Business Economics E∞

MCQ - K1 Level e <1

1. Who is the father of Economics? e>1
Alfred Marshall e=0
Adam Smith 8. Indifference curve approach was given by ___________
Lionel Robbins Alfred Marshall
Samuelson Adam Smith
2. Economics is a ________. Hicks and R.G.D. Allen
Positive science J.M.Keynes
Normative science 9. Production refers to ___.
None Destruction of utility
Both Creation of utility
3. The relationship between price and demand is ____________. Exchange value
Direct None of the above
Positive 10. The long run average cost curve is also called as_________.
Negative Budget line
None of these Planning curve
4. Law of demand shows ___________ relationship between price and quantity Indifference curve
demanded. None of the above
Positive 11. The main characteristic of monopoly market structure is_________.
Negative Single buyer
Direct Single seller
None of the above Many sellers
5. Consumer surplus is ____. Many buyers
Potential price - actual price 12. _______ is absence of competition.
MVn=TVn-TVn-1 Monopolistic
Demand=supply Monopoly
None Oligopoly
6. Relatively elastic demand is ____. Duopoly
ep=0 13. The average income of the people of a country in a particular year is _____
ep>1 Net national product
e p <1 National income
ep=1 Per capita income
7. If demand is perfectly inelastic then e is _____. Personal income
 14. _________ is the total value of all final goods and services produced by the country Price flexibility
in certain year.
Demand rigidity
National Income
Personal income Demand flexibility
Corporate income
21. Macroeconomics is the theory of ________.
Foreign income
Income and employment
15. Relationship between price and supply is ________.
Price Theory
Positive
Demand Theory
Negative
Cost Theory
Direct
22. The price elasticity of demand measures _______.
None of the above
The slope of a budget curve.
16. Perfectly elastic demand curve is a _________ curve.
How often the price of a good changes.
U shaped
The responsiveness of the quantity demanded to changes in price.
L shaped
How sensitive the quantity demanded is to changes in demand
Horizontal
23. Firms in perfect competition face a ________.
Vertical
Perfectly elastic demand curve
17.If demand is perfectly elastic then e is _____.
Perfectly inelastic demand curve
E∞
Perfectly elastic supply curve
e <1
Perfectly inelastic supply curve
e>1
24. Few sellers is the feature of
e=0
Monopoly
18.Relatively inelastic demand is ____.
Oligopoly
ep=0
ep>1 Perfect competition

e p <1 Monopolistic competition

ep=1 25. Market which has two firms is known as
19. Unitary inelastic demand is ____. Oligopoly
ep=0 Monopoly
ep>1 Duopoly
e p <1 Perfect competition
ep=1
20. The kinked demand curve explains 26. _________represents the tabular form of quantity demanded of a particular product
during a given period of time.
Price rigidity
Law of demand
 Demand Curve Cross elasticity of demand
Demand schedule Income elasticity of demand
Cross demand None of these (C)
27. Extension and contraction of demand for a good occurs as a result of 33. Which is not a statistical method in forecasting?
Change in the quality of good Trend analysis
Change in the price of a good Consumer survey
Availability of cheaper substitutes Regression method
Increases in Income (B) Least square method (B)
28. An exceptional demand curve is one that moves 34. The law which studies the direct relationship between price and quantity
Upward to the right supplied of a commodity is
Downward to the right Law of demand
Horizontally Law of variable proportion
Upward to the left. (A) Law of supply
29. In the case of a Giffen good, a fall in its price tends to None of the above (C)
Demand remain constant 35. When price rises, quantity supplied
Demand increases Expands
Reduce the demand Falls
Abnormal change in demand. (C) Increases
30. What would be the value of elasticity of demand, if the demand for the Unchanged (A)
good is perfectly inelastic? 36. In case of perfectly inelastic supply the supply curve will be
0 Rising
1 Vertical
Infinity Horizontal
Less than Zero (A) Falling(B)
31. The demand for necessities is usually
Highly elastic 37. When a percentage in price results in equal change in quantity supplied, it
Highly inelastic is called,
Unit elasticity Elastic supply
Relatively inelastic (B) Perfectly inelastic
32. The responsiveness of demand to the change in income is known as Elasticity of supply
Price elasticity of demand Unitary elastic supply (D)
38. When supply of a commodity decreases on a fall in its price, its is called Iso-quant
Expansion of supply Indifference curve
Increase in supply 44. Indifference curve slopes,
Contraction of supply Downward to the right.
Decrease in supply. (C) upward to the right.
39. Which utility approach suggests that utility can be measured and Downward to the left.
quantified? Upward to the left. Ans. a.
Ordinal 45. The process of capital formation includes,
Cardinal Capital of savings
Both a &b Mobilization of savings
Diminishing marginal utility. (B) Investment of savings
40. ---------------------- of a commodity is the additional utility derived by a All of the above Ans. d
consumer, by consuming one more unit of that commodity. 46. Internal economies is related to
Marginal utility Marketing economies
Total utility Financial economies
Average utility Labour economies.
Maximum utility (A) All of the above Ans. d
41. At what point does total utility starts diminishing? 47. When the output produced is maximum for the given level of input the
When marginal utility is positive firms achieve
When it remains constant Maximum profit
When marginal utility is increasing Technical efficiency
When marginal utility is negative.(D) Economic efficiency
42. Consumer’s surplus is also known as None of these. Ans. b.
Indifference surplus 48. The shape of TFC curve is
Elasticity of supply Horizontal line
Buyer’s surplus Downward sloping
Indifference surplus. (C) U shaped
43.Which shows various combinations of two products that give same amount Upward sloping
of satisfaction? 49. The point where TR curve cuts TC curve is called
Iso-cost curve Equilibrium point
Marginal utility curve Split off point.
 Point of inflexion. Low
Break even point. 55. In the case of inferior goods, the income elasticity of demand is --------------
Ans. d ---.
50. In perfect competition a firm increases profit when _____ exceeds Positive
________. Negative
TC, TR Positive, negative
MC, MR Negative, positive
AR, AC 56. When as a result of increase in price of goods, total expenditure made on
TR, TFC goods falls, price elasticity of demand is ------- than unity.
51. The discriminating monopoly can be categorized as_______. Greater
Personal Lesser
Place Nominal
Use None of these
All of the above 57.Market ----------- occurs where demand and supply are equal.
Equilibrium
52. ---------------------- deals with the behavior of individual decision makings Utility
units such as consumers, resource owners and so on. Elastic
Macro economics None of these
Micro economics
Mini economics
None of these
53. A Firm’s profitability depends much on its ----------------- of production.
Price
Charge
Cost
All the above
54.Low price of a good generally keeps its price elasticity of demand as --------
---.
High
Medium
Normal
 K2 LEVEL 11. What are the types of elasticity of demand?
Perfectly elastic, perfectly inelastic, unit elasticity, relatively elastic, relatively
SHORT ANSWERS.
inelastic.
Unit 1 12. What is elasticity of demand?
The degree of responsiveness of quantity demanded to changes in price of commodity
1. Define Economics.
is known as price elasticity of Demand.
Economics a social science concerned chiefly with description and analysis of the
13. What is price elasticity of demand?
production, distribution, and consumption of goods and services.
The degree of responsiveness of quantity demanded to changes in price of commodity
2. Define Business Economics.
is known as price elasticity of Demand.
Business Economics, also called Managerial Economics, is the application of
14. What is income elasticity of demand?
economic theory and methodology to business.
The degree of responsiveness of quantity demanded to changes in price of commodity
3. What is demand?
is known as income elasticity of Demand.
Demand for a commodity is the quantity which a consumer is willing to buy at a
15. What is cross elasticity of demand?
particular price at a particular time.
The degree of responsiveness of quantity demanded of product x due to changes in
4. Define demand.
price of commodity y is known as cross elasticity of Demand.
Demand for a commodity is the quantity which a consumer is willing to buy at a
16. What is consumer demand?
particular price at a particular time.
Consumer demand is the demand of an individual buyer or consumer.
5. What is Giffen paradox?
17. What is market demand?
A Giffen good is a product for which demand increases as the price increases and
Market demand is the aggregate demand of all the consumers in the market.
falls when the price decreases.
18. Give two examples for substitutes.
Tea and coffee, petrol and LPG
6. What is Veblen effect?
19. Give two examples for complimentary goods.
Veblen effect is a theory that suggests that by increasing the price it can increase
Ink and pen, car and tyre, tea and sugar
demand and by decreasing the price you can decrease demand
20. What is budget line?
7. Draw a demand curve.
Budget line (also known as budget constraint) is a schedule or a graph that shows a
8. Draw a demand schedule.
series of various combinations of two products that can be consumed at a given
9. Draw a supply curve.
income and prices.
10. What is elasticity?
21. Define consumer surplus.
Elasticity is the responsiveness of demand or supply of a product to change in its
Consumer surplus happens when the price that consumers pay for a product or
price.
service is less than the price they're willing to pay.
22. What is MRS?
Unit 2
 MRS is marginal rate of substitution denotes the extent which a product a can be Variable cost is the cost that corresponds to the units produced. Direct material,
substituted by other product b. labour etc.
Unit 3 33. Give the formula for TAC.
23. What is production? TAC= TFC+TVC/ n
Creation of utilities, conversion of raw materials into finished goods Unit 4
24. Give the four factors of production. 34. Define market
Land, labour, capital and organization. A market is a place where two parties can gather to facilitate the exchange of goods
25. What is opportunity Cost? and services. The parties involved are usually buyers and sellers.
Opportunity cost is the cost of next best alternative forgone. 35. What is perfect competition?
26. What is meant by Economies of scale? Perfect competition is a market condition where there is large number of buyers and
Economies of scale is the competitive advantage that large entities have over smaller sellers.
ones. The larger the business, non-profit, or government, the lower its per-unit costs. 36. What is monopoly?
27. What is marginal cost? Monopoly is a market condition where there is only one seller.
Marginal cost of production is the change in total cost that comes from making or 37. What is price discrimination?
producing one additional item. Price discrimination is selling the same product at different price to different
28. What is a planning curve? consumers.
Long run average cost curve is also called as planning curve. 38. Give example for price discrimination.
29. Why AC is U shaped curve? Theatre tickets, rail tickets etc.
The nature of ‘U’ shaped short-run Average Cost curve can be attributed to the law 39. What is monopolistic competition?
of variable proportions. This law tells that when the quantity of one variable factor is Monopolistic competition is characterized by product differentiation
changed while keeping the quantities of other factors fixed, the total output increases 40. What is product differentiation?
with an increasing rate and then declines with more than proportionate. Product differentiation is the essence of monopolistic competition.
30. What is explicit cost? 41. Explain the term oligopoly.
Explicit cost is defined as the direct payment which is supposed to be made to others Oligopoly is presence of few sellers in the market having price rigidity.
during the due course of running business. This includes the wages, rents 42. What is a kinked demand curve?
31. What is social cost? Kinked demand curve is seen only in oligopoly market where there is a kink or gap in
Social costs are private costs borne by individuals directly involved in a transaction demand curve.
together with the external costs borne by third parties not directly involved in the 43. Draw a kinked demand curve.
transaction. Unit 5
32. What is variable cost? Give example. 44. What do you mean by national income?
 National income is the total value a country's final output of all new goods and 53. What is per capita income?
services produced in one year. Per capita income (PCI) or average income measures the average income earned per
45. What is GDP? person in a given area (city, region, country, etc.) in a specified year. It is calculated
by dividing the area's total income by its total population.
Gross Domestic Product is money value of all goods and services produced within the
domestic domain with the available resources during a year.

46. What is GNP?

Gross National Product (GNP): Is market value of final goods and services produced
in a year by the residents of the country within the domestic territory as well as
abroad. GNP is the value of goods and services that the country's citizens produce
regardless of their location.
47. What is NNP?
Net National Product (NNP) at MP: Is market value of net output of final goods and
services produced by an economy during a year and net factor income from abroad.
48. What is circular flow of income?
The circular flow of income or circular flow is a model of the economy in which the
major exchanges are represented as flows of money, goods and services, etc.
49. What is black money?
Black money is the unaccountable amount not covered under tax.
50. Give the methods of calculating national income.
Income method, expenditure method, product method.
51. What is disposable income?
Disposable Income (DI) : It is the income left with the individuals after the payment
of direct taxes from personal income. It is the actual income left for disposal or that
can be spent for consumption by individuals.
52. What is product method?
The Product (Output) Method is the most direct method of arriving at an estimate
of a country’s national output or income is to add the output figures of all firms in the
economy to get the total value of the nation’s output. The outputs can be grouped into
certain product categories corresponding to industries or to sectors (such as the
primary sector, secondary sector and the tertiary sector).
 SECTION B 34. Explain kinked demand curve.
1. Explain the nature of Business Economics. 35. What are the features of monopoly?
2. Distinguish Micro and Macro Economics. 36. Discuss monopolistic competition and its characteristics.
3. What are the basic concepts of business economics? Explain. 37. Explain the concept of price discrimination and the three degrees.
4. State the Law of Supply. 38. Write a short note on super normal profits.
5. Explain the factors influencing supply. 39. What is oligopoly? Explain the features.
6. What are the exceptions to law of demand? 40. Write a short note on perfect competition.
7. Enumerate the determinants of demand. 41. Explain the concept of GNP.
8. State the law of demand. 42. Write a short note on GDP.
9. Explain shift in demand with example. 43. List the concepts of national income.
10. Explain cross elasticity of demand. 44. Explain the concept of circular flow of income.
11. What are the methods of measuring elasticity of demand? 45. What are the problems in measuring national income?
12. Explain the need to forecast demand. 46. Explain the importance of national income.
13. What are the methods of demand forecasting? 47. What are the methods in measuring national income?
14. What are the types of elasticity of demand? 48. Explain income method.
15. Explain demand distinctions. 49. Explain expenditure method.
16. Illustrate and explain indifference curve. 50. Explain both
17. What are the properties of indifference curve?
18. Explain Consumer Equilibrium.
19. Explain the concept of budget line.
20. Explain the concept of consumer surplus.
21. Explain income elasticity of demand.
22. Explain substitution effect.
23. Write a short note on production function.
24. Explain the concept of long run average cost curve.
25. Write a short note on economies of scale.
26. What are internal economies of scale? Explain its types.
27. Explain short run cost-output relationship.
28. Write a short note on opportunity cost.
29. Explain Cobb Douglas production function.
30. Write a note on diseconomies of scale.
31. Explain the factors involved in production and their importance.
32. What are the features of perfect competition?
33. Give the classification of markets.
 Section C

1. Explain in detail the nature and scope of business economics.

2. Business economist has a major role in any business organisation. Explain.
3. State the law of demand in detail.
4. Explain in detail the law of supply.
5. Discuss in detail the factors affecting demand.
6. Explain in detail about the types of elasticity of demand.
7. Discuss the methods used to measure elasticity of demand.
8. Discuss in detail the types of price elasticity of demand?
9. Mention in detail the techniques used in demand forecasting.
10. What is MRS? Explain.
11. Explain the indifference curve analysis in detail.
12. Explain the concept of consumer surplus in detail.
13. Discuss in detail the types of cost.
14. Explain in detail the short run and long run cost curves.
15. State in detail the law of variable proportions.
16. Explain in detail the types of economies of scale.
17. Briefly explain the classification of markets.
18. How is the price and output determined under monopoly?
19. What are the features of perfect competition? Explain.
20. Discuss about price determination under perfect competition.
21. Illustrate and explain how price is determined under monopolistic competition.
22. Explain in detail the concepts of national income.
23. What are the problems in measuring national income? Explain.
24. Why measuring national income is significant? Explain.
25. Explain in details the methods used in measuring national income

--------------------------------------------------