1 

Managerial Economics is

A. Dealing only micro aspects

B. Only a normative science
C. Deals with practical aspects
D. All of the above

2 The techniques of optimization include

A. Marginal analysis
B. Calculus
C. Linear programming
D. All of the above

3 In economics, desire backed by purchasing power is known as

A. Utility
B. Demand
C. Consumption
D. Scarcity

4. Basic assumptions of law of demand include

A. Prices of other goods should change.

B. There should be substitute for the commodity.
C. The commodity should not confer any distinction.
D. The demand for the commodity should not be continuous

5. 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. Bothb&cabove

6. In the case of perfect elasticity, the demand curve is

A. Vertical
B. Horizontal
C. Flat
D. Steep

7. Outlay method of measurement of elasticity is also called as

 A. Percentage method
B. Expenditure method
C. Point method
D. Geometric method

8. ______________ demand forecasting is related to the business conditions prevailing

in the economy as a whole

A. Macro level
B. Industry level
C. Firm level
D. None of these

9. ______________ is the base of marketing planning

A. Demand Estimation
B. Demand analysis
C. Demand function
D. Demand forecasting

10. ______________ 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

11. 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

12. The distinction between variable cost and fixed cost is relevant only in

A. long period
B. short period
C. medium term
D. mixed period

13. Purposes of Short term Demand forecasting doesn’t includes;

A. Making a suitable production policy.

 B. To reduce the cost of purchasing raw materials and to control inventory.
C. Deciding suitable price policy
D. Planning of a new unit or expansion of existing unit

14. In ______________ approach, the demand for new product is estimated on the basis
demand of existing product

A. Growth curve approach

B. Evolutionary approach.
C. Opinion polling approach
D. Vicarious approach.

15. The proportionate change in the quantity demanded of a commodity in response

to change in the price of another related commodity is called

A. Price elasticity
B. Related elasticity
C. Cross elasticity
D. Income elasticity

16. Which one is the method for measurement of elasticity

A. Proportional or Percentage Method

B. Outlay Method
C. Geometric method
D. All the above

17. ______________ Method is also known as Sales-Force – Composite method or

collective opinion method

A. Opinion survey
B. Expert opinion
C. Delphi method
D. Consumer interview method

18. Which of the following is not a method of demand forecasting of new products

A. Trend projection
B. Substitute approach
C. Evolutionary approach
D. Sales experience approach

19. Psychological pricing is also called as;

A. Penetration pricing
 B. Skimming pricing
C. Odd pricing
D. None of these

20. Customary pricing is also known as

A. Consumer pricing
B. Conventional pricing
C. Cost plus pricing
D. Full cost pricing

21. ______________ is the process of finding current values of demand for various

values of prices and other determining variables.

A. Demand Estimation
B. Demand analysis
C. Demand function
D. Demand forecasting

22. In the case of ______________ a small change in price leads to very big change in
quantity demanded

A. Perfectly elastic demand

B. Perfectly inelastic demand
C. Relative elastic demand
D. Unit elastic demand

23. In ______________ approach, on the basis of the growth of an established product,

the demand for the new product is estimated

A. Growth curve approach

B. Evolutionary approach.
C. Opinion polling approach
D. vicarious approach

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. Car and petrol are

 A. Complimentary goods
B. Substitute goods
C. Supplementary goods
D. Reserve goods

26. Criteria for good demand forecasting includes;

A. Plausibility
B. Simplicity
C. Economy
D. All the above.

27. Cost plus pricing is also called

A. margin pricing
B. full cost pricing
C. mark up pricing
D. all the above

28. 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

29. The architect of the theory of monopolistic competition

A. Rosenstein Roden
B. JR Hicks
C. Karl Marx
D. Chamberlin

30. The function of combining the other factors of production is done by

A. land
B. labour
C. Capital
D. Entrepreneurship

31. ______________ means the total receipts from sales divided by the number of unit
sold.

A. Average revenue
B. Total revenue
 C. Marginal revenue
D. Incremental revenue

32. Ep=0in the case of ______________ elasticity

A. Perfectly elastic demand

B. Perfectly inelastic demand
C. Relative elastic demand
D. Unitary elastic demand

33. Law of demand shows the functional relationship between ______________ and

quantity demanded

A. Supply
B. Cost
C. Price
D. Requirements

34. When the change in demand is exactly equal to the change in price, it is called

A. Perfectly elastic demand

B. Perfectly inelastic demand
C. Relative elastic demand
D. Unitary elastic demand

35. Tea and coffee are

A. Complimentary goods
B. Substitute goods
C. Supplementary goods
D. Reserve goods

36. Survey method of demand forecasting includes

A. Opinion survey
B. Expert opinion
C. Delphi method
D. All the above

37. In ______________ pricing fixed cost are excluded.

A. skimming pricing
B. going rate pricing
C. administered pricing
D. marginal cost pricing
38. The market with a single producer''

A. perfect competition
B. monopolistic competition
C. oligopoly
D. monopoly

39. The short run production function is called;

A. Returns to scale
B. law of variable proportion
C. Production possibility frontier
D. None of these

40. Which are the characteristics of monopoly?

A. Single seller or producer

B. No close substitutes
C. Inelastic demand curve
D. All of these

41. Whenever ______________ is greater than average total cost, average total cost is
rising.

A. Marginal cost
B. Variable cost
C. Fixed cost
D. Full cost

42. Which of the following is not a macroeconomic concept?

A. Business cycle
B. National income
C. Government policy
D. None of these

43. Iso-cost line indicate the price of

A. Output
B. Inputs
C. Finished goods
D. Raw material

44. Who classified economies of scale into internal and external?

 A. Robinson
B. Marshall
C. Edward west
D. Pigue

45. Product differentiation is the important feature of

A. monopoly
B. perfect competition
C. monopolistic competition
D. monophony

46. 13th Finance Commission has been constituted under the chairmanship of:

A. C.Rangarajan
B. Vijay L Kelkar
C. Deepak Parekh
D. Indira Bhargara

47. Method of demand forecasting is also called "economic model building"

A. Opinion survey
B. Complete enumeration
C. Correlation and regression
D. Delphi method

48. The responsiveness of demand due to a change in promotional expenses is

called

A. Expenditure elasticity
B. Advertisement elasticity
C. Promotional elasticity
D. Above b or c

49. Want satisfying power of commodity is called

A. Demand
B. Utility
C. Satisfaction
D. Consumption

50. The relationship between price and quantity demanded is

A. Direct
B. Inverse
 C. Linear
D. Non‐linear

51. Decision making and ______________ are the two important functions of executive
of business firms

A. Forward planning
B. Directing
C. Supervising
D. Administration

52. ______________ shows the change in quantity demanded as a result of a change in

consumers' income

A. Price elasticity
B. Cross elasticity
C. Income elasticity
D. None of these

53. The firm charges price in tune with the industry’s price is called

A. competitive pricing
B. going rate pricing
C. tune pricing
D. target pricing

54. 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

55. Information for pricing decisions involves:

A. Product information
B. Market information
C. Information at the micro level
D. All of these

56. The marginal revenue equation can be derived from the:

A. Demand equation
B. Supply equation
C. Cost equation
 D. Price equation

57. Functional relationship between input and output known as

A. Conversion
B. Production function
C. Work in progress
D. Output function

58. in economics ______________ means 'a state of rest 'or 'stability'

A. Depression
B. Equilibrium
C. Maturity
D. growth

59. Selling cost is the feature of the market form

A. monopoly
B. monopolistic competition
C. oligopoly
D. none of these

60. Which is the reason of skimming price?

A. Inelastic demand
B. Diversion of market
C. Safer price policy
D. All of these

61. Which is the condition of for market penetration?

A. High price elasticity of demand in the short run

B. Savings in production costs
C. Threat of potential competition
D. All of these

62. If the commodities are substitute in nature, cross elasticity will be

A. Negative
B. Positive
C. Zero
D. Any of the above

63. Which one of the following is not an internal factor influencing pricing policy
 A. cost
B. objectives
C. marketing mix
D. demand

64. For the commodities like salt, sugar etc., the income elasticity will be

A. Zero
B. Negative
C. Positive
D. Unitary

65. In the above function, the letter Y stands for

A. Yield of production
B. Income of consumers
C. Utility
D. Supply

66. 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

67. 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

68. An increase in income may lead to an increase in the quantity demanded, it is

A. Positive income elasticity

B. Zero income elasticity
C. Negative income elasticity
D. Unitary income elasticity

69. Fixing high price during the introduction is called

 A. skimming
B. penetrating
C. full cost pricing
D. target pricing

70. In a perfectly competitive market, individual firm

A. cannot influence the price of its product

B. can influence the price of its product
C. can fix the price of its product
D. can influence the market force

71. Which is the determinant of the pricing policy of a firm?

A. Channel of distribution
B. Age of product
C. Consumer association
D. All of these

72. 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

73. ______________ is situation of severely falling prices and lowest level of economic

activities

A. Boom
B. Recovery
C. Recession
D. Depression

74. Purposes of Short term Demand forecasting doesn't includes;

A. Making a suitable production policy.

B. To reduce the cost of purchasing raw materials and to control inventory.
C. Deciding suitable price policy
D. Planning of a new unit or expansion of existing unit

75. Unitary elasticity of demand mean

A. EP =>1
B. EP =<1
 C. EP =o
D. EP =1

76. 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

77. 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

78. Analysis of long run and short run affects of decisions on revenue as well as costs
is based on

A. Principle of time perspective

B. Equi‐marginal principle
C. incremental principle
D. None of these

79. 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.

80. In the case of ______________ Consumer may moves to higher or lower demand
curve

A. Extension of demand
B. Contraction of demand
C. Shift in demand
D. Slopes in demand

1. Sales Maximization Concept is given by ---------

 [A] Adam Smith

 [B] Samuelson
 [C] Marshall
 [D] Baumol

Answer: Option [D]

2. A market demand Schedule for a product indicates that ______________.

 [A] as the product's price falls, consumers buy less of the good
 [B] there is a direct relationship between price and quantity demanded
 [C] as a product's price rises, consumers buy less of other goods
 [D] there is an inverse relationship between price and quantity demanded

Answer: Option [D]

3. Economics is derived from the greek word oikonomikus which means

 [A] Business Management

 [B] Economics
 [C] House Management
 [D] Wealth Management

Answer: Option [C]

4. Who is assumed as father of Economics?

 [A] Adam smith

 [B] Robinson
 [C] Marshall
 [D] George Bernard

Answer: Option [A]

5. Capitalism refers to

 [A] the use of markets

 [B] government ownership of capital goods
 [C] private ownership of capital goods
 [D] private ownership of homes & cars.

Answer: Option [C]

6. The subject matter of economics is

 [A] To ensure economic progress of the people

 [B] To run business
 [C] To satisfy unlimited wants with limited means
 [D] To mobilize resources and to use them
 Answer: Option [C]

7. Profits is denoted as,which of the following symbol?

 [A] Sigma
 [B] Summation
 [C] Pie
 [D] Alpha

Answer: Option [C]

8. Utility is measured by

 [A] wealth .
 [B] price
 [C] value or worth
 [D] income.

Answer: Option [C]

9. When the total utility curve reaches its maximum level, marginal utility is

 [A] Positive
 [B] Zero
 [C] Rising
 [D] Negative

Answer: Option [B]

10. Who has given the concept of consumer surplus

 [A] Marshall
 [B] Robbins
 [C] Pigou
 [D] None of these

Answer: Option [A]

11. At point of satiety, marginal utility is

 [A] Zero.
 [B] Positive
 [C] Maximum.
 [D] Negative

Answer: Option [A]
 12. According to Marshall, the basis of consumer surplus is

 [A] Law of equi-marginal utility.

 [B] Law of proportions
 [C] Law of diminishing marginal utility
 [D] All of the above

Answer: Option [C]

13. Which of the following is an economic activity

 [A] To teach son at home.

 [B] Teaching teacher in the school.
 [C] To serve her child by mother.
 [D] To play football by a student

Answer: Option [B]

14. Demand is a function of __________

 [A] Income
 [B] Advertisement
 [C] Consumers
 [D] Price

Answer: Option [D]

15. Which will cause a change in the demand for commodity X

 [A] A Change In Tastes

 [B] A Change In Income
 [C] A Change In Price Of Complementary Product
 [D] A Change In The Price of X

Answer: Option [D]

16. When one speaks of "demand" in a particular market, this refers to

__________

 [A] the quantity demanded at a given price.

 [B] only one price-quantity combination on the demand schedule.
 [C] the whole demand curve.
 [D] only one point on the entire demand curve.

Answer: Option [C]
 17. Law of demand does not include

 [A] Price of commodity is an independent variable.

 [B] Quantity demanded is a dependent variable.
 [C] Reciprocal relationship is found between price and quantity demanded.
 [D] cost of product

Answer: Option [D]

18. In Relatively Elastic Demand ED is = _________

 [A] E=1
 [B] E=0
 [C] E>1
 [D] E<1

Answer: Option [C]

19. When prediction about future is based on the assumption that the firm
does not change the course of its action is ______________ forecast

 [A] Passive Forecast

 [B] Active Forecast
 [C] Short run forecast
 [D] Long run forecast

Answer: Option [A]

20. The demand for a good is highly inelastic if __________________

 [A] the price elasticity of the good is close to zero

 [B] the income elasticity of the good is close to one
 [C] if it is a necessity
 [D] both A and C.

Answer: Option [D]

21. People demand more of product X when the price of product Y decreases.
This means X and Y are _______________.

 [A] complements.
 [B] substitutes
 [C] not related.
 [D] both inexpensive

Answer: Option [B]
 22. Demand curve is a _____________.

 [A] falling curve.

 [B] rising curve.rising curve.
 [C] downward sloping curve.
 [D] upward sloping curve

Answer: Option [C]

23. A positive cross elasticity of demand coefficient indicates that

___________

 [A] A product is an inferior good

 [B] A product is a normal good
 [C] Two products are substitute goods
 [D] Two products are complementary goods

Answer: Option [C]

24. One purpose of short-range forecasts is to determine

___________________

 [A] production planning

 [B] inventory budgets.
 [C] research and development plans.
 [D] facility location.

Answer: Option [D]

25. Passive factor of production is ________________.

 [A] Only land.

 [B] Only capital.
 [C] Both land and capital.
 [D] Neither land nor capital

Answer: Option [C]

26. _____________ Economies views on reducing the Production costs

 [A] Internal
 [B] Inventory
 [C] Pecuniary
 [D] External

Answer: Option [D]
 27. Which factor of production is considered as fixed input?

 [A] Labour
 [B] Technology
 [C] Capital
 [D] Land

Answer: Option [D]

28. _____________ is the remuneration for organisation

 [A] Rent
 [B] Wages
 [C] Interest
 [D] Profit

Answer: Option [D]

29. When the output increases in the same proportion as the increase in input
it is _____________ Returns

 [A] Constant
 [B] Average
 [C] Decreasing
 [D] Increasing

Answer: Option [A]

30. Marginal cost is defined as

 [A] Total cost divided by output

 [B] Change in total cost due change in output
 [C] Change in output due to a one unit change in an input
 [D] Total product divided by the quantity of inpu

Answer: Option [B]

31. Which of the following is correct

 [A] TC= TFC+ TVC

 [B] TFC= TC- TVC
 [C] TVC= TC- TFC
 [D] All of the above

Answer: Option [D]

32. Opportunity Cost is also Known as _____________

 [A] outlay cost
 [B] Sunk Cost
 [C] Alternative Cost
 [D] Total Cost

Answer: Option [C]

33. The vertical difference between TVC and TC is equal to _____________

 [A] MC
 [B] AVC
 [C] TFC
 [D] None

Answer: Option [C]

34. The formula for average variable cost (AVC) is __________________.

 [A] DQ/DTVC.
 [B] DTVC/DQ.
 [C] TVC/Q
 [D] Q/TVC

Answer: Option [C]

35. The rate at which a firm can substitute capital for labour and hold output
constant is the ______________.

 [A] marginal rate of production

 [B] law of diminishing marginal returns
 [C] marginal rate of factor substitution
 [D] isoquant.

Answer: Option [C]

36. The formula for average fixed costs is __________________

 [A] TFC/Q
 [B] DQ/DFC.
 [C] Q/TFC.
 [D] TFC _ Q

Answer: Option [A]

37. The supply of a product does not depend on _____________.

 [A] labor costs.

 [B] the number of sellers in the market.
 [C] consumers tastes.
 [D] existing technology

Answer: Option [C]

38. The costs that depend on output in the short run are _____________.

 [A] total variable costs only.

 [B] both total variable costs and total costs.
 [C] total costs only.
 [D] total fixed cost only

Answer: Option [A]

39. Marginal cost is defined as

 [A] Total cost divided by output

 [B] Change in output due to a one unit change in an input
 [C] Total product divided by the quantity of input
 [D] Change in total cost due change in output

Answer: Option [D]

40. Implicit costs are ________________.

 [A] equal to total fixed costs.

 [B] payments for self-employed resources.
 [C] comprised entirely of variable costs
 [D] always greater in the short run than in the long run

Answer: Option [B]

41. In the law of variable proportion when TP is Maximum then the MP =

____________

 [A] MP=1
 [B] MP<0
 [C] MP=0
 [D] MP>1

Answer: Option [C]

42. Cobb Douglas production function mainly studies ____________?

 [A] Capital and Labour

 [B] Labour and Entreprenuer
 [C] Land and Labour
 [D] Land and Capital

Answer: Option [A]

43. The cost with which the concept of marginal cost is closely related

 [A] variable cost

 [B] fixed cost
 [C] opportunity cost
 [D] economic cost

Answer: Option [A]

44. ____________ costs are business costs which do not involve any cash
payments but for them a provision is made in accounts

 [A] Private cost

 [B] Social Cost
 [C] Accounting Cost
 [D] Book Cost

Answer: Option [D]

45. The vertical difference between TVC and TC is equal to ____________

 [A] MC
 [B] AVC
 [C] TFC
 [D] None

Answer: Option [C]

46. The rate at which a firm can substitute capital for labour and hold output
constant is the ______________.

 [A] marginal rate of production.

 [B] law of diminishing marginal returns
 [C] marginal rate of factor substitution.
 [D] isoquant.

Answer: Option [C]

47. The formula for average variable cost (AVC) is __________________.

 [A] DQ/DTVC
 [B] DTVC/DQ
 [C] TVC/Q
 [D] Q/TVC

Answer: Option [C]

48. In case of oligopoly, number of firms is

 [A] Larger
 [B] Infinite
 [C] One
 [D] Few

Answer: Option [D]

49. A distinguishing characteristic of monopolistic competition is

 [A] Large number of firms

 [B] Low entry barriers
 [C] Product standardisation
 [D] Product differentiation

Answer: Option [D]

50. In case of perfect competition, no of selling firm would be

 [A] Large
 [B] Single
 [C] Varied but too many
 [D] None of the above

Answer: Option [A

51. Which of the following is a characteristic of a perfectly competitive market?

 [A] Firms are price setters.

 [B] There are few sellers in the market.
 [C] Firms can exit and enter the market freely
 [D] All of the above are correct.

Answer: Option [C]

52. When firms have an incentive to exit a competitive market, their exit will
____________.

 [A] drive down market prices

 [B] drive down profits of existing firms in the market.
 [C] decrease the quantity of goods supplied in the market.
 [D] All of the above are correct.

Answer: Option [D]

53. Bank rate is also known as __________.

 [A] lending rate

 [B] interest rate
 [C] CRR
 [D] SDR

Answer: Option [D]

54. According to monetarists, the Great Depression in the United States

largely resulted from _____________.

 [A] excessive imports relative to exports

 [B] significant changes in technology and resource availability.
 [C] inappropriate monetary policy
 [D] excessive exports relative to imports.

Answer: Option [A]

55. The study of ups and downs in economics is ____________

 [A] Monetary policy

 [B] Fiscal policy
 [C] Business cycle
 [D] None

Answer: Option [C]

56. In the _____________ phase , demand, output, employment and income

are at a high level

 [A] Depression
 [B] Recession
 [C] Boom
 [D] Recovery

Answer: Option [C]

57. The measures to control business cycle are _________

 [A] Monetary policy

 [B] Fiscal policy
 [C] Direct controls
 [D] All of the above

Answer: Option [D]

58. When national income of a country is calculated in terms of constant

prices, it is called as _________

 [A] Nominal GNP

 [B] GNP at current prices
 [C] GNP at constant prices
 [D] GDP at constant prices

Answer: Option [C]

59. Inflation means ___________

 [A] More money less value

 [B] Less money high value
 [C] More money more value
 [D] Less money less value

Answer: Option [A]

60. When the rise in price is very slow like that of a creeper, it is called
_____________

 [A] Walking Inflation

 [B] Creeping Inflation
 [C] Running Inflation
 [D] True inflation

Answer: Option [B