F Answer Remarks @

Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
A budget line shows all possible combinations between how many goods? Two Goods
The sum of the factor payments+indirect taxes-
National income at market price in an economy in one year is equal to? subsidies
The demand for an individual firm's output depends on the demand for the industry's output, the number of firms in the
industry, and the structure of the industry. TRUE
The responsiveness of quantity demanded to
e changes in price
There is inverse relationship between Price and Demand TRUE
An oligopolist faces which kind of demand curve? Kinked Demand Curve
Actual costs mean the actual expenditure incurred for producing a good or service TRUE
Fans and air conditioners have positive cross elasticity of demand TRUE
The Engel Curve passes through the tangency point of Isoquant and budget line
The growth of electronic commerce has been limited by the fact that it increases the costs to retailers of
executing sales. FALSE
Which curve refers to the cost per unit as a function of accumulated production? The Experience Curve
A typical graph shows how many quadrants. Four
When the units of factor increases, marginal revenue productivity of a factor. Rising at an Increasing rate.
National income is the sum of all the per capita incomes of a country TRUE
If the price is below a firm’s minimum, ATC, it immediately shut down. TRUE
In monopoly market, a new firm can enter the industry to earn profit. TRUE
With an increase in the price of tea, the quantity demanded of coffee will also increase TRUE
Indifference curves are always convex to the origin TRUE
Answer C and D is marked
The measure of location which is the most likely to be influenced by extreme values in the data set is the Range wrong in the master key.
Utility may be defined as want satisying power of a commodity
A straight-line demand curve along which the price elasticity of demand equals 0 is one that Is Vertical
Who will act as the banker to the Government of India? RBI
Bandwagon effect is found in Relative Income Hyothesis
government expenditure to be high and tax
revenues to be low, probably leading to a
If the economy were in recession, we would expect budget deficit.
Which bank was inaugurated by Mahatma Gandhi in 1919? Union Bank of India

In the short run, a monopolist will shut down if it is producing a level of output where marginal revenue is equal
to short-run marginal cost and price is.
A characteristic of monopolistic competition is that each firm. faces a downward-sloping demand curve.
The first financial institution(development) in India that has got merged with a bank is ICICI
For a firm in monopolistic competition, the marginal cost curve intersects the average total costcurve at minimum average total cost
The estimate about useful life of a fixed asset: Can be changed
If demand curve of commodity is parallel to Y axis then it shows Perfectly Inelastic
Whose opinions have revolutionised the scope of macro economics ? J.M. Keynes
An explicit cost is None of the above
An example of a Euo Currency is All of the Above
Total utility of a commodity is measured by which price of that commodity ? Value in Use
spending and taxing policies used by the
government to influence the level of
Fiscal policy refers to the economy activity
Which of the following is NOT a reason for cutting prices Increasing Profit margins
borrowers are better off because they can
pay off their loans with currency that is
During the period of High Inflation. worth less
Firms do not continue to grow without limit because of
a negative slope, and so does its demand
In monopolistic competition, each firm's marginal revenue curve has curve
For which function, money is accepted as a unit of account? Medium of Exch
As per the law of Demand, a demand curve downward left to right
Name the note issuing authority in India. RBI
Marginal utility is equal to average utility at that time when average utility is— Maximum
Cross elasticity of complementary goods is negative
A group of firms that gets together to make price and output decisions is called Cartel
production takes place where long-run marginal
cost is equal to marginal revenue and price is
A monopolized market is in long-run equilibrium when. not below long-run average cost.
If your marginal utility from your last session with your dance instructor is equal to the price she charged you, you have had exactly the right number of
then- sessions
Open Market Operations, one of the measures taken by RBI in order to control credit expansion in the
economy means-
The value of NNP at consumer point is NNP @ Market Price
provides macro economists with much of
the data needed for macroeconomic
National Income accounts- analysis,research and forecasting
A firm that break even after all the economic costs are paid in earning Normal Profit
Inflation initiated by the increase in cost of production is termed as Cost Push
Which is the country’s third largest private sector lender whose name has been officially changed to the Axis
Bank ltd. ? UTI Bank
The cost incurred by the firm in hiring labour is called is Explicit Cost
The most important source of capital formation in India has been Household savings
Which of the following is NOT a reason for increasing prices Price Leadership.
With which of the following is the concept of marginal cost closely related? Variable cost
Which of the following would not be classified as a time series technique
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
What you give up for something, is its cost TRUE
Revenue Deficit = Revenue Expenditure – Revenue Receipts TRUE
National Income is the net national product at Factor cost
Desire means demand FALSE
Which branch of economics takes into consideration all the numeric and quantitative aspects of micro and macro
parameters? Managerial Economics
The three fundamental questions in economics are what, how, and how many. FALSE
Can two indifference curves intersect each other? No
Correlation between price and demand is Negative
Monopolistic competition is a form of market organization that combines elements of perfect competition and monopoly. TRUE
Value Pricing refers to the selling of quality goods at much lower prices than previously TRUE
What is deficit financing? printing new notes to meet deficit of the govt
When Utility can be measured in numerical terms, it is called Cardinal Utility
Electricity has composite demand. TRUE
Write the formula of NNP? C+I+G+(X-M)+NFIA-depreciation
Banks create credit on the basis of their cash deposits
When total utility becomes maximum, then marginal utility will be— Zero
A price- and quantity-fixing agreement is known as Collusion
The income effect of a price change may be positive or negative
The modern economy is not characterized by self sufficient village system
Monetary Policy is used by which authority to control inflation? RBI

Under which method of depreciation the amount of depreciation expenses remains constant throughout the useful life of a Straight line & Reducing balance
fixed asset method is wrong as per key
At point of satiety, marginal utility is— Zero
A good with a vertical demand curve has a demand with Zero Elasticity
The long run Phillips Curve is Vertical at the NAIRU
Utility means— Power to satisfy a want
Operations generated forecasts often not to do with Sales
The tax on net income of companies is Corporate Tax
A fall in the demand for money would affect
Who said Money is what money does? Walker
Monopolistic competition in comparison to perfect competition ensures higher price and lower output
The value of NNP at consumer point is NNP at Market Price
What does money serve? a unit of accounting
Elasticity of demand when there is a substantial change in the price of a commodity can be shown using Arc method
Marginal utility is equal to average utility at that time when average utility is— Maximum
If the individual receives $5 per hour and is in equilibrium at point E, his or her income at this equilibrium point must be parallel to vertical axis
How many languages are used on ten rupee note? fifteen
Two goods have to be consumed simultaneously are Complimentary
Which bank enjoys the monopoly power of issuing notes? RBI
The opportunity cost of a good is
Delphi method is used for Judgemental forecast
A monopolistically competitive industry has Differentiated products
Short term regular variations related to the calendar or time of day is known as Seasonality
The substitution effect of a price decrease for a good with a normal indifference curve pattern
Human Welfare is the subject of Economics.” This statement is associated with the name of which of the economists ? All of the above
Economics is what economists do.” It has been supported by— All of the above
In depreciation calculation, the useful life of a fixed asset is An Estimate
The prices statutorily determined by the Government for certain important goods like steel, cement, etc is called markup pricing ( is wrong)
aggregate demand rises more rapidly than the
Demand Pull Inflation occurs when economy's productive potential
When AR is falling, MR will be
set their prices according to the demand curves
Firms in monopolistic competition have rivals that they face.
If the demand for agricultural products is inelastic: A and B are complementary goods
If the trend is linear, least squares method is used to forecast demand TRUE
If the price of computers goes up, the demand for internet connections will fall. TRUE
If subsidies are provided,cost produces and the supply increases TRUE
Who gave the theory of invisible hand? Adam Smith
If the demand for a firm's output is horizontal, then the firm is a perfect competitor. TRUE
The price elasticity of demand for a product is high if it has numerous close substitutes TRUE
The quantity of a commodity demanded by a consumer is influenced by the prices of related commodities. TRUE
If the price elasticity of demand for a firm's output is inelastic, then the firm could increase its revenue by reducing price. FALSE
Consumers find it easier to postpone the purchase of a durable good than to postpone the purchase of a nondurable
good, so the demand for durable goods is more unstable than the demand for nondurable goods. TRUE
If price elasticity of demand for a firm's output becomes more elastic, then the firm's marginal revenue will increase. TRUE
Net National Product equals GNP-Depreciation
Which curve denotes the various possibilities of production with the given state of technology? Production Possibility Curve
Who is the father of Economics? Adam Smith
ISO Cost line is the locus of alternative combinations of labour and capital that a firm can purchase with a given monetary
cost outlay TRUE
An increase in price of a commodity will generally lead to a decrease in the quantity of the commodity demanded per time
period. TRUE
Utility is the basis of demand TRUE
Economies of Scale refer to a situation where output grows proportionately faster than the use of inputs TRUE
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
The law of demand refers to the relationship between consumer income and the quantity of a commodity demanded per
time period. FALSE
If the price is statutorily fixed and equal to MC, monopoly profits will be
The opportunity cost of using ALL resources is
If economic profit equal to zero then: subtracted from total revenue.
If we plot capital on the vertical axis and labor on the horizontal axis, the slope of a straight line isocost drawn on such
graph is PK/PL. reduction in prices
If the management increases the wages, the cost of production rises, the rise in prices result causing wage price spiral
and cost push inflation TRUE
Consumer surplus is the highest in the case of which type of commodities? Necessities
What affects the production possibilities? resources is the right answer technology is marked wrong in key
Name the kind of pricing which is the same as finding out an ideal starting selling price. Target
The standard of living is often measured by Real GDP per capita
will exceed gross domestic product if net factor
Gross National Product payments from abroad are positive
Cross elasticity of demand for a pair of substitute goods will be Positive
Predatory Pricing Policy is designed to drive competitors out of business
Demand is inelastic if the price elasticity of demand is less than 1
An example of a monopolistically competitive industry is the restaurant industry
The price elasticity of demand can range between zero and infinity
Banking in India is controlled by RBI
To help fight a recession, the government could decrease taxes to increase aggregate demand
Define opportunity cost? Cost of the next best option
Logically not the right answer. It
shud be perfectly inelastic. Request
The vertical demand curve for a commodity shows that its demand is perfectly elastic Comments.
The net value of GDP after deducting depreciation from GDP is Net domestic Product
Which of the following is the second law of Gossen ? Law of equi-marginal utility
What is the Cash Reserve Ratio?
The tax levied by the union government on income of individuals is known as Personal Income tax
the mean square is the sum of squares divided by its corresponding degrees of freedom
Which of the following is known as the Gossen's first law law of diminishing marginal utility
What possesses general acceptability? Money
The place where bankers meet and settle their mutual claims and accounts is known as clearing house
Price Line is same as Budget Line
Before setting price, the company must decide on its strategy for: the product
The apex organization of Industrial Fianance in India is IDBI
shifts of the supply curve results in no change
Demand is perfectly inelastic when in quantity demanded
Elasticity of demand at different points on a demand curve keeps changing at different points
Ceteris paribus, a change in the price of a commodity causes the quantity purchased of its complements to move in the same direction
A fall in the price of the commodity leads to a shift in demand rise in demand is wrong in key
The financial year in India is April 1 to March 31
when there is a decrease in the demand , the demand curve moves downwards towards the axis
Name the major components of money supply. currency and deposit components
the marginal utillity derived from consumption
of an additional unit of a commodity always
Law of Diminishing Marginal Utility states that diminishes
What is the range of prices for galloping inflation? 20 to 100%
Inflation initiated by the the increase in aggregate demand is termed as Demand Pull inflation
Direct Exchange of goods against goods is called barter system
The modern theory of the firm holds that firms behave in a way that is designed to maximize value of the firm
a negative slope, and there are no barriers to
In monopolistic competition, each firm has a demand curve with entry into the market
aggregate demand rises more rapidly than the
Demand Pull Inflation occurs when economy's productive potential
Adding a standard markup to the cost of the product refers to Cost Plus Pricing
Which market structure enjoys stiff competition? perfect competition ( its wring )
both price and quantity and both are maximum,
The demand curve shows the relationship between given the consumer's income
Managerial economics generally refers to the integration of economic theory with business Practice
The pure monopolist obtains equilibrium level of output when marginal revenue=marginal cost
What is the form of money in Medieval period? metallic coins
SBI is wrong answer, Probably BOB
Which public sector banks has the largest number of branches in foreign countries? is right.Pls update
There are no barriers to entry in a monopoly FALSE
A shift in demand is referred to as a change in quantity demanded. FALSE
TVC curve passes through the origin TRUE
How many methods are there of measuring national Income? three
gross debt minus the value of capital assets
and loans and advances given by the
What is the formula of Net Public Debt? government
What is the main economic problem? scarcity of resources
Perfectly inelastic demand curve is parallel to X – axis. FALSE
Retail firms that have developed electronic commerce distribution channels typically have not maintained their traditional
retail outlets. FALSE
Which principle defines the behaviour of a consumer in distributing the limited income among various goods and services? Equimarginal principle
To adjust GDP for market prices to factor cost deduct indirect taxes and add subsidies
Autonomous demand is linked to demand of any other product FALSE
Production and cost figures help managers with hiring and recruitment of the staff TRUE
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
When the net factor income from abroad is
When will the domestic income be more than the national income? negative.
If P0 denotes the price of commodity O and MU indicates the MU derived from commodity O, the Marginal Utility of O is
same as its price, the consumer will be in equilibrium. TRUE
Equilibrium of monopolist will never lie below the middle point of the average revenue curve because below the middle
point Highly Elastic is wrong
In case of luxury goods, the demand is elastic, while for necessity goods, it tends to be inelastic TRUE
Opportunity Cost is also called economic cost TRUE
The law of demand is violated in case of Veblen goods TRUE
For purposes of calculating GDP, which of the following payments is not included in the government spending
component? Social security payments
Veblen goods are purchased for snob appeal TRUE
The income elasticity of demand for an inferior good is negative. TRUE
What is the formula of average product total product/amount of input to produce output
Which branch of economics takes into consideration all the numeric and quantitative aspects of micro
and macroeconomics managerial economics
Under first degree price discrimination, differential prices are charged for different amounts of goods and services FALSE

opportunity cost

The next best alternative foregone is the

Adam Smith

An enquiry into the nature and causes of wealth of nations is the book written by
Improved telecommunication technology has contributed to the globalization of markets. TRUE
Name the kind of pricing which is the same as finding out an ideal starting selling price
Indicate below what is NOT a factor of production. bank loan
The historical cost is the actual cost incurred at the time of the purchase of an asset. TRUE
ATC and AVC are U shaped TRUE
An individual's demand curve is formulated under the assumption that price is held constant and all
other determinants of demand are allowed to vary vary false

zero

Total product will be maximum when MP is

If the individual receives $5 per hour and is in equilibrium at point E, his or her income at this equilibrium
point must b
What is Repo Rate? none of the above as per options provided
In case of inferior commodity, the income elasticity of demand is negative
Which is the country’s third largest private sector lender whose name has been officially changed to the Axis Bank ltd. ? UTI Bank
How can the RBI increase the money supply in the market? by buying government securities
Delphi method is used for Judgemental forecast
leisure is neither normal nor inferior and the
If the individual receives $5 per hour and is in equilibrium at point E, his or her income at this equilibrium point must b supply curve is completely inelastic
Which theory is generally included under micro economics ? Price Theory
Prices in barter economy cant exist
both price and quantity and both are maximum,
The demand curve shows the relationship between given the consumer's income
Cost-output relationship facilitates many managerial relationships such as all of the above
Adding a standard markup to the cost of the product refers to: cost plus pricing
Which bank was inaugurated by Mahatma Gandhi in 1919? Union Bank of India

keeps changing at different points

Elasticity of demand at different points on a demand curve

may be positive or negative

The income effect of a price change

The financial year in India is April 1 to Mar 31

frequent price changes

Marginal cost pricing method leads to

Depreciable amount + Residual value of a fixed asset =? cost of the fixed asset

Power to satisfy a want

Utility means—
Under which method of depreciation the amount of depreciation expenses remains constant throughout the useful life of a
fixed asset
Two goods have to be consumed simultaneously are complimentary
In the short run, a monopolist will shut down if it is producing a level of output where marginal revenue is
equal to short-run marginal cost and price is less than average variable cost.
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE

neither the units used to measure price nor the

units used to measure quantity

The price elasticity of demand depends on

Governor, RBI

Who signs the ten rupee note?

economies of scale over a broad range of
A natural monopoly refers to a monopoly that is defended from direct competition by output.

Cost Push Inflation

Inflation initiated by the increase in cost of production is termed as

which denomination were India's first bimetallic coins issued in the year 2009? Rs. 10

zero and infinity

The price elasticity of demand can range between

Maximum

Marginal utility is equal to average utility at that time when average utility is—

Punjab national bank and New bank of India

The only merger of two public sector banks took place between
linear trend equation has the form 14 option seems to be incorrect

Robbins

Who has given scarcity definition of economics ?

Define the problem

The first stage in the five-step decision process described in the text is to
the percentage change in the quantity
demanded divided by the percentage change in
The price elasticity of demand equals the price.

Construction

As per CSO classification, which of the following does not fall under finance and real estate category/

Rs. 50
Which of the following Mahatma Gandhi series of currency notes issued by the RBI has Parliament House
depicted on it?
All of the above come close to
Which of the following markets comes close to satisfying the assumptions of a perfectly competitive satisfying the assumptions of
market structure? perfect competition
a market economy, the decision-making is in the hand of millions of buyers and sellers true

Practice

Managerial economics generally refers to the integration of economic theory with business
advertising special characteristics.

Firms in monopolistic competition can achieve product differentiation by

Reserve Bank of India

Monetary Policy is used by which authority to control inflation?

its corresponding degrees of freedom

the mean square is the sum of squares divided by

Adam Smith

An Enquiry into the Nature and Causes of Wealth of Nations” is the book of economist—
What is the modern form of money? paper and plastic money

Walker

Who said Money is what money does?

 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE

Variable elasticity of substitution

Cobb douglas production function does not possess the characteristics

Average Variable Cost

At the shut down point, Price is equal to

the product

Before setting price, the company must decide on its strategy for:
Bank rate is decided by which bank? RBI
Other things being equal, what causes a decrease in demand Rise in the price of the commodity
Branch of statistics which deals with development of particular statistical methods is classified as economic statics

Cartel

group of firms that gets together to make price and output decisions is called

Debtors

Inflation benefits

Ministry of Finance

Who issues one rupee note in India?

the rate at which commercial bank borrow
What is bank rate money from RBI

Increasing Profit margins

Which of the following is NOT a reason for cutting prices

neither more nor less elastic

When the quantity of coal supplied is measured in kilograms instead of pounds, the demand for coal
becomes
The tax levied by the union government on income of individuals is known as Personal Income tax
Marginal cost pricing method leads to frequent price changes
A straight-line demand curve along which the price elasticity of demand equals 0 is one that is vertical

Rs. 10

In which denomination were India's first bimetallic coins issued in the year 2009

setting a low initial price to penetrate the

market quickly and attract a large number of
buyers to win a large market share

Market-penetration pricing refers to the practice of:

Punjab National Bank

After State Bank of India, which bank has the largest number of offices
If the MRTS LK equals 2, then the MPK/MPL is ½. TRUE
Under price discrimination, price will be higher in the market where demand is less than one is wrong
When a product is sold through an aution, it is called first degree price discrimination true

deduct indirect taxes and add subsidies

To adjust GDP for market prices to factor cost

Electricity has composite demand. true
Which curve refers to the cost per unit as a function of accumulated production the experience curve
Sum of marginal Utilities is the total utility true
Technological improvement can be illustrated graphically by a rightward shift in the production possibilities curve false
If the demand for a firm's output is horizontal, then the firm is a perfect competitor. true
Economic Activity at both consumption as well as production levels is affected by choice TRUE

Vertical straight line

What is the shape of perfectly inelastic demand curve?

Which curve is a function relating to the quantity purchased of a commodity to the level of money income? Engel curve

Change in demand

What is the other name of shift in demand?

 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE

at its lowest point

Marginal cost curve cuts the average cost curve

A commodity is referred to as normal if an increase in its price leads to an increase in the quantity of the
commodity demanded per time period true
Third Degree Discrimination seperates consumers or markets on the basis of their price elasticity of demand. TRUE
TVC curve passes through the origin true
Demand means a want false
Fiscal Policy is the policy of the Govt TRUE
The law of DMU explains the economic behaviour of a rational consumer true
International price discrimination is called dumping true
Marginal cost curve is cutting all cost curves from their lowest points true
The RBI made Indian Rupee fully convertible in current account transactions related to goods and services in the year

1994
the quantity of other goods sacrificed to
The opportunity cost of a good is get another unit of that good
Operations can be classified according to the degree of variation in demand and visibility of the operation
as well as their volume and variety of production. Which of the following operations would be classified as
high variation and high visibility? A family doctor
In which year was the Imperial Bank of India rechristened as State Bank of India? 1955
includes consumers spending on durable
In using the expenditure approach to GDP consumption goods, and nondurable goods, and services.
The Unemployment rate consistent with a constant inflation rate is called NAIRU
Give an example of exceptional demand curve parallel to vertical axis
Increasing Unemployment and Inflation is a situation of : Stagflation
Opportunity Cost may be defined as value of next best alternative foregone.
Marginal costs curve intersects the Option B is wrong as per the key.
Reallocate resources from less desired to
From the society’s point of view, the economic function of profits and losses, is to more desired uses.
An implicit cost is
After State Bank of India, which bank has the largest number of offices? Punjab National Bank
When income elasticity of demand is greater than unity, then the commodity is a luxury commodity
Rate of growth of an economy is measured in terms of: national income
In Monetary terminology, what is called the monetary base or high powered money? the total liability of RBI
by buying government
How can the RBI decrease the money supply in the market? securities its wrong
Bank rate, saving bank rate and repo
Which rates are reviewed by the RBI at the time of periodical review of the policy? rate
the change in quantity demanded
resulting from a change in relative prices,
The substitution effect refers to holding the level of satisfaction constant.
Open Market Operations, one of the measures taken by RBI in order to control credit expansion in the sale and purchase of government
economy means securities
the responsiveness of the quantity
The price elasticity of demand measures demanded to changes in price
If value of Exy is positive, the two goods are substitutes. TRUE
Which of the following is an effect of inflation? all the above
The demand for a commodity arises from the consumer's willingness and ability to purchase the
commodity TRUE
In India, the public sector is most dominant in which sector manufacturing sector
Estimates of National Income are prepared by the
Who gave law of Equimarginal Utility? H.H.Gossen
The term social accounting was first introduced into economics by no option given J. R. Hicks
The demand for durable goods is inelastic. . FALSE
About 90% of the total world revenue accounted for by electronic commerce in 1999 involved business-
to-business transactions. TRUE
The quantity of a commodity demanded by a consumer is influenced by the number of consumers in the
market. FALSE
Total fixed cost do not change TRUE
Substitute goods are goods which can replace the demand for each other TRUE
If the price elasticity of demand for a firm's output is inelastic, then a decrease in price will reduce the
firm's total revenue. TRUE
Domestic Product + Net Factor income
National product is from abroad
sum of all individual demands in the
Define Market Demand market
In Oligopoly market, there are large number of buyers and sellers FALSE
A producer is in equilibrium when TC=TR FALSE
If the economy were in recession, we would expect a fall in prices. TRUE
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
If the variations are indefinite and their consequence is also indefinite, then risk cannot be measured
before hand TRUE
If teas and coffee are perfect substitutes, an increase in the price of tea will increase the demand for
coffee. TRUE
Demand for food grains is elastic FALSE
BEP point is where cost and revenue are equal TRUE
An increase in demand can result from an increase in income
Derived demand by a firm will generally increase if the demand for the firm's output increases. TRUE
Which utility does not measure the level of satisfaction in numeric terms? Ordinal Utility
The study of inflation is part of: Macroeconomics
If the independent individual consumer demand curves for a commodity are horizontally summed, the
result is the market demand curve for the commodity. TRUE
GDP measures a country's income
Any straight line passing through the origin, irrespective of its slope has unit elasticity TRUE
Average fixed cost can be obtained through AFC=TFC/number of units produced
What is contraction of demand? a fall in demand when the price rises
The measure of location which is the most likely to be influenced by extreme values in the data set is the MEDIAN
Economics is the Science of Wealth” who gave this definition ? Adam Smith
An industry whose long run supply curve is horizontal is called constant-cost industry
Demand Schedule is shown as a result of change in state
If the price elasticity is between 0 and 1, demand is inelastic
What was the form of money in ancient period? grain and cattle
Increasing Unemployment and Inflation is a situation of : Stagflation
a 5 percent increase in the price leads to a 5 percent
The demand for movies is unit elastic if decrease in the quantity demanded.
Full Form of SLR Statutory Liquidity Ratio
it must lower its price in order to sell a greater
A firm in monopolistic competition has some degree of price-setting power because quantity.
the rate at which commercial bank
What is bank rate? borrow money from RBI
Open Market Operations, one of the measures taken by RBI in order to control credit expansion in the
economy means Sale or purchase of government securities
India has a Mixed Economy
is a stock variable, measured at a point
Wealth in time
Unitary elastic demand rarely occurs in practice. FALSE
If two goods are very close complements, then the cross-price elasticity of demand between the two goods will be large
and negative. TRUE
What describes a relationship between two or more economic variables? function
Accounting profit is the revenue obtained during the period minus the cost and expenses incurred to produce the goods
responsible for getting the revenue TRUE
In the Cobb douglas production function, the elasticity of substitution between factors is one is wrong
A demand curve can be derived using indifference curve analysis TRUE
According to Marshall, the basis of consumer surplus is dimnishing
The quantity of a commodity demanded by a consumer is influenced by the price of the commodity TRUE
What is extension of demand? rise in demand when price falls
If a firm sells its output on a market that is characterized by many sellers and buyers, a differentiated product, and monopolist competeir its wrong
unlimited long-run resource mobility, then the firm is guys
In Cost Plus Pricing, some mark up is added to the average cost in arriving at the price TRUE
Complementary goods are the goods that are demanded only when their related goods are available TRUE
National income is the Net National Product at Factor cost TRUE
The pure monopolist obtains equilibrium level of output when mr=mc
purchase and sale of securities by the Central
Open Market Operations mean Bank
The fall in prices and decline in economic
Define Recession activity in an economy
Elasticity of demand for a pair of substitute goods is positive is worng
All of the following are among the internal factors that affect pricing EXCEPT: globalisation
Selling of gilt edged securities by the
What are open market operations? government
the percentage change in the quantity
demanded divided by the percentage change in
The price elasticity of demand equals the price.
Which of the following factors will make the demand for a product more elastic?
The equilibrium level of output for the pure monopolist is where
If more is demanded at the same price or same quantity at a higher price, this fact of demand is known as increase in demand
What is extension of demand? rise in demand when the price falls
Sales tax is an indirect tax TRUE
Supply is said to be elastic when the quantity supplied changes more than proportionately to the change in price. TRUE
Any straight line passing through the origin, irrespective of its slope has unit elasticity TRUE
A demand curve can be derived using indifference curve analysis TRUE
When demand increases, the demand curve shifts to the left FALSE
Larger the number of substitutes, the more elastic is the demand TRUE
Operations can be classified according to the degree of variation in demand and visibility of the operation as well as their
volume and variety of production. Which of the following operations would be classified as high variation and high
visibility? a family doctor
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
Which of the following is NOT a reason for cutting prices increasing profit margins
Which of the following are used in calculating opportunity costs? monetary costs
The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called excess reserves
Which of the following is known as the Gossen's first law law of diminishing marginal utility
After State Bank of India, which bank has the largest number of offices? punjab national bank
How many languages are used on ten rupee note fifteen
When total utility becomes maximum, then marginal utility will be— zero
An example of a Euo Currency is all of the above
In which situation double coincidence of wants is the most suitable? barter system
Direct Exchange of goods against goods is called barter system
A characteristic of monopolistic competition is product differentiation
Short term regular variations related to the calendar or time of day is known as seasonality
A numerical description of the outcome of an experiment is called a random variable
Banking in India is controlled by RBI
Bank rate is decided by which bank? RBI
setting a low initial price to penetrate the
market quickly and attract a large number of
Market-penetration pricing refers to the practice of: buyers to win a large market share.
What is the modern form of money? paper and plastic money
In which year was the Reserve Bank of India established ? 1935
Punjab national bank and New bank of India
The only merger of two public sector banks took place between
The value of NNP at consumer point is NNP at Market Price
Firms do not continue to grow without limit because of managerial limitations
Predatory Pricing Policy is designed to drive competitors out of business
Open Market Operations, one of the measures taken by RBI in order to control credit expansion in the economy means sale and purchase of government securities
Demand is inelastic if the price elasticity of demand is less than 1
An example of a monopolistically competitive industry is the restaurant industry.
will exceed gross domestic product if net factor
Gross National Product payments from abroad are positive
The transformation curve is derived from the production contract curve
Adding a standard markup to the cost of the product refers to: Cost Plus Pricing
The price elasticity of demand can range between zero and infinity
The first financial institution(development) in India that has got merged with a bank is ICICI
Before setting price, the company must decide on its strategy for: the product
Which of the following is the second law of Gossen ? Law of equi-marginal utility
Depreciable amount + Residual value of a fixed asset =? cost of the fixed asset
A straight-line demand curve along which the price elasticity of demand equals 0 is one that is vertical
The value of an economic theory in practice is determined by
how well the theory can predict or explain
Price is the sole determinants of Demand FALSE
Negative MU denotes more satisfaction. FALSE
The quantity of a commodity demanded by a consumer is influenced by the number of consumers in the market. FALSE
When demand increases, the demand curve shifts to the left FALSE
Goods without substitutes have which kind of demand? Inelastic Demand
Economies of Scale refer to a situation where output grows proportionately faster than the use of inputs TRUE
Technological improvement can be illustrated graphically by a rightward shift in the production possibilities curve FALSE
Why should management estimate costs? For controlling pricing and estimating profits
Improvement in the standard of living in a country is best reflected to be increase in per capita income at constant prices
The equilibrium of the firm occurs when MC=MR
If the income elasticity of demand is high, the tax rates should be INCREASED
Give an example of complementary goods Car and Petrol
The cross-price elasticity of demand measures the percentage change in the demand for one good that results from a one
percent change in the quantity demanded of a second good. FALSE
Which of the following Indian Banks is not a nationalised bank? Federal Bank
Which of the following would decrease the supply of wheat? An increase in the price of corn
Private income is the factor income from all sources and current transfers from the government and rest of the world
accruing to the private sector TRUE
Policymakers can ensure a better living standard by raising productivity, which is dependent on skill development TRUE
Where Total Product is maximum, Marginal Product is zero TRUE
Under Monopoly a firm can sell all the goods at a single price FALSE
If a single monopolist enjoying internal economies of scale is replaced by a large number of producers operating under leisure is neither normal nor inferior and the
perfect competition, it may be said that supply curve is completely inelastic
If the trend is linear, least squares method is used to forecast demand TRUE
When MR is zero, AR will be constant FALSE
National income includes
payments to individuals (income
from wages and salaries, and other
income), plus payments to
government (taxes), plus retained
income from the corporate sector
(depreciation, undistributed
profits), less adjustments
(subsidies, government and
consumer interest, and statistical
The national income is GNP+Direct Taxes-Subsidies discrepancy).
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
Third-degree price discrimination
occurs when a company charges a
different price to different
consumer groups. For example, a
theater may divide moviegoers into
seniors, adults, and children, each
paying a different price when
seeing the same movie. This
discrimination is the most
Third Degree Discrimination seperates consumers or markets on the basis of their price elasticity of demand. TRUE common.
The substitution effect holds that an increase in the price of a commodity will cause an individual to search for substitutes.
Market failure is corrected by The Government
when the demand curve is rectangular hyperbola, it represents unitary elastic demand
If A is a complement to B, an
increase in the price of A will result
The price of a complementary good is expected to affect the supply of the good under consideration in the direct manner in a negative movement along the
demand curve of A and cause the
demand curve for B to shift inward;
TRUE less of each good will be demanded.
Two events A and B are
independent if the knowledge that
one occurred does not affect the
chance the other occurs. For
example, the outcomes of two roles
of a fair die are independent
events. The outcome of the first roll
does not change the probability for
If two events are independent, then is correctly described by neither (a) nor (b) the outcome of the second roll
Indifference curves are convex to
the origin because as the consumer
begins to increase his or her use of
one good over another, the curve
represents the marginal rate of
substitution. ... The marginal rate
of substitution goes down as the
consumer gives up one good for
An indifference curve is convex to the origin O because of rising of MRS TRUE another, so it is convex to the origin
Sometimes in the instance of an increase in prices, quantity demanded might remain the same due to external factors
other than price. TRUE
Which of the following is one of the assumptions of the indifference curve analysis?

The rate at which banks lend to RBI is known as? reverse repo rate
Whose signature is found on one rupee currency note? Finance Secretary of India
to issue notes is wrong...kindly
Which one of the following is not the objective of monetary policy in India? update pls
The main source of India's national income is services
In order to mximize profits , a manufacturer, under perfect competition will charge a price equal to marginal cost
Marginal Cost is less than the average cost when average cost falls with an increase in output
pricing to attract low volume in many segments
so as to gradually penetrate the market as a
All of the following are considered to be forms of a cost-based approach to pricing EXCEPT: whole
When was Exim Bank set-up? 1982
How does paper currency has value? it has the sanction of the Government
The last stage in the five-step decision process described in the text is to implement the decision A is wrong
What is the formula of national disposable income? NNP mp+Net current transfers from abroad
Microeconomics deals with allocation of resources. TRUE
What is the other name of a measurable value? Variable
If the consumption decisions of individual consumers are not independent, then the horizontal sum of individual consumer
demand curves is the market demand curve for the commodity FALSE
In which year, the book by Adam Smith Wealth of Nations was published? 1776
The subject matter of economics is divided into microeconomics andmacroeconomics TRUE
C is wrong, Try A and update if
Giffen goods are goods correct
Economic profit is the best measure of a firm's performance because good is a substitute ##
Consider the following statements and identify the right ones.I.Personal income of individuals of a country II the income at
their disposal after paying direct taxes is called disposable income. Social Security payments ##
If the elasticity of demand is zero, the demand curve will be perfectly inelastic
The economist's objections to monopoly rest on which of the following grounds? Elastic is wrong.
When marginal product (MP) & average product (AP) both falls TRUE
The fall in prices and decline in economic activity in an economy is called a recession TRUE
Luxury goods are price elastic TRUE
Price of a product is affected by the cost of production TRUE
The cost of production is a major determinant of consumer demand. FALSE
Managerial economics is primarily concerned with the market demand for an individual firm's output. TRUE
The quantity of a commodity demanded by a consumer is influenced by the price of the commodity. TRUE
The demand for an individual firm's output depends on the demand for the industry's output, the number of firms in the
industry, and the structure of the industry. TRUE
The quantity of a commodity demanded by a consumer is influenced by the number of consumers in the market. FALSE
The quantity of a commodity demanded by a consumer is influenced by the prices of related commodities. TRUE
The law of demand refers to the relationship between consumer income and the quantity of a commodity demanded per
time period. FALSE
An increase in price of a commodity will generally lead to a decrease in the quantity of the commodity demanded per time
period. TRUE
A commodity is referred to as normal if an increase in its price leads to an increase in the quantity of the commodity
demanded per time period. FALSE
Most goods are normal. TRUE
Inferior goods are generally purchased at low levels of income but not at high levels of income. TRUE
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
If an increase in the price of one commodity leads to an increase in demand for a second commodity, then the two
commodities are complements. FALSE
An individual's demand curve is formulated under the assumption that price is held constant and all other determinants of
demand are allowed to vary. FALSE
The substitution effect holds that an increase in the price of a commodity will cause an individual to search for substitutes. TRUE
The income effect holds that a decrease in the price of a commodity is, in some respects, the same as an increase in
income. TRUE
A change in the price of a commodity will cause the demand curve for that commodity to shift. FALSE
If a decrease in income causes an individual's demand curve for a good to shift to the left, then the good is inferior. FALSE
If a good is normal, then both the substitution effect and the income effect cause quantity demanded to change in the
same direction. TRUE
There is an inverse relationship between the quantity demanded of a commodity and its price. TRUE
Butter and bread are substitutes. FALSE
A shift in demand is referred to as a change in quantity demanded. FALSE
If the independent individual consumer demand curves for a commodity are horizontally summed, the result is the market
demand curve for the commodity. TRUE
If the consumption decisions of individual consumers are not independent, then the horizontal sum of individual consumer
demand curves is the market demand curve for the commodity. FALSE
The bandwagon effect refers to the importance of musical backgrounds in TV advertising. FALSE
The bandwagon effect tends to make the market demand curve flatter than the horizontal summation of individual demand
curves. TRUE
The snob effect tends to make the market demand curve flatter than the horizontal summation of individual demand
curves. FALSE
Monopoly refers to a situation in which there is only one producer of a commodity for which there are many close
substitutes. FALSE
If the demand for a firm's output is horizontal, then the firm is a perfect competitor. TRUE
Oligopoly refers to a type of market organization that is characterized by large number of firms selling a differentiated
commodity. FALSE
Monopolistic competition is a form of market organization that combines elements of perfect competition and monopoly. TRUE
Under every form of market organization except monopolistic competition, the firm faces a downward-sloping demand
curve. FALSE
If consumers expect the price of a commodity to increase in the future, then demand for the commodity will decrease. FALSE
Consumers find it easier to postpone the purchase of a durable good than to postpone the purchase of a nondurable
good, so the demand for durable goods is more unstable than the demand for nondurable goods. TRUE
Derived demand refers to the mathematical derivation of a market demand curve from individual consumers' demand
curves. FALSE
Derived demand by a firm will generally increase if the demand for the firm's output increases. TRUE
According to the estimated linear demand function presented in Case 3-1, sweet potatoes are normal goods. TRUE
Elasticity is a measure that does not depend on the units used to measure prices and quantities. TRUE
The price elasticity of demand is the same as the slope of a demand curve. FALSE
The arc price elasticity of demand measures the price elasticity at a point on the demand curve. FALSE
The price elasticity of demand for a firm's output is generally more elastic than the price elasticity of demand for the
industry's output of the commodity. TRUE
If price elasticity of demand for a firm's output becomes more elastic, then the firm's marginal revenue will increase. TRUE
If a firm increases the price of its product and total revenue increases, then the price elasticity of demand must be less
than minus one. FALSE
If the price elasticity of demand for a firm's output is inelastic, then a decrease in price will reduce the firm's total revenue. TRUE
If the price elasticity of demand for a firm's output is unit elastic, then marginal revenue is equal to zero and total revenue
is at a maximum. TRUE
If a firm is a perfect competitor, then its marginal revenue is equal to the price of its commodity. TRUE
If a firm is not a perfect competitor, then its marginal revenue is greater than the price of its commodity. FALSE
An increase in the number of available substitutes for a commodity will decrease the price elasticity of demand for the
commodity. FALSE
The long-run price elasticity of demand for a commodity is generally greater then the short-run price elasticity of demand
for the commodity. TRUE
The income elasticity of demand for an inferior good is negative. TRUE
For most goods, the income elasticity of demand is negative. FALSE
The cross-price elasticity of demand for two goods is negative if the goods are substitutes. FALSE
The cross-price elasticity of demand measures the percentage change in the demand for one good that results from a one
percent change in the quantity demanded of a second good. FALSE
If two goods are very close complements, then the cross-price elasticity of demand between the two goods will be large
and negative. TRUE
It is likely that the cross-price elasticity of demand between two goods produced by different firms in the same industry will
be positive and large. TRUE
Estimates of demand elasticities are used by firms to determine optimal operational policies. TRUE
If the price elasticity of demand for a firm's output is inelastic, then the firm could increase its revenue by reducing price. FALSE
Decreased barriers to international trade have increased the differences in consumer preferences between countries. FALSE
The international convergence in tastes has progressed to the point where there are virtually no international differences
in consumer preferences. FALSE
Improved telecommunication technology has contributed to the globalization of markets. TRUE
Middle-class life styles are fundamentally different in different countries. FALSE
Electronic commerce currently accounts for no more than 10% of total U.S. retail sales. FALSE
About 90% of the total world revenue accounted for by electronic commerce in 1999 involved business-to-business
transactions. TRUE
The growth of electronic commerce has been limited by the fact that it increases the costs to retailers of executing sales. FALSE
Retail firms that have developed electronic commerce distribution channels typically have not maintained their traditional
retail outlets. FALSE
The ability of consumers to do comparison shopping on the Internet is likely to put pressure on profit margins at the retail
level. TRUE
The cost of production is a major determinant of consumer demand. FALSE
Managerial economics is primarily concerned with the market demand for an individual firm's output. TRUE
The quantity of a commodity demanded by a consumer is influenced by the price of the commodity. TRUE
The demand for an individual firm's output depends on the demand for the industry's output, the number of firms in the
industry, and the structure of the industry. TRUE
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
The quantity of a commodity demanded by a consumer is influenced by the number of consumers in the market. FALSE
The quantity of a commodity demanded by a consumer is influenced by the prices of related commodities. TRUE
The law of demand refers to the relationship between consumer income and the quantity of a commodity demanded per
time period. FALSE
An increase in price of a commodity will generally lead to a decrease in the quantity of the commodity demanded per time
period. TRUE
A commodity is referred to as normal if an increase in its price leads to an increase in the quantity of the commodity
demanded per time period. FALSE
Most goods are normal. TRUE
Inferior goods are generally purchased at low levels of income but not at high levels of income. TRUE
If an increase in the price of one commodity leads to an increase in demand for a second commodity, then the two
commodities are complements. FALSE
An individual's demand curve is formulated under the assumption that price is held constant and all other determinants of
demand are allowed to vary. FALSE
The substitution effect holds that an increase in the price of a commodity will cause an individual to search for substitutes. TRUE
The income effect holds that a decrease in the price of a commodity is, in some respects, the same as an increase in
income. TRUE
A change in the price of a commodity will cause the demand curve for that commodity to shift. FALSE
If a decrease in income causes an individual's demand curve for a good to shift to the left, then the good is inferior. FALSE
If a good is normal, then both the substitution effect and the income effect cause quantity demanded to change in the
same direction. TRUE
There is an inverse relationship between the quantity demanded of a commodity and its price. FALSE
Butter and bread are substitutes. FALSE
A shift in demand is referred to as a change in quantity demanded. FALSE
If the independent individual consumer demand curves for a commodity are horizontally summed, the result is the market
demand curve for the commodity. TRUE
If the consumption decisions of individual consumers are not independent, then the horizontal sum of individual consumer
demand curves is the market demand curve for the commodity. FALSE
The bandwagon effect refers to the importance of musical backgrounds in TV advertising. FALSE
The bandwagon effect tends to make the market demand curve flatter than the horizontal summation of individual demand
curves. TRUE
The snob effect tends to make the market demand curve flatter than the horizontal summation of individual demand
curves. FALSE
Monopoly refers to a situation in which there is only one producer of a commodity for which there are many close
substitutes. FALSE
If the demand for a firm's output is horizontal, then the firm is a perfect competitor. TRUE
Oligopoly refers to a type of market organization that is characterized by large number of firms selling a differentiated
commodity. FALSE
Monopolistic competition is a form of market organization that combines elements of perfect competition and monopoly. FALSE
Under every form of market organization except monopolistic competition, the firm faces a downward-sloping demand
curve. FALSE
If consumers expect the price of a commodity to increase in the future, then demand for the commodity will decrease. FALSE
Consumers find it easier to postpone the purchase of a durable good than to postpone the purchase of a nondurable
good, so the demand for durable goods is more unstable than the demand for nondurable goods. TRUE
Derived demand refers to the mathematical derivation of a market demand curve from individual consumers' demand
curves. FALSE
Derived demand by a firm will generally increase if the demand for the firm's output increases. TRUE
According to the estimated linear demand function presented in Case 3-1, sweet potatoes are normal goods. TRUE
Elasticity is a measure that does not depend on the units used to measure prices and quantities. TRUE
The price elasticity of demand is the same as the slope of a demand curve. FALSE
The arc price elasticity of demand measures the price elasticity at a point on the demand curve. FALSE
The price elasticity of demand for a firm's output is generally more elastic than the price elasticity of demand for the
industry's output of the commodity. TRUE
If price elasticity of demand for a firm's output becomes more elastic, then the firm's marginal revenue will increase. TRUE
If a firm increases the price of its product and total revenue increases, then the price elasticity of demand must be less
than minus one. FALSE
If the price elasticity of demand for a firm's output is inelastic, then a decrease in price will reduce the firm's total revenue. TRUE
If the price elasticity of demand for a firm's output is unit elastic, then marginal revenue is equal to zero and total revenue
is at a maximum. TRUE
If a firm is a perfect competitor, then its marginal revenue is equal to the price of its commodity. TRUE
If a firm is not a perfect competitor, then its marginal revenue is greater than the price of its commodity. FALSE
An increase in the number of available substitutes for a commodity will decrease the price elasticity of demand for the
commodity. FALSE
The long-run price elasticity of demand for a commodity is generally greater then the short-run price elasticity of demand
for the commodity. TRUE
The income elasticity of demand for an inferior good is negative. TRUE
For most goods, the income elasticity of demand is negative. FALSE
The cross-price elasticity of demand for two goods is negative if the goods are substitutes. FALSE
The cross-price elasticity of demand measures the percentage change in the demand for one good that results from a one
percent change in the quantity demanded of a second good. FALSE
If two goods are very close complements, then the cross-price elasticity of demand between the two goods will be large
and negative. TRUE
It is likely that the cross-price elasticity of demand between two goods produced by different firms in the same industry will
be positive and large. TRUE
Estimates of demand elasticities are used by firms to determine optimal operational policies. TRUE
If the price elasticity of demand for a firm's output is inelastic, then the firm could increase its revenue by reducing price. FALSE
Decreased barriers to international trade have increased the differences in consumer preferences between countries. FALSE
The international convergence in tastes has progressed to the point where there are virtually no international differences
in consumer preferences. FALSE
Improved telecommunication technology has contributed to the globalization of markets. TRUE
Middle-class life styles are fundamentally different in different countries. FALSE
Electronic commerce currently accounts for no more than 10% of total U.S. retail sales. FALSE
About 90% of the total world revenue accounted for by electronic commerce in 1999 involved business-to-business
transactions. TRUE
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
The growth of electronic commerce has been limited by the fact that it increases the costs to retailers of executing sales. FALSE
Retail firms that have developed electronic commerce distribution channels typically have not maintained their traditional
retail outlets. FALSE
The ability of consumers to do comparison shopping on the Internet is likely to put pressure on profit margins at the retail
level. TRUE
A monopolist is a price maker
What is the other name of movement along the demand curve? Change in quantity demanded
Give examples of substitute goods. tea and coffee
A rise in the price followed by a decrease in the demand TRUE
Give an example of complementary goods Car and Petrol
What is profits in Economics? TR-TC
the difference between current expenditure and
Fiscal deficit in the Union budget means current revenue
Law of diminishing Marginal Utility is the cause of law of demand TRUE
The standard of living of the people depend on? B is incorrect
A Production function is purely technical TRUE
Indifference curve shows the various combinations of two goods which give equal satisfaction. TRUE
Which kind of costs are low at low production and high as the production increases? Marginal costs
If the actual demand for a period is 100 units but forecast demand was 90 units. The forecast error is PLUS 10
If the demand curve for product A moves to the right, and the price of product B decreases, it can be concluded that: MP lies below AP
A variable that takes on the values of 0 or 1 and is used to incorporate the effect of qualitative variables in a regression
model is called a dummy variable
A cause of inflation is A is incorrect
In which city is the Head Office of Reserve Bank of India located? Mumbai
Economics is the Science of Wealth” who gave this definition? Adam Smith
Which of the following is the apex institution which handles refinance for agriculture and rural development in India? NABARD
The compensated” demand curve is the demand curve that shows only the subsitution effect
Shares and bonds having maturity
of more than one year are not
considered as money market
Which of the following is not a specialised sub market of the money market? Bond market instrument.
A managerial economist makes an assessment of change in the consumer preferences, input prices and makes forecasts. TRUE

The economic term for the costs associated with negotiating and enforcing a contract is transaction costs
The Imperial Bank of India, after its nationalization came to be known as State Bank of India
A relatively elastic supply touches which axis OY axis
Regional Rural Banks are sponsored by national commercial bank
Setting a price below that of the competition is called penetrating price
The measure of location which is the most likely to be influenced by extreme values in the data set is the mean
Highly priced commodities have which kind of demand? inelastic
Individual demand is a demand by single buyer. . TRUE
The principle without which economics would not exist is the scarcity principle
Marginal costs curve intersects the
Which of the following is not a property of a binomial experiment
Which one of the following equals the value of output of a factory
 F Answer Remarks @
Economies of Scope refers to the reduced average total cost of production when the products are produced in a wide
variety. TRUE
Price discrimination is done to enhance profits in monopoly TRUE
Public debt implies the money borrowed by the central as well as state governments TRUE
Cross Elasticity of Demand depicts the degree of responsiveness of demand of a commodity for change in the cost of a
complementary commodity. TRUE
There is perfect mobility of resources under perfect competition. TRUE
 Question Answer Remarks
When the player has alternative courses of action and he has to select combination of these with some fixed
probabilities are known to as none strategy. FALSE
elementary units refer to those units which possesses the characteristics of the population. TRUE
f TRUE
In Assignment models, only one unit can be supplied to each destination from each source. TRUE
pure strategy is the decision rule which is always followed by the player to select the particular course of action. TRUE
faults may occur at any stage of enquiry, i.e., planning, collection, processing and analysis of data. TRUE
IFS stands for - Initial Feasible solution FALSE
When each element in a row are less than or equal to the corresponding element in another row, this row is
dominated and hence can be deleted from the payoff matrix this is called as format Dominance. FALSE
decisions concern organizational TRUE

The sum of the_______________ orders is an example of vector addition. Four

A vector may also add a vector. FALSE
A game is played when each player chooses a course of action (strategy) out of the available value FALSE
A future state can be predicted from the previous state and the matrix of transition list FALSE
The idea of probability is normally associated and remembered in connection with games or gamings FALSE
The behaviour of the dependent variable with respect to change in independent variable(s) is different in
different Forms FALSE
The larger the sample, the more useful are its indications for the population. FALSE
Number of values can be solved manually when there are two or three variables, in case of large number of
variables computing can be done through software only. FALSE
The method of testing the consistency of a system is also provided by the matrix algebra TRUE
In the guesstimate conceptual model the forecast is based on expert opinion. TRUE
The Markov process can be only in one state at a given time TRUE
A vector is any row or column of figures in a specified FALSE
In the long run,the state probabilities become 0 and 1 in all case TRUE
If Maximum value in row is equal to the minimum value in column, then saddle point exist
TRUE
Two or more events are none exclusive if only one of the events can occur on any one trial.
Continuous variables can be measured to any arbitrary degree of accuracy TRUE
Once the conceptual model has been properly designed, the quantitative model and its algorithms should almost “Flow” out of it.
TRUE
Moving Average is useful in eliminating the irregularity of time series and is generally computed to study the analysis TRUE
EPPI stands for- Expected Profit with perfect Information. TRUE
he original (given) L.P.P is called the
Primal problem. However if we state
the dual problem as the primal one,
then the other can be considered to
be the dual of this primal. The two
problems can thus be said to
The given problem in dual is known as formal FALSE constitute a pair of dual problems.
Mean could be finite or infinite depending upon the number of elements in it.
Strategic, Tactical & Operational
Broadly there are three types of decisions including Strategic decisions, formal Decisions and Operating Decisions. decisions
Linear Equation may be defined as an equation where the power of the variable(s) is one and no cross or product terms are
present. TRUE
The data collected could be in terms of qualitative variables or in terms of quantitative variables.

TRUE
If the economic model is extended to include several commodities, it will have several equations in several forms

TRUE
production loss It is incurred due to failure of not adopting most favourable course of action or strategy.
FALSE Opportunity Loss
The objective of a diet problem is to ascertain the quantities of foods that should be eaten to meet certain nutritional requirement at
a minimum cost. TRUE
Multiplication of a row vector by a column vector, which always results in a scalar, is called the _______________ multiplication of
vectors. Scalar
It is often useful to represent a matrix by a _________ symbol Single
In Steady State Condition it is possible to move from one state to another state in a finite number of steps, irrespective of the
___________ state. Present
In the guesstimate conceptual model the forecast is based on ___________________ opinion Expert
The quantity demanded depends upon the price and, therefore, for a given price, we can determine the quantity
_________________ Demanded
The probability of the outcome of any trial is “__________” and does not change throughout the process. Stable
Quantity demanded is a dependent variable while ____________ is an independent variable. Price
Independent variables are those variables whose values are not governedby the ______________ of another variable Values
linear means if a programme maximizes or minimizes some measure or criterion of effectiveness. FALSE
The second objective of the sampling theory is to accept or reject the hypothesis TRUE
Row operations can deal with a set of equations that are not all single FALSE
For every given linear programming problem, there exists an intimately related L.P. Problem referred to as its dual TRUE
It is clear that in forecasting there are always two types of variables TRUE
The probability of each value of the random variable is equal to the sum of the probabilities of the events assigned to that value of
the random variable. TRUE
The sampling technique is in expensive and less time consuming than the census technique TRUE
If element of transition matrix remain positive from one period to next,then it is referred to as the regular property of of a Markov
chain. TRUE
Data collection efforts cost money TRUE
The mixed interviews are about complex and non-quantifiable subject matter FALSE
A game is played when each player chooses a course of action (strategy) out of the available value FALSE
The most important application of geometric mean is in the construction of index numbers, i.e., averaging rates of change TRUE
In a series of statistical data that parameter which reflects a central value of the series is called the super tendency FALSE
 Question Answer Remarks
Absorbing state occurs when if any transition probability in the retention diagonal from upper left to lower right is equal to zero FALSE
An average can be defined as a central value around which other values of series tend to cluster TRUE
In the Situation of uncertain the probabilities associated with the states of nature are unknown TRUE
Probability sampling methods are those in which every item in the universe has a known chance or probability of being included in
the sample TRUE
Matrix is a column vector with c elements FALSE with m element
In a payoff matrix average point is one which is the smallest value in its row and the largest value in the column FALSE
The probability of the outcome of any trial is “stable” and does not change throughout the process TRUE
Economic and accounting models for private and public enterprises are generally used to assist major decisions & policy
formulation. TRUE
A cycling process is one in which transition matrix contains all zero elements in the retention cells and all other elements are either
0 or 1 TRUE
The term “game” represents a conflict between two or more individuals or groups or organizations TRUE
Integer Programming is the modified plp which overcomes this limitation FALSE
IFS stands for - Initial Feasible solution TRUE
The qualitative school has generated many philosophical,religious or political conceptual models according to which the ideology
and dogma is structured and forecasts prepared TRUE
A matrix is a rectangular or square array of numbers arranged into rows and columns, where the numbers acquire meaning from
their position in the array TRUE
value of a game is the average payoff per play of game over an extended of time TRUE
A dummy destination is added to the table, with a demand of 100 units. TRUE
Demand is also complicated because of the presence of inferior products in the market FALSE
Non-negetive equation is the decision variables have the values zero or positive, not negative TRUE
same probability distributions are those in which the random variable can take on only specific values FALSE
mode is that value which has the maximum frequency (i.e. occurs most often) in a given set of values TRUE
A matrix having only two column is called a column matrix FALSE
Linear Programming was introduced by george Dantzig in 1947 TRUE
Random variables can be grouped into probability distribution, which can be either discrete or inlined FALSE
The word ‘linear’ is used to represent a function, which can be represented by a straight line. TRUE
The value of a random variable is the general outcome of a random (or probability) policy FALSE
If Maximum value in row is equal to the minimum value in column, then saddle point _______________. Exist Does not exist is wrong
IFS stands for - Initial Feasible ________________. Solution
The ____________ model identifies the optimal way, but for a variety of reasons, other satisfying options may be selected and
acted upon Mathematical
The __________________ model of linear programming is a flow optimization technique. Transportation
A _____________ problem can be tabulated in a matrix called transportation matrix Transportation
Game Theory is applicable to those competitive situations which are technically known as “_______________ games Competitive
In a payoff matrix ____________ point is one which is the smallest value in its row and the largest value in the column Saddle
If this _______________ condition is not satisfied, degeneracy occurs. Co = m+n-1
The aim of the game is to determine how the players must select their respective strategies such that the pay-off is
_____________. Optimized
___________ strategy is the decision rule which is always followed by the player to select the particular course of action. Pure
To convert the unbalanced transportation problem into a balanced problem, add a _____________ destination. Dummy
The factors of production are land, labour, capital and_______? Enterpreneurship
Population can also be divided into real and unreal FALSE Real and HYPOTHETICAL
A dummy destination is added to the table, with a demand of _________ units 100
In a game with two players, if the gain of one player is equal to the loss of another player, then the game is a two person
___________________ game Zero-sum
The set of values of the variable is known as ____ of the variable Domain
_______ Decisions are primarily concerned with day to day operations of the organization Operating
Function form only tells us that there is a ______between the variables Relationship
The term "____" represents a conflict between two or more individuals or groups or organizations game
Game theory is the _______ conflict Science
In a payoff matrix _____ point is one which is the smallest value in its row and the largest value in the column Saddle
________ is a type of Assignment problem Restricted
A game is played when each player chooses a course of action (strategy) out of the available Strategies
VAM stands for Vogels Approximation ______ Method
If Maximum value in row is equal to the minimum value in column, then saddle point Exist
A variable, the building block of the decision task, may be seen as a small piece of a complex _______ Behaviour
Each variable represents a distinct dimension of the _______ making task Decision
If the maximum value is equal to the minimax value, the game has a ______ point Saddle
In a game with two players, if the gain of one player is equal to the loss of another player, then the game is a two person
_______game Zero-sum
To convert the unbalanced transportation problem into a balanced problem, add a dummy destination. TRUE
Harmonic mean is defined as the reciprocal of the arithmetic mean of the stats FALSE mean of the Reciprocals
diagonal or interior-point methods, by contrast, visit points within the interior of the feasible region FALSE Barrier or interior-point method
In the monopoli situation the information is completely known and the outcome of a specified decision can be predetermined with
certainty FALSE Deterministic situation
An individual/group responsible for making choice of appropriate course of action is know as Decision Maker TRUE
A numeric value that indicates singularity or non-singularity of a square matrix is called none FALSE is called Determinant
diagrams are used to represent a huge mass of complex data in simplified and intelligent form which is easy to understand TRUE
direct method is the most commonly used method of data collection, especially in studies relating to production management and
behavioral sciences FALSE Observation Method
If the maximin value is equal to the minimax value, the has a ending point FALSE game has a SADDLE POINT
snowball sampling is a variation of simple random sampling FALSE SYSTEMATIC sampling is a variation
Random variables can be grouped into probability distribution, which can be either discrete or inlined FALSE discrete or CONTINUOUS
Systematic sampling is a variation of simple random sampling TRUE
The computer has forced the decision maker to very carefully delineate and quantify the variables that makeup the building blocks
of the Decision task TRUE
The difference between revenue and total production costs can be described as net profit FALSE described as GROSS PROFIT
strategic decisions are concerned with external environment of the organization TRUE
This definition of probability is called the classical or priories definition of probability TRUE
The control system function is to optimize the transformation of inputs into the desired Form FALSE desired OUTPUT
 Question Answer Remarks
commercial averages are the applications of averages in commercial situations TRUE
official Decisions are primarily concerned with day to day operations of the organization FALSE OPERATING Decisions
operating Decisions are primarily concerned with day to day operations of the organization TRUE
Weighted averages have important applications in the trend analysis and search FALSE and FORECASTING
A liner problem can be tabulated in a matrix called transportation matrix FALSE a TRANSPORTATION problem
formal Decisions are concerned with structuring and acquisition of organizations resources so as to optimize the performance of the
organization FALSE ADMINISTRATIVE decisions
If an oppurtunity cost value is used for an unused cell to test optimally,it should be-: Most negetive No
If the maximin value is equal to minimax value, the game has a _____________ point Saddle
The solution to a transportation problemwith m-rows and n-coloumns (destination) is feasible if number of positive allocations are- m+n-1
Each outcome determines the gain or __________ of each player Loss
A linear function is never an ideal model of production __________________ Cost
Variables are the terms used for _________________ quantities that can assume any values within a given set. Mathematical
A statement of equality containing one or more variable is known as an _______________ Equations
A program is a set of instructions arranged in a logical sequence TRUE
Mathemetical averages are of three type:Arithmetic mean,Geometric mean and stas averages FALSE
The reasoning takes place in the decision making rectangle which is sometimes referred to as, quite appropriately, the Pink box. FALSE
In Markov analysis,state probabilities must- sum to one TRUE
Linear Programming is applied to minimize the labour or maximize the profit FALSE
It is often useful to represent a matrix by a single symbol TRUE
A cost can be less expensive and economical only if deviations from the main line of approach are kept under control. FALSE
The transition matrix elements remain positive from one period to the next.This property is known as the regular property of Markov
model FALSE
In a pay-off matrix, the minimum value in each row represents the minimum loss for player A FALSE
The method to solve assignment problems wasn introduced by d.koing, a Hungarian mathematician. TRUE
Two or more equations are said to be equivalent if they have the wrong solution FALSE
The liner model of linear programming is a flow optimization technique. FALSE
In a matrix of transition probability,the probability values should add up to one in each-: all three FALSE
Mathematical averages are those which utilize mathematical formula for the calculation of their values TRUE
Data should be collected in a systematic manner for a predetermined work FALSE
A decision always involves choice among several Aternatives TRUE
The normal distribution is completely determined by its expected value or mean (denoted by m) and standard formats FALSE
The Law of Inertia of large numbers is a corollary of the Law of Statistical regularity TRUE
zero is a type of Assignment problem FALSE
Averages give a historical concept to the relationship between different groups. FALSE
There are Indusry-wide and market-wide decisions that have to be made TRUE
linear is the relationship between the variables is directly proportional TRUE
In stochastic decision the decision maker knows the likelihood of the occurrence of each of state of nature.The probability of
occurrence of each state is known. TRUE
_____________ of a game is the average payoff per play of game over an extended of time Value is wrong option
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inventory Answer Remarks
A plant has an annual fixed cost of Rs. 1, 00,000 and a variable cost of Rs. 2000. If the product can be sold for Rs
3000, the break even quantity is 100
A technique that averages the number of recent actual values and forms a new value is called:
Product Layout is also known as
line layout. It implies that various
operations on raw material are
performed in a sequence and the
machines are placed along the
product flow line i.e. machines
Collaborative Planning, Forecasting, and are arranged in the sequence in
Replenishment (CPFR) a Web based tool which the raw material will be
Demand for a given item is said to be dependent if used to coordinate demand forecasting operated upon.
__________ is central to the philosophy of continuous improvement:
__________ is central to the philosophy of continuous improvement: Employee involvement
The method that considers several variables related to the variable being predicted is: Multiple regressions
Multiple regressions
Using the ABC classification system for inventory, which of the following is a true statement The “A” items are of high dollar value

Can be eliminated

The assignable causes of variation

Average outgoing quality level

Correct answer
AOQL stands for
Which of the following is true regarding forward scheduling? Forward scheduling is the scheduling of jobs as soon as the requirements are known

shortest processing time (SPT

Which of the following dispatching rules ordinarily gives the best results when the criterion is lowest
time for completion of the full sequence of jobs?
RFQ is sent to All potential suppliers
The two most important factors in choosing a forecasting technique are: cost and accuracy
What technique deals with the problem of supplying sufficient facilities to production lines or
individuals that require uneven service? Supply-demand theory
In the 1970's and 1980's in the USA, organizations concentrated on: marketing and financial strategies
The degree of management involvement in short range forecasts is: moderate
master production schedule specifies what product is to be made, and when

Woolen textiles industry

Cost of raw materials is highest in Correct answer

A Cpk index value of 1 is ideal, meaning all

units meet specifications.

Which of the following is true regarding the process capability index Cpk?

Product quality

IS mark is for
Possibility of rigid quality control is a characteristic of Continuous production system

1940-1980

Era of quantitative techniques was during

The trend in organizations is to place the SCM function: At the same level as the other major functions

None of above

EOQ was the contribution of

to provide a stock of goods that will provide a
Which of the following would not generally be a motive for a firm to hold inventories selection for customers
quality circle holds a brainstorming session and attempts to identify the factors responsible for flaws in a product.
Then Ishikawa diagram can be used to organize their findings. FALSE
Operations, marketing, and finance function independently of each other in most organizations FALSE
layout for allowing workers to operate more machines is called hybrid False
Inventory is considered in ROI False
Layout considers the position of machines False
TQM is applicable to process False
Mission statements should be as specific as possible regarding exactly how they will be accomplished. False
Inventory decisions are strategic decisions False
Moving average method considers all past demands FALSE
Tracking signal is used to monitor the suitability of forecasting technique False
Purchase function needs information from stores False
Patrol inspection is a part of incoming inspection False
Forecasting for production volume is long term forecasting False
capacity utilization is an objective of operations management False
Fatigue is a reason of error in inspection improper sampling False
Individual power and expertise have virtually no influence on organizational decisions since it is a group process
involving DMUs. False
A quality loss function utilizes all of the sales costs False
inventory Answer Remarks
Basic research, applied research and development are all part of the product life cycle. False
Modular design is a form of standardization False
The probability of a good lot being rejected is consumer risk False
Forecasts based on time series (historical) data are referred to as associative forecasts False
Laura's job is to negotiate the payment schedule, warranties, and delivery dates for major purchases made by her
company. It indicates that Laura deals with the terms and conditions of the purchase False As per Google. its true
Environment of uncertainty is a condition in which probability of all possible outcomes is known False
An aluminum plant produces 50 KG aluminum per Kilowatt Hour of energy. This is a partial of productivity False
As long as we match a competitor on quality and price we will gain market share. False
Quality function deployment is a method of integrating the voice of the customer into the design process False
The authority to workers to stop process if there is a potential problem is given by JIT False
Inventory cost is an invisible cost False
Multifactor productivity considers one input False
Tbusiness that is rated highly by its customers for service quality will tend to be more profitable than a
business that is rated poorly False
each piece requires 30 minutes of machine time, each machine has 2500 hours available in one year and a total of
10,000 pieces need to be produced, the number of machines required is 5 False
TTotal Quality Management emphasizes a commitment to quality that goes beyond internal company issues
to suppliers and customers False
Gourmet Pretzels bakes soft pretzels on an assembly line. It currently bakes 800 pretzels each 8-hour shift. If the
production is increased to 1,200 pretzels each shift, then productivity will have increased by: 0.5
Productivity is defined as the ratio of output to input False should be true as per def
cement plant should be located near river False
Nominal group method of forecasting is a technique based ontime series False
National productivity is determined by averaging the productivity measures of various companies or industries False
The Uniform Commercial Code specified that a product must be suitable for its intended purpose False
conjunctive decision rule is very common in the first stage of a two-stage decision process with respect to evaluation
and search in an organizational buying situation. False
Buying units (BU) are the individuals within an organization who participate in making a given purchase decision False
Operations managers take long term decisions when they decide on Facility location and layout
The Pareto principle is best applied to which of the following inventory systems ABC classification
Economic analysis is in this phase of innovation selection
Work centers are in sequence of operations in Product layout
The organization in India for granting ISO 9000 is BIS
Determining the exact mix of
products and services that
Which of the following activities is not a direct responsibility of operations management? customers will want
Current information on _________ can have a significant impact on forecast accuracy: all of the above
the finished products are mostly
Demand for a given item is said to be dependent if services (rather than goods).
an exponentially smoothed forecast and a
In trend-adjusted exponential smoothing, the trend adjusted forecast (TAF) consists of: smoothed trend factor
The Pareto principle is best applied to which of the following inventory systems?
A tool for integrating customer requirements with design is called QFD
AQL stands for acceptable quality level (AQL)
Just in time focusses on Production
mrp augmented by other resource
MRP II is accurately described as variables
A sample of parts is measured. The mean of this sample is in the middle of the control limits, but
some individual parts measure too low for design specifications and other parts measure too high. The process is in control, but not capable of
Which of the following is true? producing within the established control limits
Using the ABC classification system for inventory, which of the following is a true statement? The "A" items are of high dollar volume
Completion of any operations depends upon the slowest process in the assembly line. What
operations managers need to do in order to be successful? Target and eliminate bottlenecks
This model of location selection considers a diagonal path of movement gravity
Moving average method considers all past demands False
Reduced labour cost is an advantage of Continuous production TRUE
RFQ is sent to few selected vendors TRUE
Productivity is defined as ratio of input to output False
Productivity can be measured only on workers.
According to the manufacturing-based definition of quality, quality is the degree to which a specific
product conforms to standards FALSE
In order to compute seasonal relatives, the trend of past data must be computed or known which
means that for brand new products this approach can't be used. TRUE
In process layouts, it is important to minimize the cost of raw material FALSE
Decision-making units often function as buying centers when they consist of individuals from various
areas of the firm, such as accounting, engineering, manufacturing, and marketing, who meet
specifically to make a purchase decision. TRUE
Exponential smoothing adds a percentage (called alpha) of last period's forecast to estimate next
period's demand FALSE
Bias is measured by the cumulative sum of forecast errors. FALSE
Designing for disassembly and designing for recycling are nearly synonymous terms. TRUE
Realistic commitment is an objective of MRP TRUE
A control chart involves setting action limits for cumulative forecast error. FALSE
Measurement of productivity in service is more straightforward than in manufacturing since it is not
necessary to take into account the cost of materials. FALSE
inventory Answer Remarks
Quality function deployment is a method of integrating the voice of the customer into the design
process. TRUE
Forecasts based on an average tend to exhibit less variability than the original data. TRUE
A proactive approach to forecasting views forecasts as probable descriptions of future demand, and
requires action to be taken to meet that demand. FALSE
The value of outputs is measured by the prices customers are willing to pay for goods or services. FALSE #
Routing is an aspect of production control FALSE #
Question FALSE
The sample standard deviation of forecast error is equal to the square root of MSE. TRUE
The shorter the forecast period, the more accurately the forecasts tend to track what actually
happens. TRUE
A supply chain is a sequence of organizations that are involved in producing goods and/or producing
services. FALSE
setting the level of safety stock so that a given
The proper quantity of safety stock is typically determined by stockout risk is not exceeded
Ratio of standard deviation to mean is called skewness FALSE
The father of scientific management was Henry Ford. FALSE
Exponential smoothing is a form of weighted averaging. TRUE
The upper control limit in a control chart is at 3Ϭ TRUE
Forecasts for groups of items tend to be less accurate than forecasts for individual items because
forecasts for individual items don't include as many influencing factors. FALSE
This model of location selection considers a diagonal path of movement GRAVITY
Which of the following is NOT a factor impacting the supply chain? Longer product life cycle.
Which scheduling technique should be employed when due dates are important for a job order? backward scheduling
The center of gravity method to determine facility location looks Both distance and quantity transported
Two recent trends in operations management are supply chain management and specialization. FALSE flexibility and specialization.
The types of individuals who work in the organization represent the organization's macrosegment. FALSE composition
When a sample measurement falls inside the control limits, it means that if there is no other pattern
in the samples, the process is in control. TRUE
data point by its appropriate seasonal relative. TRUE
An example of an operational operations management decision is inventory level management. TRUE
Just in time focusses on sales FALSE
control the likelihood of a stockout due to the
The purpose of safety stock is to variability of demand during lead time
The word technology is used only to refer to information technology. FALSE
A major consideration in product design is manufacturability. TRUE
Value added' by definition is always a positive number since 'added' implies increases. FALSE
A cement plant should be located near river FALSE
JIT results in inventory reduction TRUE
For critical path scheduling techniques to be most applicable, the jobs or tasks of a project must be: all of the above correct option not given
A control chart involves setting action limits for cumulative forecast error. FALSE
A record of all the components of an item, the parent component relationship and usage quantities is called BOM TRUE
The value with highest frequency is called median FALSE
Curvilinear and multiple regression procedures permit us to extend associative models to
relationships that are non-linear or involve more than one predictor variable. TRUE
The three primary functions of a firm are financial management, operations management, and
accounting. FALSE
The operations manager has primary responsibility for making operations system design decisions,
such as system capacity and location of facilities. FALSE
TQM is applicable to services FALSE
Organizational strategy should be determined without considering the realities of functional area
strengths and weaknesses since they can be changed to meet our strategy. FALSE
Organizational objectives can be categorized as commercial, governmental, nonprofit, and cooperative. TRUE
Delivery schedule is not a part of PO FALSE
The probability of a bad lot being accepted is consumer risk FALSE
The product of achievable capacity and efficiency is called Effective capacity
A sample of parts is measured. The mean of this sample is in the middle of the control limits, but some individual The process is in control, but not capable of
parts measure too low for design specifications and other parts measure too high. Which of the following is true? producing within the established control limits
A productivity increase in one operation that doesn't improve overall productivity of the business isn't worthwhile
The assignable causes of variation Cannot be eliminated
The priority rule which processes jobs according to the smallest ratio of due date to processing time
is: critical ratio
Which of the following corresponds to the predictor variable in simple linear regression? independent variable
The MPS calls for 110 units of Product A, there are currently 60 of Product A on hand. Each A requires 4 of Part B,
there are 20 units of B available. The net requirements for B are 180
Which of the following might be used to indicate the cyclical component of a forecast? Mean Squared Error (MSE)
Which of the following lot-sizing-techniques results in the lowest holding costs? lot-for-lot
Motivation is a result of MBO
The ratio of good output to quantity of raw material input is called process yield
material requirements planning with feedback
Distribution Resource Planning (DRP) is loop from distribution centers
Using the ABC classification system for inventory, which of the following is a true statement? The “A” items are of high dollar value
In the 1970's and 1980's in the USA, organizations concentrated on: marketing and financial strategies
Current information on _________ can have a significant impact on forecast accuracy: all of the above
inventory Answer Remarks
The most appropriate sequencing rule to use if the goal is to dynamically track the progress of jobs and establish
relative priority on a common basis is critical ratio
Purchase involves All above
The probability of a bad lot being accepted is Consumer risk
The concept of cause and effect is used in
The concept of cause and effect is used in Quality circles
Use of the sequencing rule Shortest Processing Time generally results in minimum average flow time
Diminishing returns to scale of holding
Which of the following is not an assumption of the basic fixed-order quantity inventory model? inventory
One way to facilitate production scheduling and production in firms making a large number of different final products
is to use modular bills
___________ is generally used to facilitate an organization strategy that emphasizes low cost. None of the above
Discrepancy report is used for None of above
The desired probability of not running out of
Which one of the following descriptions best defines the cycle-service level as a measure of customer service? stock in any one inventory cycle
A suitable chart for controlling defects is C chart
Petrochemical Industry is an example for ~*~ production Process
Planning workforce requirements, scheduling of the equipment and financial analysis are the major uses
of__________. Productivity ratios
Most of the organizations adopt a defensive design R&D Strategy in an attempt to prolong the life of the product by Decline is the answer as per
employing new packaging, redesigning it, improving its reliability. This is __________ phase in product life cycle. Maturity google
The output of a production system is Both Goods + Services
This is a factor affecting site selection All above
how well an acceptance sampling plan
An Operating Characteristic (OC) curve describes discriminates between good and bad lots
A good layout affects All above
ISO 9000 is a Implementation standard FALSE
Forecasts based on an average tend to exhibit less variability than the original data. FALSE
Time required for production of a component is called lead time FALSE
A Boutique should be located near market FALSE
If value of input is more than the value of output, it is a value adding process FALSE
Human effort, technology, raw materials, information and time are all examples of the necessary inputs to operations FALSE
Quality-based strategies focus on customer satisfaction by ensuring that each product is carefully and thoroughly
inspected prior to delivery to prevent sending out bad product. FALSE
ISO 9000 is a standard for product quality FALSE
Early adopters are innovative organizations that derive a great deal of their success from leading change FALSE
Forecasting techniques that are based on time series data assume that future values of the series will duplicate past
values. FALSE
Productivity tends to be only a very minor factor in an organization's ability to compete. FALSE
Savings on transportation cost is a feature of localized purchasing FALSE
Organizational culture is a concept that is similar to consumer self-concept and lifestyle. FALSE
Expected payoff is equal to the highest payoff for an alternative in the environment of risk FALSE
Layout planning is a operational decision FALSE
Smoothing coefficient is low for new products for which demand is shifting FALSE
Roger owns 200 shares of stock in Home Depot. Then the home depot comes under public firm commercial firm FALSE
Plant layout design Precedes factory layout FALSE
Forecast for a group of items is more accurate than for a single item FALSE
The ratio of available capacity to designed capacity is called maximum capacity FALSE
Seasonal relatives can be used to de-seasonalize data or incorporate seasonality in a forecast. FALSE
Median refers to the central value FALSE
The T in the model TAF = S+T represents the time dimension (which is usually expressed in weeks or months FALSE
Wastivity is Equal to Productivity FALSE
A chase plan is characterized by low inventory
Operations managers are responsible for assessing consumer wants and needs and selling and promoting the
organization's goods or services. FALSE
A company can compete with other companies manufacturing a similar product only by reducing its price FALSE
In the maximin principle, the substitute with the best out of the worst payoffs is selected FALSE
Poka-yoke is the Japanese term for continuous improvement. FALSE
AOQL stands for Acceptable overall quality lot FALSE
The naive approach to forecasting requires a linear trend line. FALSE
DFM stands for: Design for Manufacturing
A scheduling technique used to achieve optimum, one-to-one matching of tasks and resources is the assignment method
Robustness of a product is _____________ related with the probability of failure. Inversely
Perhaps the most powerful type of reference group in industrial markets is that of market mavens FALSE
Correlation measures the strength and direction of a relationship between variables FALSE
Forecasts help managers plan both the system itself and provide valuable information for using the system. FALSE
Product layout is not a basic layout format FALSE #
Inventory level a performance measure of purchase FALSE
Site visits to potential vendors, laboratory tests of a new product, and investigation of possible product specifications
are part of formal information search. FALSE #
Carlos is trying to understand the organizational buyer behavior of firms in his sales territory. Therefore firmographics
is an external influence on an organization's culture that he should examine FALSE #
A suitable chart for controlling fraction defective is c chart FALSE is
CAD uses computer graphics for product design FALSE #
A firm pursuing a strategy based on customization and variety will tend to structure and manage its supply chain to
accommodate more _____________ than a firm pursuing a strategy based on low-cost and high-volume. Variation
Long time relation with a few suppliers is advocated by TQM FALSE
Increased emphasis on pollution control and the environment has led companies to adopt an environmental scanning
approach FALSE
Lead users tend to accelerate diffusion of information through infrastructure, which is labeled as market push FALSE
The latest version of ISO 9000 is 2000 FALSE
If people would only work harder, productivity would increase FALSE
X-bar R chart is for controlling attributes FALSE
inventory Answer Remarks
Vary size of inventory is a pure planning strategy for varying demand FALSE
The process improvement technique that sorts the vital few from the trivial many is Pareto analysis FALSE #
Standardized parts are interchangeable parts FALSE #
An advantage of trend adjusted exponential smoothing over the linear trend equation is its ability to adjust over time
to changes in the trend. FALSE
The term robust design refers to a product that has exceptional strength FALSE
Effective capacity is equal to design capacity FALSE
Varying workforce level to meet demand is a characteristic of chase plan FALSE
Flow of raw materials is in lots in Batch production
Size of site is a factor for Site selection
Which of the following is NOT a benefit of SCM/JIT Purchasing? Less dependence on suppliers
Given forecast errors of 5, 0, - 4, and 3, what is the bias? 4
Given forecast errors of 4, 8, and - 3, what is the mean absolute deviation? 5
Given forecast errors of 5, 0, - 4, and 3, what is the mean absolute deviation? 3
Purchase function needs information from All above
For firms competing in worldwide markets, conducting __________________ is more complex, since what works in
one country or region might not work in another Environmental analysis
What type of process would a paper mill be most likely to use? Continuous flow
A fixed interval system is suitable for joint replenishment items
Quality refers to All above
Suppose a country's productivity last year was 84. If this country's productivity growth rate of 5% is to be maintained,
this means that this year's productivity will have to be _______. 88.2
Value added can be calculated by outputs minus inputs
to examine variability in acceptance sampling
A run test is used plans
In a X-bar chart, the constant used for determining control limits is A2
If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand
is 10, which of the following is the standard deviation of usage during lead time? 100
Which of these is not part of the planning files of a production planning and control system? control files
A suitable chart for controlling fraction defective is P chart
Patrol inspection is a part of Process control
Each X requires 2 of component Y; each Y requires 4 of part Z. The lead time for assembly of X is 1 week. The lead
time for the manufacture of Y is 1 week. The lead time for the procurement of Z is 6 weeks. The cumulative lead time
for X is ~*~ weeks. 8
Acceptance sampling is usually used to control incoming lots of purchased products
Acceptance sampling's primary purpose is to decide if a lot meets predetermined standards
Producer's risk is the probability of rejecting a good lot
Which of the following is used for constructing a control chart? mean squared error (MSE)
Using the economic order quantity model, which of the following is the total ordering cost of inventory given an annual
demand of 36,000 units, a cost per order of $80 and a holding cost per unit per year of $4? 1200
When a set of jobs must pass through two workstations whose sequence is fixed, ~*~ is the rule most commonly
applied Johnson's Rule
change in the central tendency of the process
The x-bar chart tells us whether there has been a output
The production database containing information about each of the components that a firm produces or purchases is
the item master files
Purchase as a necessary evil is Never seen
In continuous (make-to-stock) operations, the master production schedule is usually expressed in terms of end-items
A manufacturer has been receiving excessive numbers of defective standard machine parts from a vendor on a
regular basis. What is the most effective way to design a formal inspection system for incoming parts? Statistical quality control
A model representing functional relationship between variables is called Mathematical model
If each piece requires 30 minutes of machine time, each machine has 2500 hours available in one year and a total of
10,000 pieces need to be produced, the number of machines required is 2
An aluminum plant produces 50 KG aluminum per Kilowatt Hour of energy. This is a ________ of productivity Partial measure
Era of advanced techniques was during After 1980
If demand is not uniform and constant, then stockout risks can be controlled by adding safety stock
The earliest start time plus the time needed to
The early finish time for an activity equals: complete the activity
Quality refers to cost of product FALSE
A control chart involves setting action limits for cumulative forecast error. FALSE
Productivity and efficiency are different names for the same thing. FALSE
In most acceptance sampling plans, when a lot is rejected, the entire lot is inspected and all defective items are
replaced. When using this technique the AOQ is not affected, but the AQL is improved. FALSE
Companies are either producing goods or delivering services. This means that only one of the two types of operations
management strategies are used. FALSE
TQM is applicable to services FALSE
Government statistics are a good source of data about productivity trends in the service sector. FALSE
The individuals (representing functional areas and management) within an organization who participate in making a
given purchase decision make up the decision center (DC). FALSE
The use of models will guarantee the best possible decisions. FALSE
Multifactor productivity considers one input FALSE
The principal activity in all production operations is to convert inputs into outputs that satisfy consumer wants. FALSE
A suitable chart for controlling defects is p chart FALSE
Product layout is not a basic layout format FALSE
Production volume in product layout is low FALSE
A moving average forecast tends to be more responsive to changes in the data series when more data points are
included in the average. FALSE
cost of distribution is not a component of total cost FALSE
Activities of handling and transport of goods is a part of maintenance function FALSE
The assignable causes of variation can be eliminated FALSE
Motivation is a result of MBO FALSE
Motives is an internal influence on organizational buyer behavior. FALSE
If the average number of defects is 9, the lower control limit in a c chart is 4 FALSE
Traditional strategies of business organizations have tended to emphasize cost minimization or product
differentiation. FALSE
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Much of the responsibility for improving productivity rests with management. FALSE
Individual power and expertise have virtually no influence on organizational decisions since it is a group process
involving DMUs. FALSE
Investigation of trends to identify influencing developments is a part of analysis FALSE
Effectiveness is the measure of output versus capacity FALSE
A company can compete with other companies manufacturing a similar product only by reducing its price FALSE
Basic research, applied research and development are all part of the product life cycle FALSE
equipment and people are shared across
All of the following are advantages of the pure project organizational structure EXCEPT projects.
Productivity is expressed as: output divided by input
X-bar R chart is for controlling Continuous variables
A tool for verifying design against failures is called FMEA
The ______ is the input to Materials Requirements Planning which lists the assemblies, subassemblies, parts and
raw materials needed to produce one unit of finished product. bill of materials
The fundamental purpose for the existence of any organization is described by its: mission statement
Acceptance sampling is for Inspection of parts
If the average number of defects is 9, the lower control limit in a c chart is 3
A persistent tendency for forecasts to be greater than or less than the actual values is called: bias
ISO 9000 is applicable to All Above
making type I errors for various percentages
The operating characteristic (OC) curve shows the probability of of defectives
Which technique is used in computing seasonal relatives? centered moving average
The ______ is(are) the MRP input detailing which end items are to be produced, when they are needed, and in what
quantities. master production schedule
Plots of sample ranges indicate that the most recent value is below the lower control limit. What course of action The process is out of control; reject the last
would you recommend? units produce
Motion study was the contribution of Gilberth
Statistical and mathematical models use Algorithm
A model representing physical replica of processes is called Iconic model
A double sampling plan specifies all of the following Except Double acceptance number
The impact of cost reduction on profits is much larger than the impact of increased sales
Inventory classification on the basis of item cost is None of these
For products in maturity stage of the product life cycle the purchasing function of an organization likely to be the key
function influencing the purchase decision. FALSE
The use of a control chart assumes that errors are normally distributed about a mean of zero. FALSE
A Type II error occurs when the population is worse than the LTPD. FALSE
Forecasting techniques such as moving averages, exponential smoothing, and the naive approach all represent
smoothed (averaged) values of time series data FALSE
ISO 9000 is applicable to services FALSE
A combination of product and process layout is called assembly line FALSE
Level zero in a bill of materials is accorded to finished product FALSE
Environmental scanning is a search for events or trends that present either threats or opportunities to the
organization FALSE
The principal activity in all production operations is to convert inputs into outputs that satisfy consumer wants. FALSE
The mission of a firm should be designed to support the firm's overall strategy. FALSE
A difference between large and small organizations when making a purchase decision is large organizations
generally involve more individuals in the decisionmaking process. FALSE
In the principle of minimax regret, equal probability is allocated to all conditions and the alternative with maximum
expected value is selected FALSE
People from different functional areas of an organization in a DMU will always use the same evaluative criteria. FALSE
The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast. FALSE
Standardization has the advantage of reducing variability. FALSE
The product of achievable capacity and efficiency is called maximum capacity FALSE
Environment of uncertainty is a condition in which probability of all possible outcomes is known FALSE
Accounts function is not covered by ISO 9000 FALSE
Straight rebuy organizational purchase situation is characterized by low purchase importance, low choice complexity,
level of decision-making unit (DMU) at low levels of the organization, a very small DMU, very brief time to decision,
and very limited decision search. FALSE
The segment of small and moderate-sized businesses has a lot of potential and have marketers learned with respect
to segmenting business customers. FALSE
Services are intangible in nature FALSE
The EOQ model with quantity discounts attempts to determine lowest price FALSE
Which of the following activities is not a direct responsibility of operations management? Designing the operations products , services & process
Which of the following is true regarding the process capability index Cpk? A Cpk index value of 1 is ideal, meaning all units meet specifications.
Exploding the bill of materials means converting the bill of materials into components and raw material requirements
Moving from the aggregate plan to a master production schedule requires disaggregation
In what way are Distribution Resource Planning (DRP) and Material Requirements Planning (MRP) similar? Both are employed in a manufacturing organization
Current information on _________ can have a significant impact on forecast accuracy: all of the above (Price, inventory, competition)
Sark Incorporated is out of stock for a key item, which has a backorder of 200 units. An open order of 750 units
Lessis than
scheduled
or equal
for to
arrival
0 units
on the following Monday. What is the current inventory position at Sark?
Using the ABC classification system for inventory, which of the following is a true statement? The “A” items are of high dollar value
The priority rule which processes jobs according to the smallest ratio of due date to processing time is: critical ratio
Which of the following factors would tend to reduce productivity? more inexperienced workers
Which of the following is true? Functional strategies are shaped by corporate strategy
Which of the following might be used to indicate the cyclical component of a forecast? Mean Squared Error (MSE)
Given forecast errors of 5, 0, - 4, and 3, what is the mean absolute deviation? 3
For firms competing in worldwide markets, conducting __________________ is more complex, since what works Environmental
in one country
analysis
or region might not work in another.
The extension of MRP which extends to resources such as labor hours and machine hours, as well as to order Enterprise
entry, purchasing,
Resource and
Planning
direct interface with customers and suppliers is
Factory X is trying to use level use scheduling. If their first target were to cut the current lot size in half, by what
Cannot
proportion
be determine
must setup cost change?
This is not a component of production management Selling product
Flow of raw materials is in lots in Batch production
Which of the following is one of 6M,s All above (man, material, money)
Which one of the following is a characteristic of a continuous process? The ability to handle high volumes
Robustness of a product is _____________ related with the probability of failure. Inversely
inventory Answer Remarks
A device to move material between two fixed points is called Conveyor
Which one of the following is the correct order of layout types from low volume/high variety to high volume/low
Fixed
variety?
position, process, cell, product
A document describing quantity of end items to be produced within specified periods of time is called Master production schedule
p chart is for controlling attributes TRUE
Standardized parts are interchangeable parts FALSE
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The annual compounded interest rate of an investment with a stated interest rate of 7%
compounded quarterly for 4 years (round to the nearest .1%) would be 6.7%.
In deciding the optimal level of current assets for the firm, management is confronted with
__________. a trade-off between profitability and risk
Payment to creditors is a manifestation of cash held for: trans motive
The longer the cash cycle, the more financing a firm requires.
Which of the following is not a part of credit policy?
Cost of issuing new shares to the public is known as :
In the Walters model, the DP ratio should depend upon the relationship between r and ke
Inventory is generally valued as lower of Market Price and Replacement Cost (Wrong Answer)
The riskiness of equity securities typically exceeds that of debt securities for firms.
The basic rent that you are charged when you borrow money is called real rate of return.
There is no explicit benefit of keeping inventory, hence no stock be maintained.
leverage can be used to measure the relationship between :
‘Bird in Hand’ argument is given by : Gordon’s Model
When an investment pays only simple interest, this means the future value of the investment
will be lower than invested sum. FALSE
Cost of Capital for Bonds and Debentures is calculated on : Risk-free Rate of Interest basis
compare the net present values under each
alternative, using the cost of capital as the
A way to analyze whether debt or lease financing would be preferable is to: discount rate
Mr. Munir purchased goods of Rs.100,000 on June 01, 2006 from Zeeshan and brothers on
credit terms of 3/10, net 30. On June 09 Mr. Munir decided to make payment to Zeeshan and
brothers. How much he would pay to Zeeshan and brothers? 97000
Which of the following does not effect cash flows from a proposal : Method of Project Financing
interest is earned only on the original
"When an investment pays only simple interest, this means:" investment
Same considerations are applicable to short-term sources as well as long-term sources of
funds. FALSE
Stability of dividend refers to the fact that the rate of divided must be fixed. FALSE
Which of the following is generally untrue for manufacturing firm? High level of cash balance
Which of the following does not usually affect working capital requirement? None of (a) and (b)
The net present value (NPV) decision rule is considered the best in theory. TRUE
Financial managers focus on cash flows. TRUE
Debentures are long-term unsecured bonds that are backed only by the general
creditworthiness of the issuer. TRUE
Depreciation is incorporated in cash flows because it : Reduces Tax liability
Receiving a required inventory item at the exact time needed is Jit
The more frequent the compounding, the less a person will earn on a savings account. FALSE Compounding generates more returns
As bank overdraft is availed by business firms on a regular basis, it may be considered as a
long-term source of funds. FALSE OD is a short term source of finance
Three advantages of the corporate form of organization are the ease of transfer of
ownership, limited liability for the shareholders and an unlimited life for the business entity. TRUE
A firm becomes bankrupt when the value of its debt equals the value of its assets. FALSE Value of debts > Value of assets
Unsecured loans are those that appear to be too risky for over one year. TRUE
_____________ is the point at which firm profit is equal to zero. Breakeven
When money is invested at compound interest, the growth rate is the interest rate.
Minimum Rate of Return that a firm must earn in order to satisfy its investors, is also known
as : Weighted Average Cost of Capital
A capital investment is one that has the prospect of long-term benefits
Which of the following is not an objective of cash management? Optimization of cash balance
Earnings before interest and taxes (EBIT) is an
indicator of a company's profitability. EBIT can be
calculated as revenue minus expenses excluding tax
and interest. EBIT is also referred to as operating
earnings, operating profit, and profit before interest
EBIT is also known as operating profits TRUE and taxes.
Market value is unaffected by Dividend policy. TRUE FALSE
Cash is the most important but least earning current asset. TRUE
payment of interest on previously earned
The concept of compound interest refers to: interest.
The maturity period of Commercial paper in the
Commercial Paper market ranges between minimum
of 15 days and maximum of 1 year from the date of
In India, commercial papers can be issued for any amount and for any duration. FALSE issue.
Raw Material,
WIP (Work in Process/Progress),
MRO (Maintenance, Repair, Operating supplies)
Inventory management does not include management work in progress. FALSE Finished goods
A firm's cost of capital can be used in valuation of every new project they encounter,
regardless of its risk FALSE
The amount of current assets that varies with
seasonal requirements is referred to as Temporary
working capital. Temporary working capital (TWC) is
The amount of current assets that varies with seasonal requirements is referred to as gross the temporary fluctuation of networking capital over
working capital. FALSE and above the permanent working capital.
an example of ""high risk - high (potential)
Financing a long-lived asset with short-term financing would be profitability"" asset financing
Angel investors are wealthy private investors focused
on financing small business ventures in exchange for
equity. Unlike a venture capital firm that uses an
Which of the following exchange capital for ownership in a business? Angel investors investment fund, angels use their own net worth.
CFOs examine the firm's accounting systems and comment on whether financial statements
fairly represent the firm's financial position.
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Gross working capital is the sum of a company's
current assets (assets that are convertible to cash
within a year or less). Gross working capital includes
assets such as cash, accounts receivable, inventory,
Gross Working Capital is equal to: Total current assets short-term investments, and marketable securities.
The cash budget is prepared after the operating
budgets (sales, manufacturing expenses or
merchandise purchases, selling expenses, and
general and administrative expenses) and the capital
expenditures budget are prepared. ... Cash outflows
for the period are then subtracted to calculate the
Capital expenditures are not considered in cash budget. FALSE cash balance before financing.
Sustainability refers to meeting the needs of the present without compromising the ability of
future generations to meet their own needs TRUE
The financing decision affects the total operating profits of the firm. FALSE
According to Gordon, dividends reduce investors'
uncertainty, causing them to discount a firm's future
earnings at a lower rate, thereby increasing the firm's
value. In contrast, failure to pay dividends increases
There is a difference of opinion on relationship between dividend payment and value of the investors' uncertainty, which raises the discount rate
firm. and lowers share prices.
The NI approach, the k0 falls as the degree of leverage is increased TRUE
Financial leverage is always beneficial to the firm. TRUE FALSE
In accounts receivable management, credit analysis is the process of determining the
probability that customers will not pay. TRUE
While cash must be available to pay bills as they become due within a firm, financial
managers try to keep balances low because cash held in checking accounts earns little, if
any, interest. In the interim, cash might be held in:
You wish to borrow $2,000 to be repaid in 12 monthly installments of $189.12. The annual
interest rate is: 24%

The estimated benefits from a project are expressed as cash flows instead of income flows it is cash, not accounting income, that is
because central to the firms capital budgeting decision
Under the core preposition of NOI approach, the
overall cost of capital depends on the business risk of
the firm, and business risk does not change with
Under NOI Approach, overall cost of capital change in debt equity mix, hence overall cost of
Which of the following is true? remains same capital remains constant.
Accounting Rate of Return is based on Average Expected Profit
Both the future and present value of a sum of money are based on: Interest Rate and Number of Time Periods
In the EOQ Model EOQ will increase if order cost increases
A firm must make its dividend payments to preferred shareholders before it makes any
interest payments to its bondholders.

TRUE FALSE
Economic Order Quantity is the optimum quantity of
goods that a firm may order in one time to minimize
the annual cost of ordering and inventory carrying
cost.
EOQ is based on certain assumptions:
a) Annual Demand
b) Ordering Cost
EOQ determines the order size when Total inventory costs are minimum c) Carrying cost
Carrying cost of inventory includes the carriage in FALSE
Financial leverage is the degree to which a company
uses fixed-income securities such as debt and
preferred equity. The effect of financial leverage
emerges if a company uses debt financing. Formula
of DFL is as follows:
DFL = % change in EPS / % change in EBIT
FL is zero if EBIT = Zero Therefore, if EBIT is zero the FL is also equal to Zero.
If you win the lottery and you choose to have your proceeds distributed to you over a
twenty-year time period, with the first payment coming to you one year from today, which
calculation would you use to calculate the worth of those proceeds to you today? present value of an annuity
The payback method determines how quickly the
Which of the following capital budgeting methods focuses on firm liquidity? Payback method cash investment is recouped.
Net working capital refers to current assets minus
current liabilities. Working capital, also known as net
working capital (NWC), is the difference between a
company's current assets, such as cash, accounts
receivable (customers' unpaid bills) and inventories of
raw materials and finished goods, and its current
Net working capital refers to current assets minus current liabilities liabilities, such as accounts payable
EBIT-EPS Analysis is an extension of financial leverage analysis. TRUE
In 3 years you are to receive ₹5,000. If the interest rate were to suddenly increase, the
present value of that future amount to you would rise. FALSE PV of future amount would FALL.
Capital budgeting decisions involve huge funds and
are long term decisions. As they involve huge costs
one wrong decision would have a big effect on the
business. Hence, capital budgeting decisions are
Capital Budgeting Decisions are Irreversable irreversible as its difficult to take back the decision.
The operating leverage explains the operating risk
and financial leverage explains the financial risk of the
firm. However, a firm has to look into overall risk or
total risk of the firm i.e., operating risk as well as
financial risk. Hence, if we combine the operating risk
Total risk of a firm is determined by the effect of operating and financial leverages. TRUE and financial risk, the result is leverage.
Capital Budgeting is a part of Investment decisions
 Question Answer Remarks
Analysts commonly make the mistake of equating
cost of capital with the interest rate on that money.
Cost of capital isn’t dependent upon how and where
the capital was raised. Cost of capital is dependent on
The cost of capital depends primarily on the source of funds, not the use FALSE the use – not the source – of funds.
Financial leverage depicts the amount of debts that
an entity uses to finance the buying additional assets.
Its basically the proportion of debt in the capital
structure of the company. Higher the degree of
financial leverage means the company is using more
debts. Financial leverage arises due to interest cost of
Financial Leverage arises because of Interest Cost debts.
Financial analysts, working capital means the same
"To financial analysts, ""working capital"" means the same thing as current assets." True ( as per answer key) thing as current assets minus current Liabilities.
"Three advantages of the corporate form of organization are the ease of transfer of
ownership, limited liability for the shareholders and an unlimited life for the business entity." TRUE
A firm will borrow long-term if the extra interest cost of borrowing long-term is less than the
expected cost of rising interest rates before it retires its debt. TRUE
Capital market securities fall into two categories: bonds and stocks. TRUE
"When firms sell securities for the very first time, the issue is an initial public offering." TRUE
Stability of dividend refers to the fact that the rate of divided must be fixed.

The cost of issuing new stock is called: flotation costs

EPS depends upon the composition of capital structure. TRUE
it is collecting credit sales more quickly than
An increase in the firm's receivable turnover ratio means that: before
"A(n)_______ would be an example of a principal, while a(n)________ would be an example
of an agent" Shareholder; Manager
% rate of dividend is also known as dividend payout ratio. FALSE
"A firm's cost of capital can be used in valuation of every new project they encounter,
regardless of its risk." FALSE
Compound interest pays interest for each time period on the original investment plus the
accumulated interest TRUE
Financial Asset
The amount of current assets that varies with seasonal requirements is referred to as
__________ working capital. temporary
Which of the following is generally untrue for manufacturing firm? High level of cash balance
Credit Analysts examine a firm's financial strength for its debt holders.
TRUE
"The more frequent the compounding, the higher the future value, other things equal."

TRUE
Deferral period refers to the credit period allowed by: Creditor
Not all cash a company generates will be returned to the investors. Which of the following
will NOT reduce the amount of capital returned to the investors? Dividends
"At optimal capital structure, the k0 of the firm is highest." FALSE
Cash cycle is equal to operating cycle for a firm. FALSE
"A formal, legal commitment to extend credit up to some maximum amount over a stated
period of time is known as Line of credit."
FALSE
"In India, commercial papers can be issued for any amount and for any duration." FALSE ?
You have $1000 you want to save. If four different banks offer four different compounding
methods for interest, which method should you choose to maximize your $1000? compounded quarterly
You are planning to retire in twenty years. You'll live ten years after retirement. You want to
be able to draw out of your savings at the rate of $10,000 per year. How much would you
have to pay in equal annual deposits until retirement to meet your objectives? Assume
interest remains at 9%. 1254
You have $100,000 to invest at 4% interest. If you wish to withdraw equal annual payments
for 4 years, how much could you withdraw each year and leave $0 in the investment
account? 27548
What is the WACC for a firm with 50% debt and 50% equity that pays 12% on its debt, 20%
on its equity, and has a 40% tax rate? 0.136
Which of the following statements is correct for a conservative financing policy for a firm The firm uses long-term financing to finance
relative to a former aggressive policy? all fixed and current assets.
Which of the following would be consistent with an aggressive approach to financing Financing some long-term needs with short-
working capital? term funds
The amount of current assets required to meet a firms long-term minimum needs is referred
to as __________ working capital. net
This sub-area of finance looks at firm decisions in acquiring and utilizing cash received from
investors or from retained earnings. investments
Liberalizing the discount rate means increasing the discount rate for the same period. TRUE
The present value of a rupee to be received in the future is more than a rupee. FALSE
The longer the cash cycle, the more financing a firm requires. TRUE
For corporations, maximizing the value of owner's equity can also be stated as maximizing
the stock price. TRUE
If the fixed cost of production is zero, which one of the following is correct? None of the above
Which of the following is not a part of credit policy? paying practices of debtors.
Comparing the values of undiscounted cash flows is analogous to comparing apples
to oranges. TRUE
Sunk costs and opportunity costs are often the same thing. FALSE
Which of the following is not incorporated in Capital Budgeting? Rate of Cash Discount
If cash discount is offered to customers, then which of the following would increase? sales
 Question Answer Remarks
The decision function of financial management can be broken down into the financing
and investment decisions. FALSE
Projects that have a zero NPV when calculated at the WACC will provide sufficient
returns to all stakeholders. TRUE
Operating leverage may be defined as Contribution ÷ EPS. FALSE
This sub-area of finance is important for adapting to the global economy. international finance
"In capital budgeting, the financial manager tries to identify investment opportunities that
will increase the value of the firm." TRUE
Retained earnings are an easily available source of funds at no explicit cost. TRUE
Strict adherence to the maturity matching approach to financing would call for all current
assets to be financed solely with current liabilities. TRUE
Permanent Working Capital is also known as: None of the above Net working capital is Wrong in key
"To financial analysts, ""net working capital"" means the same thing as __________." current assets minus current liabilities.
No it is not compulsory to pay any dividend to
Preference shareholders in case, there is Profit but
company does not want to pay any dividend. But if
company wishes to pay dividend to Equity
shareholders it can do so only after paying dividend to
Dividend is compulsorily payable to preference shareholders. FALSE Preference shareholders.
The value of $750 invested at 7.5% compounded quarterly for 4.5 years (round to
nearest $1) would be $808. FALSE
Cost of Capital for Equity Share Capital does not imply that : All of the three above
Trade credit is a long term source of lending. FALSE
Debt Financing is a cheaper source of finance because of : tax-deductibility of interest.
In proper capital budgeting analysis we evaluate incremental cash flow.
ABC analysis helps to ascertain the minimum level of stock of raw material. FALSE
The Traditional Approach to Value of the firm m that that there is an optimum capital structure.
Walter’s Model suggests that a firm can always increase the value of the share by increasing dividend
Cash dividend and bonus share issue affect the firm in the same way. FALSE
Indifference level of EBIT is one at which EPS under two or more financial plans would
be same. TRUE
"If the Net Present Values of two, mutually exclusive options are both greater than
zero, which option should be selected if the firm uses the Net Present Value method?" The one with the largest Net Present Value.
"Risk, as it relates to working capital, means that there is jeopardy to the firm for not
maintaining sufficient current assets to meet its cash obligations as they occur and
take advantage of prompt payment discounts." FALSE
"The NI approach, the ke is assumed to be same and constant." TRUE
The concepts of present value and future value are: directly related to each other
A low price/earnings ratio usually means that a firm has positive expectations for the
future. FALSE
A perpetuity is a type of annuity that is set up so that
the payments will never end. There is no set maturity
date. As long as an investor owns a perpetuity, they
A perpetuity is a special form of an annuity. TRUE will keep receiving payments.
This sub-area of finance helps facilitate the capital flows between investors and
companies. investments is wrong
Favourable financial leverage and trading on equity are same. TRUE
"Having defined working capital as current assets, it can be further classified
according to components and time." TRUE
___________ refers to meeting the needs of the present without compromising the
ability of future generations to meet their own needs Sustainability
Receivables management involves a tradeoff between costs and benefits of
receivable. TRUE
"For small companies, long-term debt is the principal source of external financing." FALSE TRUE
Cash management always attempts at minimizing the cash balance. TRUE
"Most investments, whether they involve real assets or financial assets, can be
analyzed using the discounted cash flow (DCF) approach." TRUE
"The practice generally known as double taxation is due to corporate incomes being
taxed at the corporate level, then again at the shareholder level when corporate
profits are paid out as dividends." TRUE
Which of the following is not a feature of current assets? Longer life
Stock of finished goods should be as high as possible so that no customer is denied
the sale. FALSE
Proposed assets can be evaluated using the company cost of capital providing that new assets have the same risk as existing
the: assets.
The primary reason that individuals and firms choose to borrow long-term is to
reduce the risk that interest rates will _________ before they pay off their debt. rise
"For corporations, maximizing the value of owner's equity can also be stated as" maximizing the stock price.
How much will accumulate in an account with an initial deposit of $100, and which
earns 10% interest compounded quarterly for three years? 134.49
If a bank offers a firm a simple interest loan of $1000 for 120 days at a cost of $60
interest, what is the effective rate of interest on the loan? 0.18
 Question Answer Remarks
What is the present value of an annuity of $27 received at the beginning of each year
for the next six years? The first payment will be received today, and the discount rate
is 10% (round to nearest $10). $130
If you have $1000 and you plan to save it for 4 years with an interest rate of 10%, what
is the future value of your savings? $1,464.00
How long would it take to accumulate $50,000 if you started putting $5 in the bank
every day starting at the end of today at simple annual interest rate of 7.3%? 5,493 days
A Company is considering a project that calls for an initial cash outlay of $50,000. The
expected net cash inflows from the project are $7,791 for each of 10 years. What is
the IRR of the project? 0.09
You just purchased a land for $10,000. If you expect a 12 percent annual rate of
return on your investment, how much will you sell the land for in 10 years? $31,060
Financial institutions and markets helps facilitate the capital flows between investors and
companies. TRUE
The financing decision affects the total operating profits of the firm. FALSE
A potential future negative impact to value and/or cash flows. This is often discussed in
terms of probability of loss and the expected magnitude of the loss. coefficient of variation risk
The firms that typically pay out dividends are those that have no long term debt. TRUE
Long term financing consists of long term borrowing exclusively.
A high price/earnings ratio usually indicates that a firm is a growth stock. TRUE
Trading on equity is resorted to with a view to decrease EPS. FALSE
Which of the following provides the greatest annual interest? 9% compounded daily
If you borrow $150,000 for a house at 8% simple annual interest rate for 15 years, what is
your monthly payment?
Project costing Rs. 8,00,000 and a life of 5 years is expected to bring cash inflows of Rs. Payback Period = Initial investment / Cash flow per
2,00,000 p.a. What is the payback period? 4 years year
The focal point of financial management in a firm is the creation of value for shareholders TRUE
Marketable securities are primarily Short term debt investment
_____ focuses on long term decision making regarding the acquisition of projects Capital Budgeting
Liquidity moves together with risk TRUE
Annuity is A series of equal and consecutive payments
Operating leverage works when A: Sales increases is wrong
A project requires an initial investment of 1,20,000 and yields annual cash inflow of 12,000 for 12
years. Its payback period is 10 years
Dividend is a part of retained earnings FALSE ##
Conversion of debentures into share capital is equal to issue of share capital and hence it is a type
of cash inflow. FALSE
If ke = r, then under Walter's Model, which of the following is irrelevant DP Ratio
(I) Capital market securities fall into two categories: bonds and stocks. (II) Long-term bonds include
government bonds and long-term notes, municipal bonds, and corporate bonds Both are true
Receivables management deals only with the collection of cash from the debtors FALSE
The main goal of the financial manager is to maximize the value of the firm to its owners TRUE
The WACC is the rate of return that the firm must expect to earn on its average-risk investments in
order to provide an acceptable return to its security holders TRUE
A firm has inventory turnover of 6 and cost of goods sold is Rs. 7,50,000. With better inventory
management, the inventory turnover is increased to 10. This would result in Decrease in inventory by Rs. 50,000
What is the after-tax cost of preferred stock that sells for $10 per share and offers a $1.20 dividend
when the tax rate is 35% 0.12
What appears to be the targeted debt ratio of a firm that issues $15 million in bonds and $35 million
in equity to finance its new capital projects? 0.3
All accrued costs and revenues be
Which of the following is not applied in Capital Budgeting incorporated
NPV of a proposal indicates C: Total Value of the Proposal (Wrong Ans)
If a firm has a DOL of 2.8, it means If sales rise by 1% , EBIT will rise by 2.8%
The cost of retained earnings does not consider _________ in the equation flotation costs
"In almost all present and future value computations, it is implicitly assumed that the cash flows
occur at the beginning of each period. FALSE
An advantage of the payback rule is that it is easy to understand. TRUE
"For corporations, maximizing the value of owner's equity can also be stated as maximizing the stock price
"Firms raise the funding they need through debt, equity and profits. TRUE
Gordon's model suggests that dividend payment does not affect the market price of the share FALSE
Trade credit is: D: is incorrect
A low price/earnings ratio usually means that a firm D: is incorrect
EOQ model assumes a constant usage rate for a particular item TRUE
Working Capital is defined as excess of Current assets over current liabilities
Which of the following does not usually affect working capital requirement None of (a) and (b)
If a project has conventional cash flows, it may also have more than one IRR FALSE
Financial statements are an important source of information to shareholders and stakeholders TRUE
Most preferred stock has dividends that are cumulative TRUE
CFO is the firm's highest-level financial manager TRUE
"If you have $1000 and you plan to save it for 4 years with an interest rate of 10%, the future value
of your savings would be $1464. TRUE
"Under COD terms, the seller extends credit to the buyer subject to bank approval FALSE
Short-term financing for a business firm includes A: Bonds is wrong, D: Morgages is wrong
"The board of directors has the power to act on behalf of the shareholders to hire and fire the
operating managers of the firm. In a legal sense, the directors are ""principals"" and the
shareholders are ""agents.""" FALSE
Management of cash means management of cash inflows FALSE
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Walters model supports the view that dividend is relevant for value of the firm. FALSE TRUE
The weighted-average cost of capital is the return the company needs to earn after tax in order to
satisfy all its security holders. TRUE
The principal amount of a bond at issue is called coupon value.
"For most firms, the cost of capital decreases to a low point as the firm ________ debt financing. At
some point beyond this optimal level, the cost of capital increases the amount of debt ________." increases decreases
Combined Leverage can be used to measure the relationship between : Sales and EPS
A: Sales increase is wrong (Same ques different
Operating Leverage is calculated as Contribution ÷ EBIT options)
Return on Equity and Earnings per Share are one and the same thing FALSE
The distribution of a firm’s capital between debt and equity is its capital structure TRUE
If a project has zero NPV when the expected cash flows are discounted at the weighted-average
cost of capital, then the project's cash flows are just sufficient to give debt holders and shareholders
the return they require. TRUE
DP ratio of a firm should be directly related to future growth plans of the firm TRUE
If you want to have $90 in four years, you must put $64 in a savings account today. Assume that
the savings account pays 8.5% and it is compounded monthly (round to the nearest $1) TRUE
MM Model argues that dividend is irrelevant as the value of the firm depends upon earning power TRUE
Use of safety stock by a firm would Increase Inventory Cost
The financial manager of a firm is mostly interested in the company's book balance of cash, not its
available balance FALSE
Which of the following is correct? Question on CL OL and FL
If the firm decreases its debt ratio, both the debt and the equity will become more risky. The
debtholders and equityholders require a higher return to compensate for the increased risk CL=OL×FL
If the Internal Rates of Return of two, mutually exclusive options are both greater than the cost of
capital, which option should be selected under the Internal Rate of Return method? Option C is wrong
(1 + i)n is FVIF
"A firm's cost of capital can be used in valuation of every new project they encounter, regardless of
its risk." FALSE
Credit period allowed to customers must be equal to credit period allowed by the supplier to the firm FALSE
Which of the following is not true for MM Model? Market value is unaffected by Dividend policy
"In deciding the optimal level of current assets for the firm, management is confronted with a trade-
off between liquidity and risk." FALSE
"A formal, legal commitment to extend credit up to some maximum amount over a stated period of
time is known as" Line of credit is Wrong
The firms that typically pay out dividends are those that have no long term debt. TRUE
Which of the following does not usually affect working capital requirement None of (a) and (b)
An asset sold at the end of a specified time period is called a _____________ asset. self-liquidating
Accrued interest declines with each payment on an amortizing loan TRUE
Current Liabilities are those obligations which are generally to be discharged in 1 year
You have $1000 you want to save. If four different banks offer four different compounding methods
for interest, you should choose compounded annually to maximize your $1000. FALSE
Capital structure in essence is a firm's mix of long-term financing TRUE
You are considering the purchase of two different insurance annuities. Annuity A will pay you
$16,000 at the beginning of each year for 8 years. Annuity B will pay you $12,000 at the end of
each year for 12 years. Assuming your money is worth 7%, and each costs you $75,000 today,
which would you prefer Prefer Annuity A
The company cost of capital, after tax, for a firm with a 65/35 debt/equity split, 8% cost of debt, 15%
cost of equity, and a 35% tax rate would be Wrong Ans: 0.0702
You are going to pay $800 into an account at the beginning of each of 20 years. The account will
then be left to compound for an additional 20 years. At the end of the 41st year you will begin
receiving a perpetuity from the account. If the account pays 14%, how much each year will you
receive from the perpetuity (round to nearest $1,000)? $160,000
If you want to have $1,200 in 27 months, how much money must you put in a savings account
today? Assume that the savings account pays 14% and it is compounded monthly (round to nearest
$10). 880
If you want to have $2,100 in 3 years, how much money must you put in a savings account today?
Assume that the savings account pays 7% and it is compounded quarterly $1,705
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In the personal selling process, the step which consists of identifying potential customers is classified as prospecting
Price setting is usually determined by ________ in small companies. top management
What do many companies use to determine sales force size? the workload approach
In order to form a consistent and effective integrated marketing program, price decisions should be coordinated with
each of the following EXCEPT competitors' prices
The ________ concept is aligned with the philosophy of continuous product improvement and the belief that
customers will choose products that offer the most in quality, performance, and innovative features. product
What is the first element that a reader notices in a print ad? illustration headline - is wrong ans
A salesperson in the prospecting stage most likely identifies potential customers through all of the following methods
EXCEPT referrals from competing salespeople
Sales promotion features a wide assortment of tools. Which of the following is NOT one of these tools? catalogs
To address concerns about the misuse of research study findings, several highly regarded marketing associations
have developed ________. codes of research ethics
A detailed version of a new idea stated in meaningful customer terms is called a product concept
Retail convergence is a merging of all of the following EXCEPT employees
After determining its advertising objectives, the company's next step in developing an advertising program is to set its advertising budget
Product planners need to consider products and services on three levels. Each level adds more customer value. The
most basic level is the ________, which addresses the question, What is the buyer really buying? core customer value
The communication channel a company uses to move its advertising messages from sender to receiver is called the media
Which of the following is the process of the buying center deciding on the best product characteristics? product specification
Advertisers are increasingly shifting larger portions of their budgets to media that cost less and target more effectively.
Which of the following is harmed the MOST by such a shift? network television
All of the following are difficulties associated with selling to government buyers EXCEPT ________. low sales volume
A review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company's
objectives is called a business analysis
When suppliers, distributors, and customers partner with each other to improve the performance of the entire system,
they are participating in a value delivery network
He/she is an individual acting on behalf of a company who performs one or more of the following activities:
prospecting, communicating, servicing, and information gathering. salesperson
The company designs what it considers to be a good product, totals the expenses of making the product, and sets a
price that adds a standard mark-up to the cost of the product. This approach to pricing is called cost-plus pricing
Salespeople should be trained to recognize ________ signals from the buyer, which can include physical actions such
as leaning forward and nodding or asking questions about prices and credit terms. closing
Which promotional mix strategy directs marketing efforts toward final consumers? pull
The personal selling step in which the sales person asks for an order to the customer is classified as closing
Which of the following is NOT a typical supply chain member? government agencies
Another name for systems selling is ________ selling. solutions
It includes all activities involved in selling goods and services to those buying for resale or business use. Wholesaling
A company's total marketing communications package consists of a special blend of advertising, sales promotion,
public relations, personal selling, and direct-marketing tools that the company uses to communicate customer value
and build customer relationships. This is also called the promotion mix
Business-to-consumer companies are more likely to emphasize a ________ promotion strategy, while business-to-
business companies are more likely to emphasize a ________ promotion strategy. pull; push
When determining the number of channel members to use at each level, three strategies are available: intensive,
exclusive, and ________ distribution. selective
When sales persons identify customers by selecting names of present customers, wholesalers or retailers they are
involved in Prospecting
you are about to test hypotheses about decreasing sales in certain markets and their causes. you are involved in what
type of research? causal
A(n) _____ is used to manage international marketing by simply shipping out goods. export department
What do many researchers encounter when conducting market research in foreign countries? all of the above
Which message execution style depicts average people using a product in an everyday setting? slice of life
Some consumers worry that they will be affected by marketing messages without even knowing it. They are
concerned about ________ advertising. subliminal
Some companies have adopted following strategy, offering just the right combination of quality and good service at a
fair price. good-value pricing
________ is never simple, yet understanding it is the essential task of marketing management. Consumer buying behavior
The ________ environment consists of factors that affect consumer purchasing power and spending patterns. economic
A ________ consists of all the product lines and items that a particular seller offers for sale. product mix
Almost all major purchases result in ________, or discomfort caused by postpurchase conflict. cognitive dissonance
As per Hofstede, there are ______ cultural dimensions that differentiate nations. :4
Consumer research, product development, communication, distribution, pricing, and service are all core ________
activities. marketing
A corporate VMS has the advantage of controlling the entire distribution chain under single ownership
your firm asks you to consult external sources for new product ideas. All of the following are common external sources
EXCEPT the firm's executives
When General Motors provides payments or price reductions to its new car dealers as rewards for participating in
advertising and sales support programs, it is granting a(n) promotional allowance
________ consists of activities undertaken to create, maintain, or change attitudes toward particular people. Person marketing
The owners of the company you work for have developed a core network of suppliers they are working closely with to
ensure an appropriate and dependable supply of products. This is an example of ________ management. supplier development
Advertisements built around dream themes are using which type of execution style? fantasy
A lurker on discussion boards and Web forums is a person who posts irrelevant or inflammatory messages. FALSE
Marketers describe the way the consumer processes information to arrive at brand ys as ________. alternative evaluation
Because of ________, a company cannot make its product illegally similar to a competitor's already established
product. patent laws
When it comes to international distribution channels, _______ procure products from their entry point to final users
and buyers. Channels within foreign nations
Which product(s) will most likely be intensively distributed? Coca Cola
Introducing a new product into the market is called commercialization
Today, marketers are moving toward viewing communications as managing the ________ over time. customer relationship
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The PLC concept can be applied by marketers as a useful framework for describing how products and markets work
Companies are always looking for ways to increase face-to-face selling time. All of the following are ways to reducing the number of customers each sales
accomplish this goal EXCEPT rep must visit
For primary data to be useful to marketers, it must be relevant, current, unbiased, and ________. accurate
Which method could a marketing researcher use to obtain information that people are unwilling or unable to provide? observational
Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This is known as cost-plus pricing
Each of the following economic factors can have a strong impact on a firm's pricing strategy EXCEPT the reseller's reaction to price changes
Paper, pencils, lubricants, paint, nails, and brooms are examples of ________. supplies
Information collected from online databases is an example of ________ data. secondary
Which method could a marketing researcher use to obtain information that people are unwilling or
unable to provide? observational
CellTones, a new company selling several lines of cellular phones, has closely modeled its products
after successful products that are already in the marketplace. As it prepares to enter the market with
its new products and services, which of the following should concern CellTones the most? patent laws
A firm is using ________ when it charges a high, premium price for a new product with the intention of
reducing the price in the future. price skimming
A hickory rocking chair, handmade by an Amish woodcarver in Lancaster, Pennsylvania, from locally
grown wood is an example of a(n) ________. specialty product
pricing below cost to drive
Which of the following would most likely be considered predatory pricing? out competitors is wrong
When consumers are highly involved with the purchase of an expensive product and they perceive
significant differences among brands, they most likely will undertake ________. complex buying behavior
An advantage of a vertical marketing system (VMS) is that it acts as a ________ system unified
Channel members should be evaluated using all of the following criteria EXCEPT which one? channel leadership
are easy to measure in comparison to
Demographic variables are so frequently used in market segmentation because they ________. many other methods
In the proper order, identify the correct terms for these intermodal transportation combinations: rail
and truck, water and truck, water and rail. piggyback; fishyback; trainship
Exclusive territorial agreements are normal in franchises
without communication from
Federal legislation on price-fixing requires that sellers set their prices competitors
When managers use small convenience samples such as asking customers what they think or inviting
a small group out to lunch to get reactions, they are using ________. informal surveys
In one way or another, most large companies sell to ________. other organizations
Banks, credit companies, insurance companies, and other businesses that help finance transactions
or insure against the risks associated with the buying and selling of goods and services are referred to
as ________. financial intermediaries
When using price steps, the seller must establish perceived ________ that support the price differences. quality differences
Government organizations tend to favor ________ suppliers over ________ suppliers. domestic; foreign
The creation of a successful new product depends on a company's understanding of its : customers, competitors, and markets
In many industries, traditional intermediaries are dropping by the wayside because of changes in
________ and the growth of ________ marketing. technology; direct and online
Which of the following is NOT one of the main types of off-price retailers? category killers
Buy it now is the message of sales promotion
your new employer has asked you, as a new marketing graduate, to develop a group of potential
customers who might respond in a similar way to a given set of marketing efforts. you have been
asked to develop a(n) ________. market segment
A price at which independent firms
Arm's length price can be defined as deal with each other
The growing trend of using a group of people from sales, marketing, engineering, finance, technical
support, and even upper management to service large, complex accounts is known as ________ selling. team
Which of the following is an element of developing an advertising strategy? selecting advertising media
Marketers should be aware of laws, government agencies, and pressure groups that influence or limit
various organizations and individuals in a given society. This is most accurately described as the
________ environment. political
Which promotional mix strategy directs marketing efforts toward final consumers? pull
Markets can be segmented into groups of nonusers, ex-users, potential users, first-time users, and
regular users of a product. This method of segmentation is called ________. user status
A(n) _____ is used to manage international marketing by simply shipping out goods. export department
Which group determines a product's position relative to competing products? consumers
The ________ environment consists of factors that affect consumer purchasing power and spending
patterns. economic
They have filled the ultralow-priced, high-volume gap by buying at less-than-regular wholesale prices
and charging consumers less than retail. Off-price retailers
It is considered socially irresponsible when the marketing of adult products spills over into the ________
segment. child
It includes all the activities involved in selling products or services directly to final consumers for their
personal, nonbusiness use. Retailing
An advertising objective is classified by its primary purpose, which is to inform, persuade, or remind
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When Burger King targets children, teens, adults, and seniors with different ads and media, it is
practicing ________ segmentation. age and life cycle
Which of the following is the set of benefits a company promises to deliver the customer to satisfy
their needs? a value proposition
In order to get their new products to market more quickly, many companies are adopting a faster,
team-oriented approach called team-based new-product development
Persuasive advertising becomes ________ advertising when a company directly or indirectly compares its brand with
one or more other brands. comparative
________ is the systematic design, collection, analysis, and reporting of data relevant to a specific
marketing situation facing an organization. Marketing research
________ are consumer products that the consumer either does not know about or knows about but
does not normally think about buying. These products require a lot of advertising, personal selling,
and other marketing efforts. Unsought products
Which of the following is NOT an example of the type of public that is part of a company's marketing
environment? marketing department
A distinguishing feature of a contractual VMS is that coordination and conflict management among
the independent members of the channel are attained through contractual agreements
________ is a person's pattern of living as expressed in his or her psychographics, including his or her
activities, interests, and opinions. Lifestyle
Many companies now use a combination of phone, e-mail, fax, Internet, and other technologies to
provide ________ . support services
Geotargeting allows an advertising campaign to concentrate on a fixed locale through mobile
technology FALSE True according to Google
Which of the following transportation modes is used for digital products? the Internet
________ is defined as the use of commercial marketing concepts and tools in programs designed to
influence individuals' behavior to improve their well being and that of society. Social marketing
Service businesses boost the world economy and in turn a globalizing economy boosts the service
industry. FALSE True according to Google
Favorite Memories specializes in serving gift shoppers that major competitors overlook and ignore.
Which of the following best describes Favorite Memories? market nicher
Michael Porter has identified ____________forces that decide the intrinsic long-run attractiveness of a
market or market segment. Five
Which type of store is much larger than regular supermarkets and offers a large assortment of
routinely purchased food products, nonfood items, and services? superstore
Advertisements built around dream themes are using which type of execution style? fantasy
Costs that vary directly with the level of production are referred to as variable costs
you are about to test hypotheses about decreasing sales in certain markets and their causes. you are
involved in what type of research? causal
A ________ is the way consumers perceive an actual or potential product. product image
A person's attitudes fit into a pattern, and to change one attitude may require difficult adjustments in
many others. Thus, a company should ________ try to fit its products into existing attitudes rather than
attempt to change attitudes. usually
Because of ________, a company cannot make its product illegally similar to a competitor's already
established product. patent laws
Which concept holds that achieving organizational goals depends on knowing the needs and wants of
target markets and delivering the desired satisfactions better than competitors do? marketing
A(n) ________ is a name, term, sign, symbol, design, or a combination of these, that identifies the maker
or seller of a product or service. brand
Which message execution style depicts average people using a product in an everyday setting? slice of life
you have decided to use only closed-end questions on your survey. Which of the following questions
would NOT be found on your survey? What do you like about your teacher?
Advertising ________ define the task that advertising must accomplish with a specific target audience during a
specific period of time. objectives
What is the term used to identify the individuals in a company who travel to call on customers in the field? outside sales force
Unsolicited e-mail advertising is known as _______. Spam
to address the issue of overdemand for a
Which of the following is a reason for a company to raise its prices? product
A company or store gains a(n) ________ by differentiating its products and delivering more value. competitive advantage
After company identifies primary competitors, it must look out for All of the above
Manufacturers must comply with specific laws regarding product quality and safety
that already exists but was collected for a
Secondary data consists of information ________. different purpose
The final step in the marketing process is ________. capturing value from customers
All too often companies today have failed to ________ their various communications channels, resulting in a
hodgepodge of communications to consumers. integrate
Blogs play an important curatorial role in social media because some popular blogs are followed by people seeking
the best and most interesting ideas. FALSE Google and logic says otherwise
All of the following are stages in the PLC EXCEPT adoption
Most companies practice strong PRM to forge long-term relationships with channel members. What does PRM stand
for? partner relationship management
Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor is
called advertising
Shampoo marketers rate buyers as light, medium, or heavy product users. This is ________ segmentation. usage rate
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A(n) ________ is the set of actual and potential buyers of a product. market
Which concept holds that firms must strive to deliver value to customers in a way that maintains or improves the
consumer's and society's well-being? societal marketing
According to one analyst, a Harley-Davidson motorcycle can make you feel like the toughest, baddest guy on the
block. Harley-Davidson promotes its motorcycles with images of independence, freedom, and power. Harley-Davidson
has created a ________. brand personality
A salesperson's ________ is often related to how well he or she meets a sales quota. compensation
In routine buying situations, which members of the buying center have formal or informal power to select or approve
the final suppliers? deciders
Break-even pricing, or a variation called ________, is when the firm tries to determine the price at which it will break
even or make the profit it is seeking. target profit pricing
Personal selling is the least expensive tool in the marketing communications mix. FALSE
These are sometimes several stores grouped together. These stores offer prices as low as 40 percent below retail on
a wide range of mostly surplus, discounted, or irregular items. Factory outlets
Price-fixing, predatory pricing, retail price maintenance, and deceptive pricing are examples of major public policy issues in pricing
Steve's Physco Skates sells its products to Wal-Mart, who then sells them to the consumer. This is an example of a(n) indirect marketing channel
Mark's Markers, a manufacturer of color markers, has required its dealers to charge a specified retail price for its
markers. Mark's is most likely guilty of retail price maintenance
One of Dr. Albrecht's dental assistants told the dentist he should buy a machine that would sterilize his tools without
using any water because water tends to cause the tools to rust or corrode over time. In terms of the buying center, the
dental assistant had the role of ________. influencer
you have just taken a new position in an organization and you're learning about the job functions of your new
colleagues. you observe that your marketing manager is heavily involved in the process of building and maintaining
profitable customer relationships. your marketing manager frequently speaks about the need to deliver superior
customer value and satisfaction. your manager is concerned with which one of the following? customer relationship management
In marketing research, the ________ phase is generally the most expensive and most subject to error. data collection
Marketers of automobiles, financial services, and travel are most likely to use which of the following types of
segmentation? income
promotions is wrong: Kindly
Use of telemarketing in B2B has increased at the expense of: personal selling Update correct one
Because of the scarcity of good secondary data, international researchers often must collect their own primary data.
An initial problem with this collection is developing good ________. samples
Although there are many differences between business buying behavior and consumer buying behavior, both respond
to the same four stimuli: product, price, promotion, and ________. place
It shows how large a business should be, to
The long-run average cost curve (LRAC) helps the producer understand which of the following? be most efficient
________ from marketing communications may suggest changes in the promotion program or in the product offer
itself. Feedback
Which of the following would lead to greater competition in the maturity stage of the PLC? overcapacity
________ the manufacturer or service provider is the set of firms that supply the raw materials, components, parts,
information, finances, and expertise needed to create a product or service. parallel with : is wrong
The purpose of a training program for salespeople is to teach them about all of the following EXCEPT the company retirement benefits
Under the following, the market consists of a few sellers who are highly sensitive to each other's pricing and marketing
strategies. oligopolistic competition
Communication through the mail is categorized as a(n) ________ communication channel. personal
The purchasing agent at your company is working with engineers and users to define the items to purchase by
describing general characteristics and quantities needed. He is also ranking the importance of reliability, durability,
and price. The buyer is preparing a(n) ________. general need description
Which of the following is a customer-oriented approach to pricing? value-based pricing
As a result of the great success of corporate chains, many independent stores chose to band together in either a
voluntary chain or a(n) retailer cooperative
Which type of statement first states the product's membership in a category and then shows its point-of-difference
from other members of the category? positioning statement
Wrong Answer: Marketing
intelligence gathering is more
focused on gaining insights into
consumer activities than
Which of the following statements regarding marketing intelligence is true? competitors' activities.
MTV targets the world's teenagers, who have similar needs and buying behavior even though they are located in
different countries. This is called ________ segmentation. intermarket
your colleague is confused about using the marketing research process, as he knows that something is wrong but is
not sure of the specific causes to investigate. He seems to be having problems with ________, which is often the Wrong Answer:
hardest step to take. selecting a research agency
Diana Dion is currently researching data sources from within her company to make marketing
decisions. Diana is making use of ________ databases. internal
your marketing department is attempting to improve strategic decision making, track competitors'
actions, and provide early warning of opportunities and threats. To achieve this goal, which of the
following would be the best for your department to use? the Internet
If a seller charges more than the buyer's perceived value, the company's sales will suffer
During the ________ stage of the business buying decision process, the buying center assesses the
proposals. supplier selection
Relationship selling recognizes Long-term business relationships OPTION B IS REALLY FUNNY
Ryanair offers free flights to a quarter of its customers and rock-bottom prices to many of its other
customers. Ryanair then charges for all extra services, such as baggage handling and in-flight
refreshments. Which of the following best describes Ryanair's pricing method? low-cost pricing
Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is most likely used? captive-product pricing
Big Moose Toys is a market pioneer introducing a modern version of Bullwinkle the Moose, a
character from an animated television series originally broadcast in the 40s and 60s. Their version of
Rocky the Flying Squirrel, another character from the show, targeted to baby boomers was a strong
success. They need to make the new launch strategy for Bullwinkle consistent with the intended product position
Marketing logistics involves getting the right product to the right customer in the right place at the gathering customer's ideas for new
right time. Which one of the following is NOT included in this process? products
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Which type of research would be best suited for identifying which demographic groups prefer diet soft
drinks and why they have this preference? descriptive
A society's basic values, perceptions, preferences, and behaviors are all part of its ________
environment cultural
your marketing department is currently researching the size, density, location, age, and occupations
of your target market. Which environment is being researched? demographic
A consumer organization, environmental group, or minority group has challenged your firm's stand
on a local issue. your firm is being challenged by a ________ public. citizen-action
Creating word-of-mouth campaigns by cultivating opinion leaders and getting them to spread
information about a product or service to others in their communities is known as buzz marketing
Which of the following is NOT a type of factor in a company's macroenvironment? competitive
Which type of distribution is used when the producer wants more than one, but fewer than all, of the
intermediaries who are willing to carry its products? selective
________ are products and services bought by final consumers for personal consumption. These
include convenience products, shopping products, specialty products, and unsought products. Consumer products
Marketing researchers usually draw conclusions about large groups of consumers by studying a small
________ of the total consumer population. sample
Lexus targets wealthy consumers with similar needs and buying behaviors, even though the
consumers are located in different countries. This is an example of ________. Intermarket segmentation
After the purchase of a product, consumers will be either satisfied or dissatisfied and engage in
________. postpurchase behavior
Selecting which segments of a population of customers to serve is called ________. target marketing
The buyer decision process consists of five stages. Which of the following is NOT one of these stages? Variety-seeking buying behavior
Which of the four Ps describes the goods-and-services combination the company offers to the target
market? product
Consumers position products and services ________. with or without the help of marketers
An increasing number of retailers and wholesalers have created their own ________, also called store
brands. private brands
Which stage of the new-product development process focuses on finding new ways to solve customer customer-centered new-product
problems and create more customer-satisfying experiences? development
In the communication process, the reaction of the receiver after being exposed to a message is called
the response
Building, keeping, and growing profitable relationships by delivering customer value and satisfaction
is called ________. customer relationship management
We define a ________ as anything that can be offered to a market for attention, acquisition, use, or
consumption and that might satisfy a want or need. product
________ are those products purchased for further processing or for use in conducting a business. Industrial products
The decision-making unit of a buying organization is called the ________. buying center
When managers use small convenience samples such as asking customers what they think or inviting
a small group out to lunch to get reactions, they are using ________. informal surveys
to gather and integrate information a
What is the purpose of a data warehouse? company already has
An e-mail from Amazon.com offers free shipping on your next purchase of more than INR 2000. This is
an example of sales promotion
Failure to enter the current price into a retailer's system may result in charges of scanner fraud
corporate, contractual, and
Which of the following are the three major types of vertical marketing systems? administered
Underpriced products sell very well, but they produce less revenue than they would have if price were raised to the
following level perceived value
Which promotional tool is most effective in building up buyers' preferences, convictions, and, most
importantly, actions? personal selling
________ is a new-product development approach in which one company department works to
complete its stage of the process before passing the new product along to the next department and
stage. Sequential product development
Tiffany & Co jewelry can only be found in a limited number of intermediaries. This is an example of
________ distribution. exclusive
narrow product lines; deep
Specialty stores carry ________ with ________ within them. assortments
Marketing communicators must do all of the following EXCEPT deliver products to the customer
Which of the following is NOT an example of a specialized and highly-targeted media that an advertiser might use to
reach smaller customer segments? network television
Companies that use a customer sales force structure organize their salespeople by industry
The Internet makes it easy for
consumers to view, interact with, and
Which of the following statements about the Internet is most accurate? create marketing content.
Although test marketing costs can be high, they are often small when compared with the costs of a major mistake
JC Penney's catalog and retail store
Which of the following is an example of a multichannel distribution system? sales
A marketer focuses on several commonalities among all consumers. This marketer appears to be
engaging in ________ undifferentiated marketing
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Information collected from online databases is an example of ________ data. secondary
Chicken of the Sea brand tuna sells more than the same size Kroger brand tuna, even though the
Kroger tuna costs $0.14 less per can. Chicken of the Sea has brand ________ equity
Gretchen Kabor has formal authority to select the suppliers and arrange terms of purchase for many
of the items her firm uses. Her role in the buying center is that of ________. decider
It is usually the most expensive component of
Personal selling is important in almost every company because: the marketing mix.
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Name Email Address
Aashay Singh [email protected]
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Navneet Raina [email protected]
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SYAM MOHAN KUMAR KANDULA [email protected]
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Zaidi Khan [email protected]
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Sharath S [email protected]
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Gaurav Srivastava [email protected]
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Name Email Address
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PRANAY BALAKRISHNAN NAIR [email protected]
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Musthafa Valappil
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Bagathi Kishore [email protected]
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Manveer Singh [email protected]
Anil Kumar Chauhan [email protected]