Select the bank

1. Demand cure is also know as the __________ revenue curve • Average • Marginal • Incremental • Budget

2. An entrepreneur co-ordinates __________ • Factors of supply • Factors of production • Scientists • Marketing representatives

3. The commodity that is _________ is the opportunity cost of the commodity produced • Sacrificed • Produced • Considered • Consumed

4. Dr. Alfred Marshall also suggested another method called the _______ of measuring price elasticity at point on the demand cure.

• Point geometric method • Arc elasticity method • Percentage method • Point elasticity method

5. Law of variable proportion occupies an important place in Economic theory • Form’s • Labour • Population

6. In the 3rd stage of operation of the law of variable proportions, the marginal product becomes negative • Positive • Zero • Remains same

7. In real world perfect competition is seldom seen • Imperfect • Semi perfect • real

8. Keynes defined Marginal efficiency of capital as the highest rate of return over expected cost on producing an additional unit of an asset.

• Marginal efficiency of Labour • Marginal efficiency of land • Marginal efficiency of entrepreneur

9. Keynes believed that, fluctuations in the Marginal efficiency of capital are the fundamental cause of trade cycle and income fluctuations in a capitalist economy.

• Marginal efficiency of Labour • Marginal efficiency of land • Marginal efficiency of entrepreneur

10. An upward sloping demand curve is called Exceptional demand curve

• Normal demand curve • Expansionary demand curve • Concretionary demand curve

11. A normal demand curve has Negative slope • Positive slope • Upward slope • Horizontal slope

12. Under perfect competition each makes Normal profit in the long run. • Abnormal • Supernormal • zero

13. The market price is determined by the interaction of the market demand curve and supply curve • Cost curve • Revenue curve • Average cost curve

14. Keynes believed that with reduced consumption saving of people rise • Demand • Supply • Price level

15. Keynes theory of consumption is a psychological theory • Sociological • Physiological • political

16. Expansion or contraction in supply of capital may affect the fortunes of business • Supplly • Demand • Consumption

17. Without Government intervention all goods would be only private • Market mechanism • Price mechanism • Cost mechanism

18. Government can stabilize the working of the markets • Improve • Deteriorate • Neutralize

19. MR and ____ are same in a perfectly competitive market • AR • TR • AVC • AFC

20. Joel dean suggested the methods of demand forecasting for new products • Prof. clark • Prof. pigou • Marshall

21. A firm can stabilize its output where marginal cost is equal to MR • AR • AC • AVC

22. When supply increases, demand remaining the same, the equilibrium price falls • Rises • Remains same • Rises slightly

23. The intersection of market demand and supply curve determines __________ • Market price • Selling price • Abnormal price • Administered price

24. Demand for a commodity depends on the relative price of its _______ • Substitute goods • Necessary goods • Luxury goods • Complimentary goods

25. By _________ we mean no government intervention • Laissez faire • Ceteris paribus • Regulated economy • Organization

26. Elasticity of demand for salt can be represented e=0 • e=1 • e<1 • e>0

27. In ___________ method the opinion of the experienced persons with the firm are collected and a committee or the general manager of the firm analysis this information and forecasts the demand for the firm’s product

• Composite management • Collective opinion • Sample survey • Panel experts

28. To economist ‘profits’ means total revenue minus all costs • Explicit cost • Implicit cost • Sunk cost

29. Monopoly firm is a price Maker

• Taker • Setter • Avoider

30. The market economy believes in the survival of the _______ • Fittest • Richest • Poorest • Weakest

31. Government intervention is strongly felt when markets ________ • Work • Fail • Improve • Succeed

32. The AR curve faced by the firm under perfect competition is Horizontal to O X axis • Perfectly inelastic demand • Relatively inelastic demand • Unitary elastic demand

33. To sustain the level of income and employment in the economy ________ should increased • Investment demand • Compulsion to invest • Capacity to invest • Inducement to save

34. One of the problems associated with capital attracting standard is Profit earned • Share capital • Capital structure of the firm • Interest on capital

35. The index numbers which are compiled to measure the changes in retail prices of various commodities refers to ________

• Wholesale prices index • Commodity prices index • Customer price indices • Retail prices index

36. _________ is a good example of monopoly in India • Railways • Post and telegraph • Supply of electricity • Telecommunication

37. Expansion of demand is _______ • More expensive demand • Increase in demand • Elastic demand • Changes in demand

38. A consumers’ expectation about the future changes in the prices of given commodity also may affect • Its supply • Its demand • Its quality • Its market

39. Paradoxical to the law of demand are _______ • Giffen goods • Complimentary goods • Substitutes goods • Necessary goods

40. Principle of _________ is associated with private goods • Non exclusion • Exclusion • Divisibility • Division

41. In case of monopoly _________ and industry are the same • Firm • Plant • Industry • Group

42. The difficulties in transport may cause a ________in the supply • Temporary decrease • Permanent decrease • Increase • No change

43. When two or more goods consumed in combination to satisfy a given want, it is called ________ • Complimentary goods • Giffen goods • Luxury goods • Necessary goods

44. National income statistics help people assess the _________ of economy • Industrial welfare • Growth performance • Agricultural unemployment • Disguised unemployment

45. The equilibrium level of effective is determined where ADF= • ASF • ED • IMF • MEC

46. ________ are goods which are already establish in the market • Established products • New products • Home products • Foreign products

47. Relatively inelastic demand is _________ • Less than 1 • Between1 & 2 • More than 1 • Equal to 0

48. Cost-benefits analysis can be useful in determining the role of government in our economy because it would tell us about the possible _______ from government provision of a particular good

• Advantages to society • Advantages to government • Advantages to foreigners • Advantages to the political leaders

49. The term giffen good coined by _______ • Adam smith • Robert Giffen • Alfred marshal • J R Hicks

50. Production function gives us an idea of the _________ of the output and the optimum employment of the variable inputs.

• optimum level • low level • high level • medium level

51. No single criterion satisfies all the conditions, therefore different standards are used for _______ • Different purposes • Different targets • Different objectives • Various purposes

52. When aggregate supply in the economy is greater than aggregate demand, factors that would show a rising tendency include output and _______

• Employment

• Labour • Prices • Costs

53. The law of constant returns to scale is depicted by the marginal out put curve which is _____ • Horizontal • Vertical • Downward sloping • Upward sloping

54. True / False

1. With the technological advances, the flow of output increases from given input (T) 2. Lack of professionalism calls for denationalization (T) 3. To the firm explicit costs are the money payment which the self owned and employed resources could

earned in their next 4. Specific demand forecasts gives a total picture of the demand for the markets of a firm’s product 5. The supply of factory made goods of daily consumption in inelastic (T) 6. Under perfect competition, firms are free to enter and exit in the market (T) 7. Aggregate demand function is a positively sloped curve (T) 8. Government expenditure makes up for the deficient aggregate demand (T) 9. Market forces are incapable of providing full employment (T) 10. The demand curve has a negative slope (T) 11. Cost is a function of prices of inputs, the rate of out put, the size of plant and technology (T) 12. Marginal cost (MC) is the rate of change of variable cost (F) 13. Elasticity of demand can be ascertained from the slope of the demand curve (F) 14. Firm under perfect competition should cover at least average variable cost to continue its business in the

market (T) 15. Indian railways is an example of monopoly (T) 16. Costs that are actually incurred during process of production are actual costs (F) 17. Cost plus pricing is also known as full cost pricing (T) 18. Market mechanism contributes to emergence of monopolies (T) 19. Public goods are necessarily supplied by public sector (F) 20. In projection approach the past experience is projected into the future (T) 21. under perfect competition, firm can be adjusted its supply to the demand by changing some factors (T) 22. Pure public goods are know for their indivisibility (T) 23. Profit is taken as the basis of pricing under marginal costing method (F) 24. When a firm’s average revenue (A.R) is less than its average cost, it earns only abnormal profit (F) 25. Profit means different things to different people (T) 26. The word profit has the same meaning to businessmen, accounting, tax collectors, workers etc.(F) 27. Demand in economics also means demand per unit of time (F) 28. For consumption of private goods its purchase by paying the right price is essential (T) 29. Where there exists a close substitute in the relevant price range, its demand will tend to be inelastic (F) 30. imitative pricing involves following the pricing policy of other rival or competitive firm (T) 31. A mid term appraisal in respect of short term project is desirable 32. Products produced by different firms under competitive market are homogenous 33. Total outlay is total quantity demanded multiplied by price per unit of the product 34. Open market operations involve purchase of goods and services from open market 35. The total number of consumer’s for a firm’s product is called the population. 36. Planned expenditure of the government of india for year 2003-04 was greater than its non plan

expenditure (F) 37. In a competitive world every company tires to attain competitive monopoly (T)

38. Cross elasticity refers to the responsiveness of demand for a commodity to a given change in the price of substitute or complementary (T)

39. . When the proportion of change in demand is exactly the same as the change in price, the demand is said to be relatively elastic.(F)

40. Cost benefit analysis an investor asses the worth of an investment project (T) 41. The term “elasticity of demand “, when used without qualifications is commonly referred to as price

elasticity of demand 42. Laws of returns to scale deals with quantities of some factors is kept fixed but other factors is varied 43. Role of cost plus pricing could be identified in product tailoring (T) 44. Aggregate demand function is the schedule showing a relationship between maximum expected sales

proceeds and different levels of output and employment 45. Predictions of the future demand for a firm’s product or products are called demand forecasts 46. The total outlay remains constant in the case of unitary elastic demand (T) 47. The Production function can be studied in four ways(F) 48. Monopolist faces a downward sloping demand curve indicating that price charged by monopolist would

lead to less quantity demanded.(T) 49. Government of India has adopted a system of dual prices in case of goods such as sugar, cement & paper 50. Contraction of supply is traced by the downward movement on the supply curve (T) 51. Demand is backed by necessary purchasing power.(T) 52. IPCL has taken over by reliance (T) 53. Insurable risks cannot be covered by insurance (F) 54. Uncontrolled growth of population is a cause of rise in prices in India (T) 55. In the case of perfectly inelastic, demand remains unchanged whatever may be the change in price (T) 56. There is transport cost existed in perfect competition (F) 57. An increase in tax such as excise duties will reduce the supply (T) 58. A producer in a static society works like a paid manager (T) 59. Break through in the production of fertilizer and high-quality seeds leads to bad crop. (F) 60. Macro-level forecasts are used at the level of the firm or a industry.(F) 61. Deficit financing involves financing of government budget deficit (T)

Multiple Choice Single Responses

1. Benefit cost ratio is used as the criterion for • Production • Project appraisal • Investment • Distribution

2. when input and output increase in the same proportion, then it is called as • increasing returns to scale • inflated returns to scale • constant returns to scale • prosperous returns to scale

3. Which changes in cost, administered price also changes • Also changes • Does not changes • Becomes unpredictable • Changes profits levels

4. Cost plus pricing method assumes that cost can be allocated • Individual products • Complementary products • Composite products • Substitute products

5. The opinion polling method tries to collect information directly or indirectly from • The general people • The prospective people • Selected section of people • Producer’s of commodities

6. A good source of public revenue is • Taxes collected • Salary • Payment of wages • Payment of bouns

7. Theory of production and cost is called • Supply side • Demand side • Labour side • Producer side

8. A place where buyers and sellers meet each other to effect a business transaction is know as • Market • Plant • Industry • Trust

9. A commodity like milk that is used on a daily by consumers, enjoys a highly • Inelastic demand • Highly elastic • Infinity • Elastic

10. After charging skimming price a firm may subsequently • Increase price • Decrease price • Stabilize price • Keep changing the price

11. Industries, other than those needing compulsory licensing, will need no approval of government in such cities where population is

• More than one million • Less than one million • 1 crore • Less than one crore nut more than 50 lakhs

12. The risk which cannot be passed on to an insurance company is • Fire • Competition • Theft • Accident

13. In the long run firm under perfectly competitive market earns • Normal profit • Abnormal profit • Supernormal profit • losses

14. With improvement in technology, with the given inputs, in level output • Increases • Decreases • Remains constant

• None of the above 15. Accounting costs are called as

• Explicit cost • Implicit cost • All costs • Internal costs

16. Black money can also be called • An unaccounted money • Stolen money • Not hared earned money • Social change

17. Black money can be accumulated • By paying regular taxes • By evading tax payment • By way of salary • By way of printing money

18. In a monopolistically competitive industry, industry, price is • Above marginal cost since each firm is a price setter • Equal to marginal cost since each firm is a price taker • Below marginal coat since each firm is a price setter • Always a fraction of marginal cost since each firm is a price setter

19. The extent of variation in demand is technically expressed as • Elasticity of demand • Desire backed by purchasing power • Want • Changes in demand

20. Jevons’, the economists who defined the term’ market’ different from that the traditional sense is an • English economics • French economics • German economics • Indian economics

21. Abnormal profits attract rivals and • Wipe out profits • Wipe out losses • Increase competition • Crate scarcity of raw materials

22. Basic objective of administered prices are • Ensures regional balance • Ensures that every unit makes exorbitant profit • To fix and maintain prices of essential eaw material avoid cost escalation • To ensure economic prices to uneconomic units so that the letter too can earn profit

23. According to Alfred Marshall market has been classified in to • 4 • 3 • 5 • 2

24. Superstar Amitabh Bachcan was roped in to strengthen the sales of • Cadbury • Amul • Wafers

• Nutrine 25. Market economy is also involved in

• Overproduction • Underproduction • No production • Low production

26. Macro economics is the study of • Consumer behaviour • Economy as a whole • Individual demand • Individual supply

27. Government through the industrial policy of a nation could • Prevent the entry of private entrepreneurs to certain business • Create income equalities • Create regional imbalance • Encourage credit flow

28. By public expenditure, we mean • Expenditure incurred by government • Expenditure incurred by firms • Expenditure incurred by households • Income of general public

29. Participation in market economy is guided motive of • Maximum private profit • Maximum social benefit • Maximum social cost • Maximum social profit

30. The total fixed cost curve is • Horizontal curve • Vertical curve • Sloping from left to right • Sloping from right to left

31. In case of such quasi private or quasi goods when element of public ness is dominant, they are termed as • Public goods • Private goods • Joint goods • Composite goods

32. Labour payment is covered under • Fixed cost • Total costs • Variable cost • Cost on wages

33. Enough demand is essential to sustain • Full employment • Cost of production • Profit • revenue

34. Uncertainty and risk arises mainly due to uncertain behaviour of the • Market forces • Factors • Change in technology

• Mangers 35. Dalal street in Bombay is known as

• Bombay stock Exchange • Bombay money market • Mangaldas market • Mulji Jetha market

36. Goods produced on small scale have • Relatively inelastic supply • Relatively elastic supply • Unitary elastic • Perfectly inelastic

37. Replacement cost is highest for • Capital goods • Durable goods • Consumer goods • Perishable goods

38. The concept of effective demand is • Aggregate expenditure in the economy • Aggregate income of the economy • Availability of goods per unit of time • Demand with out consumption gap

39. In general demand for luxurious and comforts is • Relatively inelastic • Relatively elastic • Infinity elastic • Perfectly inelastic

40. Marginal cost is also taken as a change in • TVC • TFC • AVC • AFC

41. Cost benefit analysis in broader sense refers to • Evaluation of any project • Evaluation of its employees • Evaluation of a quality of production • Evaluation of only cost

42. Total fixed cost divided by total unit output • Average fixed cost • Marginal cost • Variable cost • Average cost

43. A firm initiating changes in price is called • Price taker • Price initiator • Price follower • Price leader

44. The demand curve has a • Negative slope • Positive slope • Horizontal line

• Vertical line 45. When the proportion of change in the quantity demanded is greater than that of price the demand is said

to be • Elasticity or demand is infinity • Relatively elastic • Perfectly inelastic demand • Relatively inelastic demand

46. Administered prices are often inadequate to meet the • Rise in cost • Fall in cost • Stability in cost • Profit expectations

47. The number of total firms under pure competition always remains • Optimum • Minimum • Very less • Very large

48. The number of sellers operating under perfect competition as compare to oligopoly is • Smaller • Larger • Lesser • Fewer

49. One of the factors of production is • Raw materials • Labour • Building • Shares

50. The slope of supply curve of Labour is always • Upward • Downward • Backward • Rightward

51. Pure profit is considered to be a • Long term phenomenon • Short term phenomenon • Medium term profit • Long term profit

52. Income elasticity refers to degree of responsiveness of demand for a commodity to given change in the consumer’s

• Expenditure • Income • Behaviour • Expectations

53. In economics, supply is considered to be a • Relative term • Absolute term • Subjective term • Objective term

54. For financing economic development of India, one of the measures resorted to is

• Deficit financing • Zero base budgeting • Surplus budget • Denationalization

55. Total fixed cost of a firm includes • Depreciation • Payment of wages to Labourers • Rent paid • Running expenses on fuel

56. Public expenditure is incurred by government through • Public revenue • Private income • Past savings • Deficits

57. Keynes believed that full employment was • Difficult to attain • Easy to attain • Normal phenomenon • Possible with government intervention

58. The classical economics analysis of market is based assumption of • Monophony • Perfect competition • Monopolistic competition • Duopoly

59. Cost is less than revenue indicates • Output and employment will decrease • Output and employment will increase • Output and employment will remain constant • Output cannot be determined

60. In sample survey method • Demand forecasts of new goods is based on the information about established goods • Some new goods are substitutes of already established goods • It is possible to estimate the demand for the new good by studying how the established goods

have grown • The new product is first introduced in some sample markets

61. Paradox of thrift is also known as • Paradox of savings • Paradox of income • Paradox of consumption • Paradox of employment

62. Large number of buyers and sellers is one of the features of • Monopoly • Pure competition • Duopoly • Oligopoly

63. The law demand is usually referred to the • Individual demand • Market demand

• A firm’s demand • Industry demand

64. The commercial value of relatively elastic demand lies between • One and infinity • One and ten • One and fifty six • Zero and one

65. An inventory refers to the stock of • Factors of production • Raw materials • Machines • Distribution

66. Expansion of supply is shown by the movement in the supply curve which is • Downward • Upward • Higher • Lower

67. PDS stands for • Public distribution system • Public development system • Private development system • Private distribution system

68. Government intervention, according to Keynes, is essential to ensure • Full employment • High level production • Low cost • unemployment

69. NTC stands for • National textile corporation • National thermal company • National transport corporation • National tourist company

70. Issue of new currency could be controlled if • Treasury bills are not issued • Treasury bills are issued • Commercial bills are issued • Commercial bills are not issued

71. Formula of accounting profit • TC-(W-R+I+M) • AC-(W-R+I+M) • TR-(W-R+I+M) • MC-(W-R+I+M)

72. In modern times, entrepreneurs are also required to take note of the political climate in the • World • State • Society • Country

73. Composite management opinion may not give very accurate results because • They may be biased • No scientific base

• Based on the opinion of the experts • It is rough method

74. General theory of employment, interest and money was written by • Prof J R Hicks • Prof Lionel Robbins • Prof J M Keynes • Prof Amartya Sen

75. The total number of consumers for a firm’s product is called • The unit • The group • The section • The population

76. On account of new machines, a firm is able to effect a substantial reduction in the • Cost of production • Revenue of firm • Wages of labour • Installation cost

77. Pure public good must be in the hands of • Public sector • Private sector • Joint sector • Mixed sector

78. In economics. ‘demand’ does not mean simple • Desire • Need • Want • Willingness to pay

79. The price the consumer is willing to pay may have no relation with • Costs • Depreciation • Company profits • Company sales

80. Macro economics is the study of • Consumer behaviour • Economy as a whole • Individual demand • Individual supply

81. Managerial economics can also be called • Macro economics • Applied economics • Labour economics • Industrial economics

82. An example of economic aggregate could be • National income • Individual demand • Individual supply • Rent

83. The profit should be large enough to allow for a • Normal earnings • Plough-back

• Capital attracting • Rational profit

84. Suppose government introduces a public park, expenses incurred on such a park are termed as • Public expenditure • Private expenditure • Daily collections through such a park • Monthly fees

85. A monopolist faces a download sloping market curve, where • Average revenue is less than marginal revenue • Marginal revenue is greater than price changed • Average revenue is less than the price of its product • Marginal revenue is always less than price charged

86. A market in which any firm has little ability to influence market prices is called • Systematic market • Competitive market • Comprehensive market • Monopoly market

87. cross elasticity refers to the responsiveness of demand for a commodity to a given change in the price of a

• Related commodity • Substitute commodity • Competitive commodity • Inputs

88. The supply is always referred to • Price and time • Income and expenditure • Inflation • Production

89. Co-ordination between the factors of production ensured by • Banker • Manger • Labour • Entrepreneur

90. Government incurs expenditure on • Building of bridges • Construction of multiplexes • Provision of consumer articles • Provision of cloth

91. Market mechanism leads to emergence of • Monopolies • Perfect competition • Monopolistic competition • Duopoly

92. Prof J K Galbraith introduced • Countervailing power • Countervailing duties • Conditional power • Conditional publicity

93. things that are produced by the factors of production are called • goods

• services • commodities • output

94. ADF is important from the view point of determining • Effective demand • Aggregate supply • Aggregate demand • Inflation

95. As generally, output cannot be increased without an increase in the • Input • Cost • Demand • Production shifts

96. Demand for giffen goods is • Negative income elasticity • Zero income elasticity • High income elasticity • Low income elasticity

97. The consumer is wrongly biased against the • Quality of a commodity • Quantity of a commodity • Availability of a commodity • Packing of coomodity

98. To invite foreign investment in industries requiring large investment and advanced techniques, foreign direct investment in the from of foreign equity is permitted up to

• 0.51 • 0.50 • 0.49 • 0.40

99. Changes in administered price leads to changes in cost but such a change in cost may not be • Likely • Certain • Proportionate • Predictable

100. The production which depended on the mercy of natural conditions is • Agricultural produce • Industrial produce • Consumer goods • Durable goods

101. Anybody interested in assessing the worth of yhis investment must go for • Cost benefit analysis • FIFO • LIFO • Inventory turnover ratio

102. Unavoidable costs are made when firm faces • Growth • Development • Extension • Contraction

103. In the case of relatively inelastic demand, the demand curve is

• Rapidly sloping • Slightly • Horizontal straight line • Vertical straight line

104. One of the major factors affecting elasticity of demand • Nature of commodity • Consumers behaviour • Supply of inputs • Firm ability to produce

105. The steel Authority of India limited • Private sector • Public sector undertaking • Joint stock company • Limited company

106. To solve the problem of unemployment Keynes has advocated government intervention through • Fiscal policy • Monetary policy measure • Tax measure • Income policy measure

Multiple Choice Multiple Response

1. The subject matter of macroeconomics indicates • Theory of income and expenditure • Theory of money and banking • Theory of trade • Markets structures

2. Various methods of appraising investments include • Pay back period • Internal rate of return • Net present value • Interest coverage ratio

3. According to critics in this dynamic world • The government policy may suddenly change • Change in minatory policy takes place • Contraction of supply of money takes place • There may be change in consumer’s income

4. According to cost-input relationship • C- denotes the cost, which is a function of • L-Labour and • K- Quantity of capital • K- Interest rate of capital

5. A market becomes competitive when • Share of each buyer is small compared to the size of the market • Share of each seller is small compared to the market • Firms set their own price of the product • Firms produce differentiated products

6. Demand forecasts may be based on • Judgment of the experienced staff • On scientific analysis (statistics) • On individual opinion

• On public opinion 7. The production function can be explained by

• Law of variable proportions • Law of returns to scale • Optimum combinations of inputs • Total revenue and cost curve

8. The study of cost function involves • Prices of inputs • Rate of out put, size of plant • State of technology • Education of workers

9. The law of variable proportion

• Examines the production function • With one factor variable • Keeping the quantities of other fixed • Examines the supply function

10. Prof. J M Keynes write a book on • Employment • Interest • Money • Consumer surplus

11. Features of monopoly are • Single producer • Barriers to entry • No close substitutes to the product • Perfectly elastic demand curve

12. Under perfect competition • The number of firms in the industry is very large • Each firm is very small in size • Action of firm does not affect the market supply • It is encouraged with a view to promote the exports

13. Causes of inflationary pressures in India during 90s were • High fiscal deficit • Supply and demand imbalances • Decrease in procurement • High unemployment

14. Forecasts can be made at the level of • The firm • The industry • The nation • The individual

15. The concept of opportunity cost is used for • Measuring profits • Policy decision of the firms • Forming capital budget • Measuring total cost

16. Explicit costs are • Out of pocket costs • These are firms accounting expenses

• Expenditure costs • Expenses made on self owned resources

17. Explicit costs are expenditure made on • Salaries and wages paid to the employees • Price of raw materials • Fixed overhead costs • Self cost

18. Demand forecasts are useful to firm for • Long term investment decisions • Budgeting polices • Warehousing and inventory control • Calculating profits

19. The demand for a product is influenced by • The distribution of income • Prices of related products • Tastes of the consumer • supply

20. Income earned by factors of production is called • Wages • Rent • Interest • capital

21. Economic profits means, total revenue minus • Explicit cost • Implicit costs • Normal profits • Only explicit costs

22. Public goods carry features such as principle of • Non exclusion • Indivisibility • Exclusion • Divisibility

23. The law of supply reflects • The general tendency of the sellers • In offering their stock of a commodity • For sale in relation to the varying prices • For sale in relation to the fixed prices

24. Under law of supply • It is assumed • That the price of the product changes • But there is no change in the cost of production • There is also change in the coat of production

25. Demand is determined by • Price of the product • Relative prices of other goods • Tastes and habits • Slope of the curve

26. The exception to law of supply explained by • Backward bending supply curve • Or regressive supply curve

• Labour and savings • Straight line supply curve

27. The basic assumption of Keynesian theory • Short run equilibrium analysis • Capitalist • Technology and stock of capital are constant • Long run analysis

28. Certain cost elements that are not firm’s control are: • Transport cost • Fuel costs • Taxes • Building construction

29. e = ? Q/? P x P/Q • The original demand • The original price • Change in demand • Price of giffen goods

30. Q = f ( N,L,K,T), this algebraic expression is used for • Production function • Demand function • Supply function • Cost function

31. Among various institutions associated with supplies to PDS are • FCI

Kirloskar Brothers • STC • IO C

32. Supply of kerosene to the PDS is handled by • IOC • Hindustan petroleum • Bharat petroleum • NTPC

33. PDS serves two purposes • Helps government • Creates employment opportunities • Helps hold down price • Provides essential to low income groups at relatively low prices

34. Defects of market mechanism are • Inequalities in income and wealth • Emergence of monopolies • Equal distribution of income • Existence of perfect competition

35. Conditions for price discrimination are • Markets should be segmented • Markets should be imperfect • Elasticities in different markets would be different • Resale of goods is possible

36. Two most important and widely accepted economic policies are • Fiscal • Monetary

• Inventory • Innovative

37. The total fixed cost is constant • But total variable cost increases • As production • So total cost also increases • So total cost also constant

38. Economic feasibility includes • Prospects of employment generation • Development of backward area • Availability of management personnel • Availability of finance

39. The cross elasticity of demand explains • Percentage change in quantity demand of one good • Percentage change in price of another good • Ratio of changes in demand of one good and price of another good • Change in income

40. The production function can be studied in three ways • Law of variable proportion • Laws to return to scale • Optimum combination of inputs • Studying cost function

41. A demand curve explains • Price quantity relation • Slope of curve • Tabular statement • Complementary goods’ demand only

42. The profit standards may be determined in terms of • Aggregate money terms • Percentage of sales • Percentage return on investment • Percentage of demand

43. Gross profit is used for payment for • Remuneration to factors of production • Depreciation • Maintenance charges • Capital expenditure

44. Pure profit makes provision also for • Insurable risks • Depreciation • Necessary minimum payment of shareholders • External costs

45. The world ‘profit’ has different meanings to • Businessmen • Accountant • Tax collectors • Movie stars

46. Impure public goods are also called • Quasi public goods • Quasi private goods

• Merit goods • Cooperative goods

47. Public goods carry features such as principle of • Non exclusion • Indivisibility • Exclusion • Divisibility

48. Study of macroeconomics is important as • It helps one to understand the working of the economic system • It si based in empirical evidences • It is policy oriented • It studies individual objects

49. When a firm is small in size it may • Not need an organized furcating system • Not be able to afford an organized forecasting • It is incapable of forecasting • It has no competent staff to handle forecasting

50. For Keynes, business cycle is a composition of • Good and bad trade • Good trade and neutral trade • Low unemployment levels and rising prices • High unemployment levels and falling prices

51. Cost push factor causing price rise in India are • Fluctuation in output and supply • Taxation as a factor in raising costs • Administered prices • Mounting government expenditure

52. Various names to market mechanism are • Price mechanism • Market system • Market economy • Cost mechanism

53. Guideline followed by the government of india on pricing policy • PSUs should be economically viable • When PSUs compete with private sector, market forces would determine the price • Cost plus method • Marginal cost method

54. If in industrial enterprise capital is kept fixed • And other factors are increased • The marginal product will initially increase • But will ultimately diminish • And other factors are decreased

55. The important policy questions of profit are • What are the criteria for determining the profit standard • What from of profit standard should be used • How should reasonable profits be determined • How to distribute profit

56. types of imperfect competition are • monopoly • duopoly

• monopolist competition • pure competition

57. Policy of dual pricing is • Create inequality • Makes rich richer • In the interest of the vulnerable sections of society • It does not discourage the producers from expanding production and investment in the

particular sector 58. Macro economic aggregates are

• National income • Total investments • Employment • Business cycles

59. Increasing returns explains • Total product increases at an increasing rate • Marginal product increasing and it is maximum • Average product is increasing but it is below MP • Average product is increasing but it is above MP

60. Economic feasibility includes • Prospects of employment generation • Development of backward areas • Availability of management personnel • Availability of finance

61. The Total output of oil commodities in one country over a specific period, usually taken as a year is called

• Gross national product • Gross national income • Gross national output • Net national output

62. Other related measures used by government of India to control inflation include • OGL import policy for importing certain goods • Excise cuts • Adjustments in trade and tariff policies • Expanding exports

63. In general most goods possess elements of • Public-ness • Private-ness • Cooperativeness • Complementarily

64. The price policy in a public enterprises will have • Foreign trade • Competition from private enterprises • Its own profit • Demands of labour unions

65. Standardizing and grading agencies in India are such as • AGMARK • ISI • CBI • RAW

66. The level of effective demand is determined by • Aggregate demand function • Aggregate supply demand • Level of employment • Level of inflation

67. innovation theory of profit explains about • innovative nature of entrepreneur • reward for innovation • exploitation of innovation • reward for discharging many duties

68. cooperation exists in • marketing • credit • transport • market of agricultural products

69. private goods carry features such as • Principle of exclusion • Principle of divisibility • Principle of acceptance • Principle of social recognition

70. Managerial economics generally refers to the • Integration of economic theory with business practice • Applied economics • Business economies • Econometrics

71. Role of cost plus pricing could be seen in pricing of public utilities such as • Electricity supply • Water supply • Education • Agricultural products

72. Match the following

1. Experimental pricing Involves fixing of prices by trials 2. Imitative pricing Price decided on the basis of 3. Skimming pricing change high price initially and

Change low price initially and increase it subsequently Involves fixing of prices arbitrarily

1. Law of demand Inverse relation between price 2. Shift demand curve Changes in factors other than 3. Expansion of demand Due to change in price 4. Snob appeal goods Luxurious goods

1. explicit costs Labour wages 2. Implicit cost Opportunity cost 3. Nominal cost Money cost 4. Accounting costs Production cost

Marginal cost Gross cost

1. Perfectly elastic When e = infinity 2. Perfectly inelastic When e = 0 3. Relatively elastic demand When e > 1 4. Relatively inelastic demand When e < 1

When e = 1 When e = 2

1. Limitation of the law of diminishing returns - New methods of cultivation 2. Total product increases up to a point at an increasing rate –M P is Zero 3. when marginal product is zero - Total product is maximum 4. When average product is decreasing - M. P is less than A.P

TP falls Increasing returns

1. Cost plus pricing Ignores demand 2. Going cost pricing Emphasizes market conditions 3. Marginal cost pricing Different from incremental cast 4. Intuitive pricing Psychological and subjective

Objective approach to pricing Ignores supply

1. MR Marginal revenue 2. Profit maximization Firm’s aim 3. Super normal profit Short-run 4. IF AR< AFC Stop production

Continue production Maximization of revenue

1. Expansion of demand Movement on same demand 2. Increase in demand Shift in demand curve 3. Relationship between price and Relationship between price and 4. Market demand curve Summation of individual demand

Inverse relation between price and demand An individual’s demand curve

1. Elasticity of income = 30/20 1.5 2. Elasticity of income = 11/6 1.8 3. Elasticity of demand=15/5 0.6 4. Elasticity of demand = 15/5 0.7

1.5 1.6

1. Each shot run average curve U shaped 2. Marginal curve Has to touch the long run cost 3. MC is given by has the shape of an inverted U 4. Average total unit cost curve means the cost of producing one unit

The slope of the TVC curve or slope of the TC curve The cost of producing all units

1. Consumption Act of using the goods to satisfy 2. Production Act of marking goods and services 3. Production function combination of inputs to yield the

4. Cross national product Total out put of all commodities of Theory of price Theory of distribution

1. Consumption Function of income 2. Business cycles Fluctuations in aggregates 3. Inflation Steady and sustained rise in 4. Fiscal policy Brings variations in taxation and

Inducement to borrow Marginal efficiency of labour