) agro-based industries (d) capital and basic goods

industries

30. When due to introduction of new machinery, some people lose lobs, this is called

unemployment (a) Cyclical (b) Technological (c) Frictional (d) Seasonal

31. Every person in the world is an Indian (a) Second (b) Third (c) Sixth (d) Tenth

GENERAL ECONOMICS TEST

32. If in a country, birth rate is falling and also death rate is falling, it is said to be passing

through ______stage of demographic transition (a) first (b) second (c) third (d) fourth

33. When prices are increasing continuously but the economy is stagnating, the

phenomenon is called (a) inflation (b) stagflation (c) deflation (d) reflation

34. When in an economy 10000 units of a good are produced but there is a demand for

15000 units, the result will be_________ (a) decrease in the price of the good (b)

increase in the price of the good (c) no change in the price of the good (d) cost push

inflation

35. _______is a statement showing expected income and expenditure usually for a year

(a) Balance of trade (b) Balance of transactions (c) Budget (d) Balance of payments

36. If as a result of withdrawal of 2 farmers from a farm there is not any major decrease in

the farm output, it means there exists unemployment (a) Cyclical (b) Seasonal (c)

Technological (d) Disguised

37. India follows a income tax system (a) progressive (b) proportional (c) regressive (d)

none of the above

38. If there are 100 persons in an economy, out of which 60 are economically active, and

if the unemployment rate is 10%, then how many people are in the work force? (a) 60

(b) 100 (c) 54 (d) Insufficient data

39. India's telephone network is in the world (a) largest (b) second largest (c) third

largest (d) smallest

40. Who is the custodian of national reserve of international currency? (a) SBI (b) RBI (c)

IDBI (d) CBI

41. The income of National Investment Fund would be used for (a) funding of national

games (b) investment in social sector project (c) funding of elections (d) all of the

above

42. Which of the following is correct? (a) 100% FD1 is allowed in defence (b) From the

fiscal year 2014-15, 50% FDB is allowed in public sector bank (c) There has been a

steep hike in the custom duty on non agricultural product (d) FDI is prohibited in

Casinos

43. As a result of the New Industrial Policy, 1991 (a) The public sector has been stripped

off all its power (b The public sector has been given the commanding heights of the

economy (c) The public sector's portfolio would be reviewed with greater realism The

focus would be on strategic high tech and essential infrastructure industries (d) The

public sector's management has been passed over to the private sector

44. FD1 is prohibited in all of the following except (a) atomic energy (b) lottery business

(c) gambling and betting (d) banking operations

45. Repo rate is the rate at which (a) banks borrow from SBI (b) bank borrows from RBI (c)

RBI borrows from banks (d) Public borrows from banks

46. refers to that portion of total deposits of a commercial RBI in the form of cash

reserves (a) CRR (b) SLR. (c) Bank rate (d) Repo rate

47. Money includes (a) currencies and demand deposits (b) bonds, government securities

(c) equity shares (d) All of the above

48. _______has the highest birth rate in 2012 (a) Kerala (b) Maharashtra, (c) Orissa (d)

West Bengal

49. Infant Mortality Rate is highest in (2010) (a) AP (b) MP (c) Bihar (d) Kerala

50. 150 The effect of decrease in CRR will be reduced or nullified if: (a) Bank rate is

reduced (b) Securities are sold in the open market_ (c) SLR is reduced_ (d) Securities

are bought in the open market

MOHIT EDUCOMP PVT. LTD.

Main Centre- 59 Jatindra Mohan Avenue Kolkata : 700005

9830741471/8017567120/03325551197

Website : mohitagarwalclasses.com www.facebook.com/education.mohit

BUSINESS ECONOMICS

01. Human wants are……………… in companion to means to satisfy them.

(a) Finite (b) Unlimited (c) Unlimited (d) Limited

02.The economy which makes use of both markets and government:

(a) Mixed economy (b) Socialistic economy (c) Capitalistic economy (d) None of the above

03.The practical application of economic theory in business decisions is called..............

(a) Macro economics (b) Micro economics c) Business economics (d) Normative Economics

04. Price mechanism is a feature of . . . . . . . . . . . . .

(a) Capitalism (b) Socialism (c) Mixed economy (d) All of the above

05. Micro economic theory deals with the issues .............

(a) Product pricing (b) Consumer behavior (c) Factor pricing (d) All of the above

06. Nature of business economics is: a)Theory of markets and private enterprises b)Normat ive in nature c )Incorporates elements of macro analysis d) All

07. Business economics is also called

(a) Micro economics (b) Welfare economic (c) Macro economics (d) Managerial economics

08. Issues requiring decision making in the context of business are: (a) How much should be the optimum output at what price should the firm sell? (b) How will the product be placed in the market?

(c) How to combat the risks and uncertainties involved? (d )All of the above

09. Consider the following statement about Capitalism:

(i) It works through price mechanism

(ii) It increase human welfare

(iii) It operates on profit motive

(a) (i) & (b) (i)& (c) (ii) & (d) None of the above

10. Business economics uses elements of: (a) Micro economics (b) Macro economics (c) Both micro & macro economics (d) None of the above

11. Consumer surplus in case of necessary commodities:

(a) Zero (b ) One (c) Infinite (d) None of these

12. When price increases from Rs. 200 to Rs. 300 and supply increases from 2000 units to 5000 units, then calculate elasticity of supply?

(a) 3 (b ) 0 .3 (c) 4 (d) 0.4

13. The consumer is in equilibrium when the following condition is satisfied:

a) 𝑀𝑈𝑥𝑀𝑈𝑦 > 𝑃𝑥𝑃𝑦 b) 𝑀𝑈𝑥𝑀𝑈𝑦 < 𝑃𝑥𝑃𝑦 c) 𝑀𝑈𝑥𝑀𝑈𝑦 = 𝑃𝑥𝑃𝑦 d ) None of these

14. In an indifference curve analysis, the consumer attains equilibrium at a point where the marginal rate of substitution is .................the

price ratio.

(a) Greater than (b) less than (c) Equal to (d) Not related to

15. Which of the following statement is not true?

(a) MU is the slope of TU curve (b) MU is the rate of change of TU (c) MU cannot be negative (d) MU can become zero

16. Which of the following statements about indifference curve is not true?

(a) Indifference curve shows price of 2 commodities (b) Indifference curve is convex to origin

(c)Indifference curve can’t touch either of the axis (d)Two indifference curves can't touch each other

17. An indifference curve shows.............marginal rate of substitution between two commodities

(a) increasing (b) decreasing (c) constant (d ) zero

18. Forecasting of demand is the art and science of predicting the

a. Actual demand for a product at some future date b. Probable demand for a product at some future date

c. Total demand for a product at some future date d. Non e o f t h es e

19. Normally, when the price of a commodity increases its demand:

(a) Remains constant (b) Increases c) Decreases (d) Zero

20. Additional made to the total utility by the consumption of an additional unit of a commodity is called:

(a) Total utility (b) Average utility (c) Marginal utility (d) All of the above

21. Which one of the following is not a method of demand forecasting?

(a) Mathematical method (b) Statistical method (c) Expert opinion method (d) Barometric method

22. In case of inferior commodity the rise in income will result in demand curve:

(a) Upward (b) Downward (c) No change (d) Initially downward but ultimately upward

23. According to law of supply, the supply of commodity normally depends on:

(a) Price of related commodity (b) Price of commodity (c) Price of factors of production (d) Demand for the product

24. Demand curve of a normal commodity:

(a) Downwards from left to right (b) Upwards from left to right (c) parallel to y -axis (d) parallel to x – axis

From the following information:

Hours of labour Total output Marginal Product

0

1 200 200

2 180

3 480

25. What is the marginal product of third hour labour?

(a) 120 (b) 180 (c) 480 (d) 100

26. What is the total output when the 2 units of labour is employed?

(a) 180 (b) 380 (c) 200 (d) 480

27. The shape of AFC curve is C

(a) Concave (b) Convex (c) U Shaped (d) Upward Sloping

28. Which of the following statement about factors of production is not true?

(a) Land is a passive factor (b) Land is a free gift of nature (c) Land is immobile (d) Land is perishable

29. Accounting cost will be . . . . . . . . . . . . . . . .economic cost.

(a) Greater than (b) less than (c) Equal to (d) None of these

30. Which of the following shows the unique relation between marginal revenue, average revenue and price elasticity?

31.Cobb — Douglas production function represents.. .. .. . ... .returns to scale

(a) Constant (b) Increase (c) Decrease (d) None of these

32. If Average cost of a firm is minimum, then Marginal cost will be... . .. .. .. . .. .

(a) Greater than average cost (b) Equal to average cost (c) Less than average cost (d) None of these

33. Which is the other name that is given to the demand curve?

(a) Profit curve (b) Average Revenue curve (c) Average Cost Curve (d) Indifference curve

34. Which of the following condition is for profit maximization?

(a) MC < MR (b) MC=MR (c) MC > MR (d) None of these

35. On the basis of law of variable proportions, average product is at its maximum, when average product is .............marginal product.

(a) Greater than (b) Less than (c) Equal to (d) None of these

36. The price of a commodity express its:

(a) Cost of production (b) Profit earning level (c) Exchange value (d) Variable cost

37. Product differentiation is an important feature of :

(a) Monopoly (b) Imperfect competition (c) Perfect competition (d) Discriminating monopoly

(a)MR = 𝐴𝑅 ((𝑒−1)𝑒 ) (b) 𝑀𝑅 = 𝐴𝑅 ((𝑒−1)𝑒 ) (c )𝑀𝑅 = 𝐴𝑅 ((1−𝑒)𝑒 ) (d) None

38. Price leadership is used to explain firm's behavior under:

(a) Monopoly (b) Oligopoly (c) Perfect competition (d) Discriminating monopoly

39. A market which has single buyer and single seller is called............

(a) Monopoly (b) Bilateral monopoly (c) Duopoly (d) Monopsony

40. Which one of the following is not a feature of oligopoly?

(a) Inter dependence (b) Selling cost (c) Group behavior (d) Free entry

41. If the supply of a commodity does not change then with every increase in demand price will.........

(a) Remain same (b) Increase (c) Decrease (d) Becomes zero

42. If there is a increase in supply without any change in demand, equilibrium price will..........

(a) Increase (b) Decrease (c) Remain unchanged (d) Becomes zero

43. The structure of tooth paste industry in India is best described as a...........market.

(a) Perfectly competitive (b) Monopolistic (c) Monopolistically competitive (d) Oligopolistic

44. Under the first degree of price discrimination the monopolist charges different prices,

(a) From different persons (b) For different quantity sold (c) At different markets (d) In all of the above situations

45. In a monopoly market which of the following is not found?

(a) Single seller (b) barriers to entry (c) Close substitutes (d) All of the above

46. A monopolist average revenue curve: (a) Falls from left to

right (c) Is parallel to y-axis

47. In long run a perfectly competitive firm earns (a)

Normal profits (c) Losses

(b) Is parallel to x-axis

(d) Rise from left to right

(b) super normal profits

(d) Neither profits nor losses

48. Under perfect competition demand curve for individual firm is:

(a) In elastic (b) Unitary elastic (c) Perfectly elastic (d) Perfectly inelastic

49. Which of the following is not a feature of perfect competition?

(a) Homogenous (b) Large number of buyers & sellers (c) Free entry & exit (d) Selling cost

50. Marginal revenue curve of a firm under perfect competition:

(a) Falls from left to right (b) Rises from left to right (c) Parallel to y - axis (d) Parallel to x - axis

51. A typical business cycle has .................distinctive phases.

(a) 2 (b) (c) 5 (d) Many

52. Business cycles are contagious &.................. in nature

(a) Local (b) Regional (c) National (d) International

53. Which of the following is not correctly matched?

(a) Keynes : Fluctuations in aggregate effective demand (b) Hawtrey : Purely monetary phenomena

(c) Schumpeter : Innovations (d) Pigou : Fluctuations in investment

54. The world economy suffered the longest, deepest and the most widespread depression of the 20' century during :

(a) 1930 (b) 1934 (c) 1996 (d) 1936

55. Which one of the following is an important character of business cycles according to pigou?

(a) Psychological factors (b) Natural factors (c) Demographic factors (d) Monetary factors

56. According to theory of business cycles once a peak is reached.............begins in the economy as the increase in demand and halts declining in

certain areas.

(a) Expansion (b) Contraction (c) Depression (d) Recovery

57. Which of the following is the internal cause of business cycles?

(a) Fluctuations in investment (b) Natural factors (c) Technology shocks (d) Population growth

58. Which of the following is the external cause of business cycles?

(a) Population growth (b) Variations in government spending (c) Money supply (d) Macro economic policies

59. Feature of business cycles are

(a ) Occurs per iodical ly (b) Have four different phases

(c) Generally originate in a free market economy (d)All of the above

60. Change in fashion retailing is an example of:

(a) Sluggish fluctuation (b) Cyclical fluctuation (c) Sunrise fluctuation (d) Seasonal fluctuation

01. Applied economics includes __________

(a) Regression analysis and mathematical linear programming (b) Capital budgeting

(c) Both a and b (d) None

02. Macroeconomics include __________

(a) Product pricing (b) Consumer Behavior (c) External value of money (d) Location of industry

03. Shyam : This year due to heavy rainfall my onion crop was damaged Krishna : Climate affects crop yields. Some years are bad, others are

good Hari : Don’t worry. Price increase will compensate for the fall in quantity supplied Radhe : The Government ought to guarantee that our

income will not fall.

In this conversion, the normative statement is made by

(a) Shyam (b) Krishna (c) Hari (d) Radhe

04. Socialism Ensures

(a) Rapid growth and balanced development (b) Right to work

(c) Incentives for efficient economic decisions (d) Both a and b

05. A capitalist economy consists of

(a) Central planning authority (b) A mechanism to decide as what, how and for whom to produce

(c) Both a & b (d) None of the above

06. Freedom of choice is the advantage of

(a) Socialism (b) Capitalism (c) Mixed Economy (d) None of the above

07. Socialist economy is _________

(a) Self regulating (b) Profit oriented (c) Command economy (d) Allocation of resources as per market requirements

08. Exploitation and inequality will be more in __________

(a) Socialism (b) Capitalism (c) Mixed (d) All of the above

09. Business Economics is

(a) Normative in nature (b) Interdisciplinary in nature (c) Both (d) None

10. If price decreases from Rs. 80 to Rs. 60 and elasticity of demand is 1.25 then

(a) demand increase by 25% (b) Demand decreases by 25% (c) Remains Constant (d) None of the above

11. Which of the following is correct?

(a) Elasticity on lower segment of demand curve is greater than unity (b) Elasticity on upper segment of demand curve is lesser than unity

(c) Elasticity at the middle of demand curve is equal to unity

(d) Elasticity decreases as one move from lower part of demand curve to upper part.

12. If maize has –0.30 as income elasticity of demand, then maize will be considered as _____

(a) Necessity (b) Inferior good (c) Superior good (d) None

13. Contraction of supply implies ________

(a) Decrease in cost of production (b) Decrease in price of the good concerned

(c) Decrease in price of related good (d) Increase in price of the good concerned

14. Perishable commodities will have ______

(a) Perfectly elastic curve (b) Perfectly inelastic curve (c) Elastic (d) Inelastic

15. Which of the following statement is correct?

(a) Supply is inversely related to its cost of production (b) Price and quantity demand of a good have direct relation ship

(c) Taxes and subsidy has no impact on the supply of the product (d) Seasonal changes have no impact on the supply of the commodity

16. In case of _______ goods, there is an inverse relationship between income and demand for a

product.

(a) substitute goods (b) Complementary Goods (c) Giffen Goods (d) None of the above

17. Which of the following will affect the demand for non-durable goods?

(a) Disposable Income (b) Price (c) Demography (d) All of the above

18. When the price of tea decreases, people reduces the consumption of coffee. Then the goods

are

(a) Complementaries (b) Substitutes (c) Inferior goods (d) Normal goods

19. The price elasticity of demand at the midpoint of the straight line demand curve under point method is _________

(a) 0 (b) 1 (c) >1 (d) <1

20. Which of the following relation is true with MU?

(a) When MU is positive, Total utility rises at a diminishing rate (b) When marginal utility is zero, total utility is maximum.

(c) When marginal utility is negative, total utility is diminishing (d) All of the above

21. Which of the following is! are the conditions of theory of consumer surplus if price is same

for all units he purchased?

(a) Consumer gains extra utility or surplus (b) Consumer surplus for the last commodity is zero

(c) Both (d) None

22. When the supply of a product is perfectly inelastic then the curve will be

(a) Parallel to y – axis (b) parallel to x – axis (c) At the angle of 45o (d) Sloping upwards

23. The consumer is in equilibrium when the following condition is satisfied:

(a) Budget line is the tangent to the IC Curve (C) 𝑀𝑈𝑥𝑃𝑥 = 𝑀𝑈𝑦𝑃𝑦 =

𝑀𝑈𝑧𝑃𝑧

(c) Both a & B (d) None of the above

24. Which of the following is not the property of indifference curve?

(a) Slopes downwards to the right (b) Always convex to the origin (c) Intersects each other (d) Will not touch either of the axis

25. Marginal average and total product of a firm in the short run will not comprise with ______

(a) When marginal product is at a maximum, average product is equal to marginal product, and total product is rising

(b) When average product is maximum, Average product is equal to marginal product, and total product is rising

(c) When marginal product is negative, total product and average product are falling.

(d) When total product is increasing, average product and marginal product may be either rising or falling.

26. When increase in demand is equal to increase in supply and equilibrium price remains

constant, then what about equilibrium quantity?

(a) Increases (b) Decreases (c) Remains constant (d) None of the above

27. When price is Rs. 20, Quantity demand is 10 units and price is decreased by 5% then quantity demand increased by 10% then Marginal

revenue is

(a) Rs. 10 (b) Rs. 11 (c) Rs. 9 (d) Rs. 20

28. A firm producing 15 units of output has average cost of Rs. 250 and Rs. 125 as per unit cost for fixed factors of production. Then average

variable cost will be ________

(a) 180 (b) 150 (c) 125 (d) None of the above

29. Opportunity cost is _________

(a) Recorded in the books of accounts (b) Sacrificed alternative (c) Both a & B (d) None of the above

30. Which of the following is considered as production in economics ?

(a) Helping a blind person in crossing the road (b) Group dance performance in a college annual function

(c) Holding a child who is falling from a wall (d) Performing an art in a theatre

31. Diminishing marginal returns implies

(a) Decreasing average fixed cost (b) Decreasing average variable cost (c) Decreasing marginal cost (d) Increasing marginal cost

33. Given the relation MR = if the demand for a product is unitary elastic then _____

(a) MR = 0 (b) MR >0 (c) MR < 0 (d) None of the above

34. Which of the following is true, when the firm is at a equilibrium?

(a) MC < MR (b) MC Curve cuts the MR curve from below (c) Both a & b (d) None of the above

35. If a Perfectly competitive firm earns supernormal profits then_______

(a) AR > MR (b) AR < MR (c) AR = MR (d) None of the above

36. Kinked demand curve is

(a) Highly elastic at above the prevailing price (b) Inelastic at below the prevailing price

(c) both a & b (d) None of the above

37. Which is the characteristic feature of monopoly?

(a) Homogeneous goods (b) Strong barriers to entry (c) Perfect Competition (d) Perfectly elastic demand curve

38. Price discrimination is possible only in________

(a) Monopoly (b) Perfect competition (c) Oligopoly (d) Monopolistic competition

39. What is the characteristic of monopolistic competition?

(a) Price elasticity is low for the product concerned (b) Large number of sellers

(c) No degree of control over price (d) One buyer

40. When TR is at its peak then MR is equal to ______

(a) Zero (b) Positive (c) Negative (d) None of the above

41. Market consists of

(a) Buyer and seller (b) One Price for one product at a given time (c) Both a and b (d) None

26. According to behavioral Principles.

(a) A firm should not produce at all its total variable costs are not met.

(b) A firm will be making maximum profits by expanding output to the level where marginal revenue is equal to marginal cost.

(c) Both (a) and (b) (d) None of these

42. Monopsony means

(a) Where there are large firms (b) There is a single buyer (c) Small number of large buyers (d) Single seller and single buyer

43. A discriminating monopolist to reach equilibrium position, his decision on total output depends upon ________

(a) How much total output should be produce (b) How the total output should be distributed between the two sub-lmarkets?

(c) Both a & b (d) None of these

44. Demand curve is horizontal in the case of _______

(a) Monopoly (b) Perfect competition (c) Imperfect competition (d) Monopolistic Competition

45. Which is not the characteristic feature of expansion phase in business cycle?

(a) Increase in national output (b) Unemployment (c) Rise in price and costs (d) Boost in business confidence

46. Business Cycle occurs

(a) Periodically (b) In different phases (c) Both a & b (d) None of the above

47. Which of the following is not the phase of business cycles?

(a) Prosperity (b) Upswing (c) Reconstruction (d) Depression

48. “Modern business activities are based on the anticipations of business community and are affected by waves of optimism or pessimism”, according to

(a) Pigou (b) Keynes (c) Hawtrey (d) Schumpeter

49. Economic activities will be declining in the phase of ________

(a) Expansion (b) Depression (c) Contraction (d) Peak

50. Due to recession, employment rate ________ and output .

(a) Rises; rises (b) Falls; falls (c) Rises; falls (d) Falls; rises

51. The internal causes of business cycle is

(a) Fluctuation in effective demand (b) Technology shocks (c) Both a & b (d) None

52. According to some economists, ______ are the prime causes of business cycles.

(a) Fluctuations in aggregate demand (b) Fluctuations in investments (c) Macroeconomic policies (d) All of the above

53. Boom and depression in business cycle are _______

(a) Turning points (b) Equilibrium points (c) Both a & b (d) None of the above

54. Which is not related to great depression of 1930?

(a) It started in USA (b) John Maynard Keynes regarded lower aggregate expenditure as the cause

(c) Excess Money supply (d) Both a & b

55. Economic goods are considered as scarce resources because _______

(a) Inadequate quantity to satisfy the needs of the society (b) Not Possible to increase in quantity

(c) Limited hands to make goods (d) Primary importance in satisfying social requirements

56. Which of the following is true about leading indicators?

(a) Measurable economic factors (b) Changes after real output (c) Both (a) and (b) (d) None

ECONOMIC MODEL TEST PAPER

1. In the case of a straight line demand curve meeting the two axes, the price elasticity of demand at y-axis of the line would be equal to

a) 1; b) infinity; c) 3; d) 1.25

2. A firm under perfect competition will be making minimum losses (in the short run) at a point where:

a) MC > MR; b) MR> MC; c) MC = MR; d) AC = AR

3. When the consumer is in equilibrium his price line is to indifference curve

a) Parallel; b) At right angle; c) Diagonally opposite; d) Tangent

4. The Law of variable proportions examines the Production function with:

a) One factor variable and only one factor fixed; b) One factor variable keeping quantities of other factors fixed; c) All factors

variable; d) None of the above

5. Indifference Curve analysis is based on

a) Ordinal utility; b) Cardinal utility; c) Marginal utility; d)None of the above

6. MC curve cuts AVC Curve; a) At its falling point; b) At its minimum Point

c) At its rising point; d) At different points

7. Accounting profit is equal to: a) Total Revenue – Total variable cost; b) Total Revenue – Total direct cost; c) Total

Revenue – Total Cos t d) Total Revenue – Total Explicit cost and Total Implicit Cost.

8. Which of the following is a cause of an economic problem?

a) Scarcity of Resources; b. Unlimited wants

c. Alternative uses; d. All of the above

9. When two goods are perfect substitutes of each other then

a) MRS is falling; b. MRS is rising; c. MRS is constant; d. None of the above

10. In case of a Giffen good, the demand curve will be:

a) Horizontal; b. Downward – sloping to the right; c. Vertical; d. Upward – sloping

11. Which of the following statements is incorrect?

a) The services of doctors, lawyers, teachers etc. are termed as production; b. Man cannot create matter; c. Accumulation of capital does

not depend solely on income; d. None of the above

12. In perfect competition utilization of resources is

a) Partial; b. Moderate; c. Full; d. Over

13. Price discrimination occurs when:

a) Producer sells a specific commodity or service to different buyers for the same price

b) Producer sells specific commodity or service to different buyers at two or more different prices due to difference in cost

c) Producer sells a specific commodity or service to different buyers at two or more different prices for reasons not associate with

difference in cost

d) Producer under perfect competition sells different goods to consumers at different prices

14. MR curve under Monopoly lies between AR and Y – axis because, the rate of decline of the MR is

a) Just half of the rate of decline of AR; b. Just equal to the rate of decline of AR

c. Just triple the rate of decline of the average revenue; d. Just double the rate of decline of the average revenue

15. In the long run, normal profits are included in the curve.

a) LAC; b. LMC; c. AFC; d. SAC

16. Calculate Income-elasticity for the household when the income of a household rises by 10% the demand for T.V. rises by 20%

(a) + .5; b. -.5; c. + 2; d. -2

17. In case of necessaries the marginal utilities of the earlier units are large. In such cases the consumer surplus will be:

a) Nfinite; b. Zero; c. Marginally positive; d. Marginally Negative

18. Which of the following is not the characteristic of Labour?

a) Labour is highly ‘Perishable’ in the sense that a day’s labour lost cannot be completely recovered

b) Labour is inseparable from the labourer himself

c) Labour has a strong bargaining power

d) The supply of labour and wage rate are directly related in the initial stages

19. Indicate which of the following is a variable cost?

a) Payment of rent on building; b. Cost of Machinery; c. Interest payment on Loan taken from bank; d.

Cost of raw material

20. Marginal costs are closely associated with:

a) Variable cost; b. Total fixed cost; c. Average cost; d. Total cost

21. Economic cost means

a) Accounting cost + Implicit cost; b. Accounting cost + Marginal cost

c. Cash cost + Opportunity cost; d. Implicit cost

22. When is average product at its maximum point?

a) When AP intersects MP; b. When AP intersects TP

c. When MP is highest; d. At the point of inflexion

23. A firm has producing 7 units of output has an average total cost of Rs. 150 and has to pay Rs. 350 to its fixed factors of production

whether it produces or not. How much of the average total cost is made up of variable cost?

(a) 200; b. 50; c. 300; d. 100

24. Calculate Income-elasticity for the household when the income of a household rises by 5% and the demand for bajra falls by 2%

(a) + 2.5; b. – 2.5; c. -.4; d. +.4

25. The consumer surplus concept is derived from:

a) Law of demand; b. Indifference curve analysis; c. Law of diminishing marginal utility

b) All of above

26. The cost that firm incurs in hiring or purchasing any factor of production is referred as:

a) Explicit cost; b. Implicit cost; c. Variable cost; d. Fixed cost

27. depicts complete picture of consumer tastes and preferences.

a) Budget line; b. Average cost curve; c. Indifference map; d. Marginal revenue curve

28. When economists speak of utility of a certain good, they are referring to:

a) the demand for the good; b. The usefulness of the good in consumption

c. the expected satisfaction derived from the consumption of good.

d. The rate at which consumers are willing to exchange one good for another

29. Diminishing marginal returns imply:

a) Decreasing average variable cost; b. Decreasing marginal cost

c. Increasing marginal cost; d. Decreasing average fixed cost

30. If the goods are perfect substitutes for each other then cross elasticity is

a) Infinite; b. One; c. Zero; d. None of the above

31. Consumer Surplus is:

a) What a consumer is ready to pay + what he actually pays; b. What a consumer is ready to pay – what he actually pays; c. What he

actually pays – what a consumer is ready to pay; d. None of the above

32. Which of the following statements is correct?

a) Monopolist can earn only profits; b. Firms in a perfectly competitive market are price maker

c. Industry in a perfectly competitive market is a price taker; d. AR curve and demand curve are same

33. Soap industry is an example of:

a) Oligopoly; b. Perfect competition; c. Monopolistic competition; d. Monopoly

34. When price is less than average variable cost at the profit maximizing level of output, a firm should :

a) Shut down, since it cannot recover its variable cost; b. Produce where MC = MR, if operating in short run; c. Produce

where MC = MR, if operating in long run; d. None of the above

35. For the Price taking firm:

a) Marginal Revenue is less than price; b. Marginal revenue is greater than price

c. The relationship between marginal revenue and price is not clear;

d. d. Marginal revenue is equal to average revenue

36. Economic goods are goods which:

a) Cannot be increased in quantity; b. Obey the law of Micro Economics

c. Are limited in supply and are scarce; d. Are limited to man-made goods.

37. Which of the following means an Economic activity?

a) Production of Goods; b. Production of Services

c. Consumption of Goods and Services; b. All of the above

38. Which economy is now a myth only, as no country in the world is having that type of economy?

a. Capitalist Economy; b. Socialist Economy; c. Mixed Economy; d. None of the above

Use table to answer question 39-42 Mohan sweets is a small restaurant and a price taker. The table below provides the data of Mohan’s Sandwich output and costs in Rupees

Quantity TC TFC TVC AVC AC MC

0 100

10 210

20 300

30 400

40 540

50 790

60 1060

39. If Sandwiches are being sold for Rs. 14 each, what is Mohan’s profit maximizing level of output?

a) 10 Sandwiches; b. 40 Sandwiches; c. 50 Sandwiches; d. 60 Sandwiches

40. What is the total variable cost when 60 sandwich are produced?

a) Rs. 690; b. Rs. 960; c. Rs. 110; d. Rs. 440

41. What is the average fixed cost when 20 sandwiches are produced?

a) Rs. 5; b. Rs. 3.33; c. Rs. 10; d. Rs. 2.5

42. Between 10 to 20 sandwiches, what is the marginal cost per sandwich?

a) Rs. 11; b. Rs. 13; c. Rs. 14; d. Rs. 9

43. If decreasing returns to scale are present, then if all inputs are increased by 10% then:

a) Output will increase by less than 10%; b. Output will increase by 10%

c. Output will decrease by 10%; d. Output will increase by more than 10%

44. Effective Demand depends on:

a) Desire; b. Means to purchase; c. Willingness to use those means d. All of the above

45. Quantity demanded is a:

a) Flow Concept; b. Stock Concept; c. Both (a) and (b); d. None of the above

46. If two goods are complementary, like pen and ink, then the cross elasticity is:

a) Positive; b. Zero; c. Negative; d. Less than one

47. If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per dozen and the supply increases from 240 dozen to 300 dozens

elasticity of supply is:

a) .7; b. -.67; c. .65; d. .77

48. If as a result of 90 percent increase in all inputs, the output increase by 75 percent this is a case of

a) Increasing return of a factor; b. Decreasing return to a factor

c. Diminishing return to scale; d. None of the above

49. At shut down point:

a) Price is equal to AVC; b. Total revenue is equal to TVC; c. Total loss of the firm is equal to TFC; d. All of the

above

50. Excess Capacity is the essential characteristic of the firm in the market form of:

a) Monopoly; b. Perfect competition; c. Monopolistic competition; d. Oligopoly

51. If a good is priced at Rs. 180 p.u. and its price is increased to Rs. 240 p.u. Now suppose quantity demanded previously was 100 units

and as a result of price increase, the quantity demanded fell to 80 units. What is the price elasticity?

(a) . 777; b. 1.4; c. 1; d. . 8

52. Macroeconomics is the study of:

a) Inflation; B. Unemployment; c. Growth; d. All of the above

53. All of the following are U-shaped curves except the:

a) AVC curve; b. AFC curve; c. AC curve; d. MC curve

54. A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is:

a) Infinite; b. Zero; c. Equal to one; d. Greater than zero but less than one

55. Lesser production of would lead to lesser production in future

a) Public goods; b. Consumer goods; c. Agricultural goods; d.Capital goods

56. A condition needed for a perfectly competitive industry to exist is that:

a) Buyers are able to influence the price of the commodity

b) Any units of commodity are considered by buyers to be different

c) Buyer discriminates in their purchases based on non-price factors.

d) There are no obstacles to the free mobility of resources

57. If the price of petrol rises by 25% and demand for car falls by 40% then, cross elasticity between petrol and car is:

(a) -1.6; b) 1.6; c) -2.6; d) 2.6

58. Assume that when price is Rs. 40 quantity demanded is 9 units, and when price is Rs. 38, quantity demanded is 10 units. Based on

this information, what is the marginal revenue resulting from an increase in output from 9 units to 10 units?

a) Rs. 20; b. Rs. 40; c. Rs.38; d. Rs. 1

59. Which of the following is not a variable in the index of leading indicators?

a) New consumer goods order ; b) Delayed deliveries

c. New building permits; d) Prime rate

60. When aggregate economic activity is increasing the economy is said to be in

a) An expansion; b) a contraction; c) A peak; d) A turning point.

CA, CS DIVYA AGARWAL

9830741471

Main Centre- 59 Jatindra Mohan Avenue

9830741471/8017567120/03325551197

Website- www.mohitedu.com

www.facebook.com/education.mohit Test Series: March, 2019

FOUNDATION COURSE

MOCK TEST PAPER

PAPER – 4 : BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE PART I: BUSINESS ECONOMICS

QUESTIONS Max. Marks: 60

1. In the case of a straight line demand curve meeting the two axes, the price elasticity of demand at y-

axis of the line would be equal to

a) 1; b) infinity; c) 3; d) 1.25

2. A firm under perfect competition will be making minimum losses (in the short run) at a point where:

a) MC > MR; b) MR> MC; c) MC = MR; d) AC = AR

3. When the consumer is in equilibrium his price line is to indifference curve

a) Parallel; b) At right angle; c) Diagonally opposite; d) Tangent

4. The Law of variable proportions examines the Production function with:

a) One factor variable and only one factor fixed; b) One factor variable keeping quantities of other factors fixed; c) All factors variable; d) None of the above

5. Indifference Curve analysis is based on

a) Ordinal utility; b) Cardinal utility; c) Marginal utility; d)None of the above

6. MC curve cuts AVC Curve; a) At its falling point; b) At its minimum Point

c) At its rising point; d) At different points

7. Accounting profit is equal to: a) Total Revenue – Total variable cost; b) Total Revenue – Total direct cost; c) Total Revenue – Total Cos t d) Total Revenue – Total Explicit cost and Total Implicit Cost.

8. Which of the following is a cause of an economic problem?

a) Scarcity of Resources; b. Unlimited wants

c. Alternative uses; d. All of the above

9. When two goods are perfect substitutes of each other then

a) MRS is falling; b. MRS is rising; c. MRS is constant; d. None of the above

10. In case of a Giffen good, the demand curve will be:

a) Horizontal; b. Downward – sloping to the right; c. Vertical; d. Upward – sloping

11. Which of the following statements is incorrect?

a) The services of doctors, lawyers, teachers etc. are termed as production; b. Man cannot create matter; c. Accumulation of capital does not depend solely on income; d. None of the above

12. In perfect competition utilization of resources is

a) Partial; b. Moderate; c. Full; d. Over

13. Price discrimination occurs when:

a) Producer sells a specific commodity or service to different buyers for the same price

b) Producer sells specific commodity or service to different buyers at two or more different prices

due to difference in cost

c) Producer sells a specific commodity or service to different buyers at two or more different prices

for reasons not associate with difference in cost

d) Producer under perfect competition sells different goods to consumers at different prices

14. MR curve under Monopoly lies between AR and Y – axis because, the rate of decline of the MR is

a) Just half of the rate of decline of AR; b. Just equal to the rate of decline of AR

c. Just triple the rate of decline of the average revenue; d. Just double the rate of decline of the average revenue

15. In the long run, normal profits are included in the curve.

a) LAC; b. LMC; c. AFC; d. SAC 16. Calculate Income-elasticity for the household when the income of a household rises by 10% the

demand for T.V. rises by 20%

(a) + .5; b. -.5; c. + 2; d. -2

17. In case of necessaries the marginal utilities of the earlier units are large. In such cases the consumer

surplus will be:

a) Nfinite; b. Zero; c. Marginally positive; d. Marginally Negative

18. Which of the following is not the characteristic of Labour?

a) Labour is highly ‘Perishable’ in the sense that a day’s labour lost cannot be completely

recovered

b) Labour is inseparable from the labourer himself

c) Labour has a strong bargaining power

d) The supply of labour and wage rate are directly related in the initial stages

19. Indicate which of the following is a variable cost?

a) Payment of rent on building; b. Cost of Machinery; c. Interest payment on Loan taken from bank; d. Cost of raw material

20. Marginal costs are closely associated with:

a) Variable cost; b. Total fixed cost; c. Average cost; d. Total cost

21. Economic cost means

a) Accounting cost + Implicit cost; b. Accounting cost + Marginal cost

c. Cash cost + Opportunity cost; d. Implicit cost

22. When is average product at its maximum point?

a) When AP intersects MP; b. When AP intersects TP

c. When MP is highest; d. At the point of inflexion

23. A firm has producing 7 units of output has an average total cost of Rs. 150 and has to pay Rs. 350 to

its fixed factors of production whether it produces or not. How much of the average total cost is made

up of variable cost?

(a) 200; b. 50; c. 300; d. 100

24. Calculate Income-elasticity for the household when the income of a household rises by 5% and the

demand for bajra falls by 2%

(a) + 2.5; b. – 2.5; c. -.4; d. +.4

25. The consumer surplus concept is derived from:

a) Law of demand; b. Indifference curve analysis; c. Law of diminishing marginal utility

b) All of above

26. The cost that firm incurs in hiring or purchasing any factor of production is referred as:

a) Explicit cost; b. Implicit cost; c. Variable cost; d. Fixed cost

27. depicts complete picture of consumer tastes and preferences.

a) Budget line; b. Average cost curve; c. Indifference map; d. Marginal revenue curve

28. When economists speak of utility of a certain good, they are referring to:

a) the demand for the good; b. The usefulness of the good in consumption

c. the expected satisfaction derived from the consumption of good.

d. The rate at which consumers are willing to exchange one good for another

29. Diminishing marginal returns imply:

a) Decreasing average variable cost; b. Decreasing marginal cost

c. Increasing marginal cost; d. Decreasing average fixed cost

30. If the goods are perfect substitutes for each other then cross elasticity is

a) Infinite; b. One; c. Zero; d. None of the above

31. Consumer Surplus is:

a) What a consumer is ready to pay + what he actually pays; b. What a consumer is ready to pay – what he actually pays; c. What he actually pays – what a consumer is ready to pay; d. None of the above

32. Which of the following statements is correct?

a) Monopolist can earn only profits; b. Firms in a perfectly competitive market are price maker

c. Industry in a perfectly competitive market is a price taker; d. AR curve and demand curve are same

33. Soap industry is an example of:

a) Oligopoly; b. Perfect competition; c. Monopolistic competition; d. Monopoly

34. When price is less than average variable cost at the profit maximizing level of output, a firm should :

a) Shut down, since it cannot recover its variable cost; b. Produce where MC = MR, if operating in short run; c. Produce where MC = MR, if operating in long run; d. None of the above

35. For the Price taking firm:

a) Marginal Revenue is less than price; b. Marginal revenue is greater than price

c. The relationship between marginal revenue and price is not clear;

d. d. Marginal revenue is equal to average revenue

36. Economic goods are goods which:

a) Cannot be increased in quantity; b. Obey the law of Micro Economics

c. Are limited in supply and are scarce; d. Are limited to man-made goods.

37. Which of the following means an Economic activity?

a) Production of Goods; b. Production of Services

c. Consumption of Goods and Services; b. All of the above

38. Which economy is now a myth only, as no country in the world is having that type of economy?

a. Capitalist Economy; b. Socialist Economy; c. Mixed Economy; d. None of the above

Use table to answer question 39-42

Mohan sweets is a small restaurant and a price taker. The table below provides the data of Mohan’s

Sandwich output and costs in Rupees

Quantity TC TFC TVC AVC AC MC

0 100

10 210

20 300

30 400

40 540

50 790

60 1060

39. If Sandwiches are being sold for Rs. 14 each, what is Mohan’s profit maximizing level of output?

a) 10 Sandwiches; b. 40 Sandwiches; c. 50 Sandwiches; d. 60 Sandwiches

40. What is the total variable cost when 60 sandwich are produced?

a) Rs. 690; b. Rs. 960; c. Rs. 110; d. Rs. 440

41. What is the average fixed cost when 20 sandwiches are produced?

a) Rs. 5; b. Rs. 3.33; c. Rs. 10; d. Rs. 2.5

42. Between 10 to 20 sandwiches, what is the marginal cost per sandwich?

a) Rs. 11; b. Rs. 13; c. Rs. 14; d. Rs. 9

43. If decreasing returns to scale are present, then if all inputs are increased by 10% then:

a) Output will increase by less than 10%; b. Output will increase by 10%

c. Output will decrease by 10%; d. Output will increase by more than 10%

44. Effective Demand depends on:

a) Desire; b. Means to purchase; c. Willingness to use those means d. All of the above

45. Quantity demanded is a:

a) Flow Concept; b. Stock Concept; c. Both (a) and (b); d. None of the above

46. If two goods are complementary, like pen and ink, then the cross elasticity is:

a) Positive; b. Zero; c. Negative; d. Less than one 47. If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per dozen and the supply increases from

240 dozen to 300 dozens elasticity of supply is:

a) .7; b. -.67; c. .65; d. .77

48. If as a result of 90 percent increase in all inputs, the output increase by 75 percent this is a case of

a) Increasing return of a factor; b. Decreasing return to a factor

c. Diminishing return to scale; d. None of the above

49. At shut down point:

a) Price is equal to AVC; b. Total revenue is equal to TVC; c. Total loss of the firm is equal to TFC; d. All of the above

50. Excess Capacity is the essential characteristic of the firm in the market form of:

a) Monopoly; b. Perfect competition; c. Monopolistic competition; d. Oligopoly

51. If a good is priced at Rs. 180 p.u. and its price is increased to Rs. 240 p.u. Now suppose quantity

demanded previously was 100 units and as a result of price increase, the quantity demanded fell to

80 units. What is the price elasticity?

(a) . 777; b. 1.4; c. 1; d. . 8

52. Macroeconomics is the study of:

a) Inflation; B. Unemployment; c. Growth; d. All of the above

53. All of the following are U-shaped curves except the:

a) AVC curve; b. AFC curve; c. AC curve; d. MC curve

54. A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is:

a) Infinite; b. Zero; c. Equal to one; d. Greater than zero but less than one

55. Lesser production of would lead to lesser production in future

a) Public goods; b. Consumer goods; c. Agricultural goods; d.Capital goods

56. A condition needed for a perfectly competitive industry to exist is that:

a) Buyers are able to influence the price of the commodity

b) Any units of commodity are considered by buyers to be different

c) Buyer discriminates in their purchases based on non-price factors.

d) There are no obstacles to the free mobility of resources

57. If the price of petrol rises by 25% and demand for car falls by 40% then, cross elasticity between

petrol and car is:

(a) -1.6; b) 1.6; c) -2.6; d) 2.6

58. Assume that when price is Rs. 40 quantity demanded is 9 units, and when price is Rs. 38, quantity

demanded is 10 units. Based on this information, what is the marginal revenue resulting from an

increase in output from 9 units to 10 units?

a) Rs. 20; b. Rs. 40; c. Rs.38; d. Rs. 1

59. Which of the following is not a variable in the index of leading indicators?

a) New consumer goods order ; b) Delayed deliveries

c. New building permits; d) Prime rate

60. When aggregate economic activity is increasing the economy is said to be in

a) An expansion; b) a contraction; c) A peak; d) A turning point.

CA CS DIVYA AGARWAL 9830741471

1

MOHIT EDUCOMP PVT. LTD. Main Centre- 59 Jatindra Mohan Avenue

9830741471/8017567120/03325551197

Website- www.mohitedu.com

www.facebook.com/education.mohit

macro economics test

time allowed-25 min full marks: 25

1. Which one is not a secondary function of Money?

a) Standard of differed payment b) Medium of Exchange c) Store of Value d) Transfer of value.

2. India’s per capital income at market prices in 2014 was US$

a) 15060 b) 1560 c) 1005 d) 2000

3. The Head Office of RBI situated in?

a) Delhi b) Mumbai c) Kolkata d) Chennai.

4. In year 2014, HDI rank of India among BRICS countries was

a) Lowest b) Highest c) In the Middle d) None of the Above.

5. Which one is known as “The Lander of the Last Resort”.

a) World Bank b)IMF c)RBI d)Commercial Bank .

6. According to the Quantity Theory of Money

a) MV=PT b) MP=VT c) MT=VP d) T=MPV.

7. Recently, Indian experienced demonetisation on

a) 7th November, 2016 b) 8th November, 2016 c) 9th November, 2016 d) 8th December, 2016.

8. New Industrial Policy was announced in

a) March 1956 b) April 1990 c) July 1991 d) January 2001.

9. Which one is not a function of commercial bank?

a) Accepting Deposits b) Lending of Funds c) Issuing Travelers Cheque d) Custodian of Foreign

Exchange Reserve.

10. Poverty is measured in terms of:

a) Calorie b) Education c) Wealth d) None of the above.

11. Who implements the Monetary Policy in India?

a) Central Government b) State Government c) RBI d) World Bank.

12. The Largest employment generating sector in india is

a) Primary sector b) Secondary sector c) Manufacturing sector d) Service sector.

2

13. When India adopted the new agriculture strategy?

a) 1995-96 b) 1956-57 c) 1964-65 d) 1977-78

14. Equity flow comprises:

a) Foreign direct investment b) portfolio equity c) a) and b) both d) none of the above.

15. In 2014, India’s FDI inflow was:

a) $33,871 million b) $45,881 million c) $21,450 million d) $46,971 million.

16. How many major reforms Budget 2017-18 contains:

a) 4 b) 5 c)7 d) 3

17. Which of the following banks extended agriculture credit:

a) NABARD b) RRBS c) Both of above d) none of above.

18. In 2014, percentage of GDP in India:

a) 23% b) 38.3% c) 46.3% d)53.4%

19. The per capital income of an Indian in 2015:

a) $1,560 b) $1700 c) $1600 d) $1750

20. In 2015, GNI of which country is 5 times higher than India?

a) Germany b) USA c) China d) Japan

21. The First claim of demonetisation is:

a) Black Money b) Help in reducing Interest rates c) Plug terror financing d) Formalise Indian

economy.

22. The transaction approach to the Quantity theory of Money given by:

a) RBI b) fisher c) Central bank d) Government of India.

23. Which one of the following is a Leading function of Central Bank:

a) Issue of Notes b) Collection of Data c) Central Banking in Developing countries d) None of

Above.

24. When did RBI established:

a) July 1, 1937 b) July 1, 1935 c) April 1, 1935 d) April 1, 1937

25. Risk of getting significant negative public opinion:

a) Operational Risk b) Reputational Risk c) Security Risk d) Legal Risk.

CA, CS DIVYA AGARWAL

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