Download Managerial Economics Question Bank - E

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bank
Managerial
economics
NEHRU ARTS AND SCIENCE COLLEGE
PG AND RESEARCH DEPARTMENT OF COMMERCE
Question Bank - Managerial Economics
UNIT – I
Managerial Economics – Meaning and Definition – Nature and Scope – Economic Theory –
Divisions – Goals of a firm.
Section A
1.Which one is not a characteristics of managerial economics
a. Micro economics b. Normative science c. Positive science d. Pragmatic
2. Which is the characteristics of managerial economics
a. Deals with both micro and macro aspects
b. Both positive and normative science
c. Deals with theoretical aspects
d. Deals with practical aspects.
3. . ………….is economic theory used in business whereas ……….is economics theory used in
business and non business organization
a. Micro economics, macro economics
b.
Business
economics,
managerial
economics
c. Positive economics and normative economics d. None of these
4. . Managerial economics is also called
a. Micro economics
b. Theory of the firm
c. Economics of the firm
d. All
5.. Which of the following is not included in functions of managerial economists
a. Sales forecasting
b. Industrial market research
c. Advice on foreign exchange
d. None of the above
6. Which of the following is included in specific functions of managerial economists
a. Economic analysis of competing companies
b. Advice on pricing problems of industry
c. Environmental forecasting
d. All of the above
7. Which of the following is not a function of managerial economists
a. Advice on trade and public relations
b. Economic analysis of agriculture
c. Investment analysis
d. Supervision and control
8. . Which of the following is not a function of managerial economist
a. Analysis of under developed economies
b. Capital project appraisal
c. Advice on primary commodities
d. None of these
9. Basic economic tools of managerial economics include
a. Opportunity cost principle
b. Incremental principle
c. Discounting principle
d. All of the above
10. Basic economic tools of managerial economics does not include
a. Principle of time perspective
b. Equi‐marginal principle
c. Incremental principle
d. None of these
11. Managerial Economics is
a. Dealing only micro aspects
b. Only a normative science
c. Deals with practical aspects
d. All of the above
12. Micro economics studies the economic actions and behavior of
a. Individual units
b. Economic aggregates
c. Total employment
d. General price level
13. Macro economics is concerned with
a. The theory of firm
b. Household expenditure
c. General price level
d. Individual consumer behavior
14. The author of the book “ The General Theory of Employment, Interest and Money”
a. Alfred Marshall
b. Adam Smith
c. J M Keynes
d. A C Pigou
15. Modern definition is also called as
a. Growth definition
b. Welfare definition
c. scarcity definition
d. Neoclassical definition
15. Economics was classified into micro and macro by
a. Ragnar Frisch
b. Adam Smith
c. J M Keynes
d. A C Pigou
c. J M Keynes
d. Ragnar Frisch
16. Who is regarded as a father of Business Economics
a. Joel Dean
b. Adam Smith
17. Decision making and ‐‐‐‐‐‐‐‐are the two important functions of executive of business firms
a. Forward planning
b. Directing
c. Supervising
d. Administration
c. Income theory
d. None of these
c. Income theory
d. None of these
18. ………….is micro economic theory
a. Demand theory
b. Price theory
19. Macro economic theory is also called as
a. Demand theory
b. Price theory
20. The famous book on economics “An Enquiry into the Nature and Cause of Wealth of Nation”
was Written by
a. Alfred Marshall
b. Adam Smith
c. J M Keynes
d. A C Pigou
21. Wealth(Classical)definition of economics is given by
a. A C Pigou
b. Lionel Robbins
c. Adam Smith d. Alfred Marshall
22. ……………. is known as the ‘father of economics
a. A C Pigou
b. Lionel Robbins
c. Adam Smith
d. Alfred Marshall
23. Welfare(neo classical) definition of economics is given by
a. J B Say
b. Lionel Robbins
c. Adam Smith
d. Alfred Marshall
24.. The scarcity(New) definition is suggested by
a. A C Pigou
b. Lionel Robbins
c. Adam Smith
d. Alfred Marshall
25.. Allocation of available resources among alternatives is based on the principle
a. Opportunity cost principle
b. Discounting principle
c. Equi‐marginal principle
d. None of these
Section B
1.
2.
3.
4.
5.
Differentiate accounting in economics and commerce.
Discuss economic theory.
Give the meaning and definition of managerial economics.
Explain the nature and scope of managerial economics.
Describe the social responsibilities in business.
Section C
1. How is economics related with other disciplines?
2. Explain the various objectives of a business firms.
UNIT - II
Demand Analysis – Meaning, Determinants of Demand – Law of Demand, Elasticity of
Demand – Price, Income and Cross Demand – Demand Estimation and Demand Forecasting
– Demand Distinctions.
Section A
1. A demand curve
a. Raises upward from left to right
b. Slopes downward from left to right
c. Is a horizontal straight line
d. Is a vertical straight line
2. Elasticity of demand refers to
a. Change in demand due to change in price
b. Change in income due to change in price
c. Change in taste due to change in price
d. Change in profit due to change in demand
3. The responsiveness of change in demand due to change in income is called Income
elasticity of demand.
a. True b. False
4. The doctrine ‘Conspicuous Consumption’ which states ‘some goods are purchased
not for their intrinsic worth but for their prestige value is
a. Veblen effect
b. Giffen effect
c. Speculative effect d. None of the
above
5. When E>1, the demand is said to be
a. Perfectly inelastic
b. Perfectly elastic
c. Inelastic
d. Elastic
6. Cross elasticity of demand refers to a situation where
a. Increase in demand increases the prices
b. Increase in price of one commodity increases demand for another commodity.
c. Increase in demand increases sales.
d. Decrease in price increases demand.
7. Demand refers to
a. The willingness and the ability to buy a commodity
b. Shortage of a commodity
c. Want satisfying power of a commodity
d. Surplus of a commodity
8. The law of demand operates because
a. Law of diminishing marginal utility comes into force
b. The working of the principle of different uses
c. The working of the principle of different income
d. All of these
9. If the demand for goods is inelastic, an increase in its price will cause the total
expenditure of the consumers of the goods to
a. Remain the same
b. Increase
c. Decrease d. None of these
10. Law of demand establishes
a. Inverse relationship between price and quantity
b. Positive relationship between price and quantity
11. When the elasticity of demand is low, the MR is …
a. Positive
b. Negative c. Zero
d. Either negative or zero
12. Which one of the following formula will be used for the computing price elasticity of
demand?
% of change in quantity demanded
a.
% of change in price
b.
c.
d.
% of change in quantity demanded
national income
% charge in quantity demanded
100
% charge in price
% charge in supply
13. The concept of elasticity of demand was introduced by
a. Marshall
b. J.M. Keynes
c. Adam Smith
d. None of these
14. Since the change in quantity demanded is in opposite direction to the change in price,
price elasticity of demand is
a. Positive
b. Negative
15. Match the following
a. If E > 1
(i) Demand is inelastic
b. If E < 1
(ii) Demand is completely inelastic
c. If E = 1
(iii) Demand is perfectly or infinitely elastic
d. If E = 0
(iv) Demand is unity
e. If E = α
(v) Demand is elastic
Ans. (a)
16-(v), 17-(i), 18-(iv), 19-(ii), 20-(iii)
(b)
16-(i),
17-(ii), 18-(iii), 19-(iv), 20-(v)
(c)
16-(iv), 17-(v), 18-(ii),
19-(i), 20-(iii)
16. Match the following
a. Zero income elasticity of demand
(i) Ei < 0
b. Negative income elasticity of demand
(ii) Ei = 1
c. Unitary income elasticity of demand
(iii) Ei = 0
d. Income elasticity of demand greater than one
(iv) Ei < 1
e. Income elasticity of demand less than one
(v) Ei > 1
Ans. (a)
21-(i), 22-(iii), 23-(iv), 24-(v), 25-(ii)
(b)
21-(iii), 22-(i),
23-(ii),
24-(v), 25-(iv)
(c)
21-(iii), 22-(iv), 23-(i),
24-(v), 25-(ii)
17. If commodities A and B are perfect substitutes of each other, the cross elasticity of
demand will be
a. Infinity
b. Zero
c. E>1
d. E=1
18. If two commodities are complements of each other, then their cross elasticity will be
a. Positive
b. Negative
19. Higher the price of certain luxurious articles, higher will be the demand, this concept is
called
a. Giffen effects
b. Veblen effects
c. Demonstration effects
d. Both b & c above
20. Demand for milk, sugar, tea for making tea, is an example of
a. Composite demand
b. Derivative demand
c. Joint demand
d. Direct demand
21. Demand for electricity is an example of
a. Composite demand
b. Derivative demand
c. Joint demand
d. Direct demand
22. The concept of Elasticity of Demand was introduced by
a. Alfred Marshall
b. Lionel Robbins
c. Adam smith
d. J M Keynes
23. Price Elasticity of demand =
a.
Proportionate change in quantity demanded /
Proportionate change in price
b. Change in Quantity demanded / Quantity demanded Change in Price/price
c. ( Q2‐Q1)/Q1 (P2‐P1) /P1
d. All the above
24. When a small change in price leads to infinite change in quantity demanded, it is called
a. Perfectly elastic demand
b. Perfectly inelastic demand
c. Relative elastic demand
d. Relative inelastic demand
25. Quantity remains the same whatever the change in price, this is the case of
a. Perfectly elastic demand
b. Perfectly inelastic demand
c. Relative elastic demand
d. Relative inelastic demand
Section B
1.
2.
3.
4.
Explain demand with illustrations.
Differentiate demand estimation and demand forecasting.
What are the different types of demand?
Write about the factors that influence demand.
5. What is the economics behind Law of Demand?
6. Income elasticity of demand – explain.
7. Describe with illustrations cross elasticity of demand.
Section C
1.
2.
3.
4.
5.
6.
Explain price elasticity of demand.
Does the Law of Demand always hold true?
What are the different types of elasticity of demand?
Explain law of demand.
Discuss the different ways through which you estimate demand for a product.
Explain in detail demand distinctions.
UNIT - III
Production Function – Meaning and Definition – Elasticity of Substitution and Production –
Type of cost of Production – Long run and Short run cost.
Section A
1. In the long run all costs become __________________ costs.
2. The short-run average cost curves are also called_______________.
3. Profit is
a. sales
b. sales minus cost
c. cost plus
d. all the above
4. Which of the following is not a factor of production?
a. land
b. capital
c. labour
d. rent
5. Production function studies the relationship between
a. input and output
b. cost and revenue c. demand and supply
6. Production is ________ of utilities.
a. destruction
b. creation
7. Consumption is ______________ of utilities.
a. destruction
b. creation
8. _________ cost is called supplementary cost or overhead cost.
a. variable costs b. fixed costs
c. total costs d. marginal costs
9. The reward for organization as a factor of production is
a. interest
b. rent
c. wages
d. profit
10. Variable costs are also called as _________________ or _______________
11. ………..= R2‐R1/Q2‐Q1
a. Average revenue
12.
b. Total revenue c. Marginal revenue
d.Incremental revenue
……….. Measures the differences between the new total revenue and existing total
revenue
.
a. Average revenue
b. Total revenue
c. Marginal revenue
d.Incremental
revenue
13. ………. means the total receipts from sales divided by the number of unit
sold.
a.
Average revenue
c. Marginal revenue
b. Total revenue
d. Incremental revenue
14. So long as Average Revenue is falling, Marginal Revenue will be …………. Average
Revenue
a. Less than
b. More than
c. Equal to
d. None of these
15. Where Marginal revenue is negative, TR will be …………..
a. Rising
b. Falling
c. Zero
d. One
16. Total Revenue will be maximum at the point where Marginal Revenue is
a. One
b. Zero
c. 1
17. ………….. Is the change in total revenue irrespective of changes in price or due to the effect of
managerial decision on revenue
a. Average revenue b. Total revenue c. Marginal revenue d. Incremental revenue
18. Which of the following is not a variable input?
a) Raw material
b) Power
c) Equipment
d) None of these
19. Which of the following is a short run law?
a) Law of constant return to scale
b) Law of increasing return to scale
c) Law of diminishing return
d) None of these
20. …………is called produced means of production
a) Land
b) Labour
c) Capital
d) Raw material
21. In the long run all input become …………
a) Fixed
b) Variable
c) Semi variable
d) None of these
22. The term “Economies” refers to
a) Product advantage
b) Cost advantage
23. Related to production function, MRTS stand for;
a) Marginal revenue and total sales
b) Minimum revenue from total sales
c) Marginal rate of total supply
d) Marginal rate of technical substitution
c) Sales advantage
d) All of the above
24. in economics ……..means ‘a state of rest ‘or ‘stability’
a) Depression
b) Equilibrium c) Maturity
d) growth
25. Which is not a property of ISOQUANT?
a) Downward sloping
b) Convex
c) Negative slope
d) Positive slope
Section B
1. What are the different factors of production?
2. Define Cobb-Douglas production function.
3. Explain indifference curves.
4. List out the different costs of production.
5. Differentiate long run and short run costs.
Section C
1. Explain the concept of production function.
2. Explain the different concepts in cost and revenue.
3. Explain LAC.
4. How do you optimize cost by substituting factors of production?
UNIT-IV
Markets – Forms of Market – Characteristics - Pricing Methods – Objects of pricing policies
– Practices – Government intervention in Market.
Section A
1. Under oligopoly there are
a. Many sellers
b. Few sellers
c. Few buyers
d. Few buyers and sellers
2. Price discrimination is
a. Price differentiation
b. No price
c. Single price
3. If the producer charges a lower price in the world market than in the home market, he
is
said to be ____________ in the world market.
4. Under monopoly there is
a. only one seller b. only one buyer
c. only one producer d. only one
consumer
5. The following is a public enterprise
a. BHEL
b.Reliance
c.Tata Indicom
6. ‘laissez-faire’ means
a. government intervention
b. non-intervention of the government
c.co-existence of government and private sector
7. Public sector is
a. private company
b.family business
c. government company
8. MRTP Act is now referred as
a. MRTP Act
b.Competition Act
c.Restrictive Practices
9. Cost plus pricing is also called
a. margin pricing
b. full cost pricing
c. mark up pricing
d. all the above
10. Average cost pricing is also called as
a. cost plus pricing
b. marginal cost pricing c. margin pricing
d. both a & c
11. Under which method, the cost is added with the predetermined target rate of return on
capital
invested
a. Cost plus pricing
b. Target pricing
c. Mark up pricing
d. None of these
12. Target pricing is also called as
a. Cost plus pricing
b. Rate of return pricing c. Mark up pricing d. None of these
13. Under the Marginal cost pricing, the price is determined on the basis of;
a. Fixed cost b. Variable cost c. Total cost d. Average cost
14. Cinema Theater, telephone bills etc..are following
a. Full cost pricing b. Marginal cost pricing c. Differential pricing d. Mark up pricing
15. Price discrimination is also called as
a. Discriminatory pricing
c. Average cost pricing
b. Differential pricing
d. a & b above
16. The method of pricing which is also known as Parity pricing and Acceptance pricing is
a. Differential pricing
b. Going rate pricing
c. Discriminatory pricing
d. Mark up pricing
17. The pricing of cup of tea or coffee, is an example of
a. Mark up pricing
b. Marginal cost pricing
c. Conventional pricing
d. Cost plus pricing
18. ……………………is the method of leadership pricing
a. Going rate pricing
b. Follow up pricing
c. Barometric pricing
d. Parity pricing
19. Generally used strategy for pricing new products is/are
a. Skimming price strategy
b. Penetration price strategy
c. Both a & b
d. None of these
20. …………… provide guidelines to carry out ……………
a. Pricing strategies, pricing policies
b. Pricing policies, pricing strategies
c. Pricing rules, pricing policies
d. Pricing rules, pricing strategies
21. Psychological pricing is also called as;
a. Penetration pricing b. Skimming pricing
c. Odd pricing d. None of these
22. Prices of Bata shoe as Rs.99.99, this pricing is
a. Mark up pricing
b. Odd pricing
c. Marginal cost pricing
d. Follow up pricing.
23. Which one of the following is not a reason for adopting skimming price strategy
a. When the demand of new product is relatively inelastic.
b. When there is no close substitutes
c. Elasticity of demand is not known
d. Product has high price elasticity in the initial stage
24. Which one of the following is not a reason for adopting penetration price strategy
a. Product has high price elasticity in the initial stage.
b. The product is accepted by large number of customers.
c. Economies of large scale production available to firm
d. When the buyers are not able to compare the value and utility
25. Customary pricing is also known as
a. Consumer pricing
b. Conventional pricing
c. Cost plus pricing
d. Full cost pricing
Section B
1. Compare the characteristics of monopoly?
2. Write the features of perfect competition.
3. What are the characteristics of oligopoly?
4. Write the assumptions of monopolistic competition.
5. State the conditions of price discrimination.
6. In what ways government intervenes in a market?
7. Explain the price policy in public utilities.
8. List out the objectives of pricing policies.
Section C
1. Discuss the different forms of market.
2. What is price discrimination? What are the different types & conditions of price
discrimination?
3. What are the different pricing methods followed by business firms?
4. Explain in detail the functioning of MRTP Act in India.
UNIT-V
Price Theory – Perfect Competition, Monopoly, Monopolistic competition, Monopsony,
Duopoly, Duopsony and Oligopoly.
Section A
1. Average revenue curve for a monopoly firm under profit condition is
a. above average cost
b.below average cost
b. equal to average cost
d.none of the above
2. Perfect competition is characterized by
a) large number of buyers and sellers
b) homogeneous product
c) free entry and exit of firms
d) all the above
3. The market with a single producer’’
a) perfect competition b) monopolistic competition
c) oligopoly
d) monopoly
4. Selling cost is the feature of the market form
a) monopoly
b) monopolistic competition
c) oligopoly
d) none of these
5. The product under monopolistic competition are
a) differentiated with close substitute
b) perfect substitute
c) differentiated without close substitute
d) homogeneous
6.. In the oligopoly market there are
a) large no. of firms
b) a few firms
c) a single firm
d) an infinite no. of firms
7.. The concept of product differentiation was introduced by
a) TR Malthus
b) JM Keynes
c) Mrs. Robinson
d) Chamberlin
8. The short run production function is called;
a) Returns to scale
b) law of variable proportion
c) Production possibility frontier
d) None of these
9. Under oligopoly a single seller cannot influence significantly
a) market price
b) quantity supplied
c) advertisement cost
d) all the above
10. Average revenue is the revenue per
a) unit commodity sold
b) total commodity sold
c) marginal commodity sold
d) none of these
11. The distinction between variable cost and fixed cost is relevant only in
a) long period
b) short period
c) medium term
d) mixed period
12. The condition for the long run equilibrium of a perfectly competitive firm
a) Price=MC=AC
b) Price=TC
c) MC=AVC
d) MC=MR
13. Product differentiation is the important feature of
a) monopoly b) perfect competition c) monopolistic competition d) monophony
14. The architect of the theory of monopolistic competition
a) Rosenstein Roden
b) JR Hicks
c) Karl Marx
d) Chamberlin
15. The no. of firms under oligopoly is
a) 1
b) 2
c) many
d) few
16. The law of diminishing returns applies more to
a) Agriculture
b) industry
c) services
d) commerce
17. Which is/are the salient features of monopolistic competition?
a) Large number of sellers
b) Normal profit
c) Free entry and exit of firms in industry
d) All of these
18. Which are the characteristics of monopoly?
a) Single seller or producer
b) No close substitutes
c) Inelastic demand curve
d) All of these
19. The causes of emergence of monopoly is/are:
a) Concentration of ownership of raw materials
b) State regulation
c) Public utility services
d) All of these
20. Which are not the features of oligopoly?
a) Few sellers
b) Advertising and sales promotion
c) One firm
d) Conflicting attitudes of firms
21. The monopoly can be controlled by:
a) Social boycott
b) Antimonopoly legislation
c) Public ownership
d) All of these
22. The properties of indifference curves are
:
a) Indifference curve slops downwards from left to right
b) Convex to the point of origin
c) Two indifference curve never cut each other
d) All of these
23. Price discrimination occurs when variation in prices for a product in different markets does not
reflect variation?
a) Costs
b) Price
c) Demand
d) All of these
24. A cost that has already been committed and cannot be recovered known as:
a) Sunk cost
b) Total cost
c) Full cost
d) Variable cost
25. The competitive firm’s long run supply curve is the portion of its …………..curve lies above
average total cost.
a) Marginal cost
b) Revenue cost
c) Fixed cost
d) All of these
Section B
1. How is price determined under monopoly?
2. Explain – pricing under perfect competition.
3. Explain the different theories of pricing.
4. Define - monopsony, duopoly and duopsony.
5. How is price determined in a monopoly market?
Section C
1. Discuss pricing of monopolistic competition in short run and long run periods.
2. Discuss ‘Kinked demand curve’.