QUESTION BANK

ECONOMICS FOR ENGINEERS (HSMC604)

GROUP-A
MCQ (50X1)=50 MARKS

1. The subject matter of economics is distributed into __________ parts. (A) two (B) three (C) four
(D) five
2. 2. The concept of ‘Consumer Surplus’ was introduced in Economics by (A) Prof. Robbins (B) Prof.
Samuelson (C) Prof. Smith (D) Prof. Marshall
3. 3. If the price elasticity of demand is |0.5|, then the commodity is (A) Luxury (B) Necessary (C)
Inferior (D) Giffen
4. 4. In the case of rare coins, supply curve will be (A) Horizontal (B) Vertical (C) backward bending
(D) positively sloped
5. 5. When the price elasticity of demand is equal to one, the demand curve is (A) rectangular
hyperbola (B) parallel to the horizontal axis. (C) parallel to the vertical axis (D) negatively sloped
straight line
6. 6. Which one of the following is not a factor of production? (A) Land (B) Labour (C) Capital (D)
Bank Loan
7. 7. The ‘Law of Variable Proportion’ was first developed by (A) Prof. Mill (B) Prof. Marshall (C)
Prof. Ricardo (D) Prof. Smith
8. 8. Which one of the following cost can never become zero? (A) Average cost (B) Fixed cost (C)
Marginal cost (D) Variable cos
9. 9. All the factors of production become variable in the (A) Short run (B) long run (C) very short
run (D) very long run
10. 10.Marginal cost is defined as (A) the change in total cost due to one unit change in output. (B)
the change in total cost due to one unit change in input. (C) the ratio of total cost to total output
(D) the ratio of total cost to total input
11. 11.If a firm produces 200 units of commodity X by employing 10 workers and 240 units of the
same commodity by employing
12. 12 workers, then the Average Product of the worker is (A) 20 (B) 40 (C) 200 (D) 240 12.Which
one of the following is a feature of a perfect competition? (A) Selling Cost (B) Group Behaviour
(C) Homogenous Product (D) Differentiated Product
13. 13.In the case of a perfectly competitive firm, the demand curve for product is (A) Elastic (B) unit
elastic (C) perfectly elastic (D) perfectly inelastic
14. 14.Cartel is one form of (A) Monopoly (B) Duopoly (C) collusive oligopoly (D) non-collusive
oligopoly
15. 15.Dynamic Pricing is mostly followed by (A) Automobile Manufacturing Companies (B) Cooking
Gas Supplying Companies (C) On-line Companies (D) Brand Name Food Companies
16. 16.PT = MV is the equation suggested by (A) J.M. Keynes (B) A.W. Phillips (C) Irving Fisher (D)
A.C.Pigou
17. 17.All the following functions are associated with commercial bank except that (A) Commercial
Bank cannot issue Paper Notes (B) Commercial Bank acts as a Banker to the Government (C)
Commercial Banks are mostly privately – owned and privately – managed (D) to accept Deposit
from the Public is the most important function of a commercial bank
18. 18.Gresham’s Law is true where (A) only Barter System operates (B) only Paper Currency
operates (C) only Metal Currency operates (D) Both Paper and Metal Currencies operates
19. 19.Quantity Theory of Money states that (A) Price Level is directly proportional to Money Supply
(B) Price Level is inversely proportional to Money Supply (C) Price Level is not related to Money
Supply (D) Price Level is inversely related to Money Demand
20. 20.The Growth definition of Economics was introduced by (A) J.M.Keynes and P.A. Samuelson
(B) Adam Smith (C) Alfred Marshall (D) Lionel Robbins
21. 21.According to the ‘Law of Demand, demand varies ________ with price. (A) Directly (B)
Indirectly (C) Proportionately (D) Inversely
22. 22.When excess demand occurs in an unregulated market, there is a tendency for: (A) price to
rise (B) quantity supplied to decrease (C) quantity demanded to increase (D) price to fall
23. 23.In the case of inferior goods, the consumer (A) purchases less with increase in income (B)
purchases less with decrease in price (C) purchases more with increase in income (D) purchases
more with decrease in price
24. 24.Let a firm employs 10 labourers to produce 150 units of output. If 11 labourers are employed
to produce 166 units of output, then the marginal product is (A) 11 (B) 16 (C) 150 (D) 166
25. 25.A rational producer produces in that region where (A) marginal physical product of the fixed
input becomes negative (B) marginal physical product of the variable input becomes negative (C)
marginal physical product of the fixed input becomes increasing (D) marginal physical product of
the variable input becomes declining
26. 26.In a firm doubles all inputs, and output doubles as well, the firm is subject to (A) constant
returns to scale (B) increasing returns to scale (C) decreasing returns to scale (D) economies of
scale
27. 27.As output increases, AFC of a firm (A) Increases (B) remains constant (C) continuously
declines (D) initially increases, afterwards declines
28. 28.Which of the first order condition for the profit of a firm be maximum? (A) AC = MR (B) MC =
MR (C) MR = AR (D) AC = AR
29. 29.Opportunity cost is measured in terms of the (A) optional cost that has been avoided (B)
negative cost that has been sacrificed (C) accounting cost that has been paid (D) next best
alternative that has been foregone
30. 30.Due to the operation of ‘Laws of return to Scale’ LAC curve is (A) Rectangular hyperbola (B)
U-Shaped (C) Parallel to the horizontal axis (D) Parallel to the vertical axis
31. 31.The AR curve and industry demand curve are identical (A) in case of monopoly (B) in case of
oligopoly (C) in case of monopolistic competition (D) in case of perfect competition 3
32. 2.OPEC is an example of (A) Perfect competition (B) Monopolistic competition (C) Monopoly (D)
Cartel
33. 33.The relationship between money supply and price level is (A) Inverse (B) Neutral (C)
Proportional (D) non-proportional
34. 34.Cash Balance Approach was given by (A) I. Fisher (B) J. M. Keynes (C) G. Crowther (D)
Cambridge University Professors
35. 35.Which one of the following functions of commercial banks include collection of cheques,
drafts, bill of exchange etc. of their customers from other banks? (A) Agency Function (B)
Creation of Credit (C) Payment of Loans and Advances (D) General Utility Function
36. 36.Which one of the following is the apex bank for agricultural credit in India? (A) RBI (B) IDBI (C)
SIDBI (D) NABARD
37. 37.Which of these would lead to fall in demand for money? (A) Inflation (B) Increase in Real
Income (C) Increase in Real Rate of Interest (D) None of the above
38. 38.The rate at which the commercial banks borrow from the Reserve Bank of India is called as
(A) REPO (B) PLR (C) BPLR (D) Bank rate
39. 39.Commercial banks provide collateral loans against (A) Government Security (B) Shares (C)
Bills of Exchange (D) Commercial Paper
40. 40.________ defined economics as a science which deals with wealth. (A) J.B. Say (B) A.C.Pigou
(C) Alfred Marshall (D) Lionel Robbins
41. 41._________ goods are known as scarce goods. (A) Economic (B) Durable (C) Free (D)
Consumer
42. 42._________ is the first Law of Consumption. (A) The Law of Diminishing Marginal Utility (B)
The Law of Demand (C) The Law of Increasing Returns (D) All of the above
43. 43.Factors of production may be of _______ types. (A) 4 (B) 3 (C) 2 (D) 5
44. 44.The Law of Variable Proportions relates to _________ only. (A) long – run (B) short – run (C)
very long run (D) very short run
45. 45.The total ___________ curve will be a horizontal line. (A) Variable cost (B) Fixed cost (C)
Marginal cost (D) Cost
46. 46.The supply curve always slopes ___________ (A) Upwards (B) Downwards (C) both (A) and
(B) (D) neither (A) nor (B)
47. 47.__________ is the centre of all marketing policies. (A) Price (B) Product (C) Profit (D) Publicity
48. 48.In the long run, a firm in perfect competition earns _____________ (A) normal profit only (B)
abnormal profit (C) average profit of past 5 years (D) 12.33 per cent profit on capital employed
49. 49.Oligopoly means _________ (A) Single seller (B) few sellers (C) large number of sellers (D) no
buyers
50. 50.Penetration Pricing is adopted by following a ___________ (A) low price (B) high price (C)
dual price (D) support price
 GROUP-B

1. What is elasticity of Demand? What is elasticity of Demand?

2. What is opportunity cost?
3. Explain marginal costing?
4. What is meant by marginal revenue?
5. Give a short note on sunk cost?
6. What is Break-even point?
7. Define P/V ratio.
8. State the Law of Demand
9. Differentiate wealth and money
10. What are factors determined internal economics
11. What do you mean by `Make or Buy Decisions?
12. What are the different approaches followed in make or buy decision?
13. what is time value of money?
14. What is economic analysis ?
15. What is cost of dominated cash flow?
16. What is present worth method?
17. What is future worth analysis?
18. What is Replacement analysis?
19. Define the term “Depreciation”
20. Mention the various method used in depreciation calculation.
21. Define the term inflation?
22. What is sinking fund?
23. What are all the effects of inflation?
24. What is NPV & IRR ?
25. What is benefit-cost (BC) ratio?

GROUP-C

1. Briefly explain about element of cost and its classification?

2. Discuss opportunity and describe process planning
3. Discuss the nature and scope of managerial economics
4. Differentiate monopoly from monopolistic competition
5. What is demand forecasting? Explain any four method of forecasting
6. Explain the factors influencing demand and supply
7. Compute the present value of Rs. 1000 receivable 6 years hence if the rate of discount is 10
percent?
8. Discus make or buy decision and explain value engineering procedure
9. How will you measure elasticity of demand. Illustrate how do you interpret the different types of
elasticity.
10. A company invests in one of the two mutually exclusive alternatives. The life of both alternatives
is estimated to be 5 years with the following investment, annual returns & salvage values

Alternative
A B
Investment( Rs) 1,50,000 Rs) 1,75,000
Annual equal return (Rs) 60000 70000
Salvage value (Rs) 15000 35000
Determine the best alternative based on the annual equivalent method by assuming i=25%.
11. Classify cost dominated cash flow diagram to derive the Annual Equivalent Method.
12. (i)Explain inflation adjusted decision. (ii)A machine costs Rs.5,00,000/-. Its annual operation cost
during the first year is Rs. 40,000/- and it increases by Rs.5000/- every year thereafter. The
maintenance cost during the first year is Rs. 60,000/- and it increases by Rs.6000/- every year
thereafter. The resale value of the machine is Rs.4,00,000/- at the end of the first year and it
decreases by Rs. 50,000/- every year thereafter. Take an interest rate of 20%. Find the economic
life of the asset
13. list out the scope of economics. Whether economics is a science or an art Is it a positive or a
normative science.
14. Describe price theory The price of commodity falls when its apply increases because its marginal
utility diminishes
15. . what is the basis of taxations Taxations its based on principle of progression the rate of
taxations increase as the income increases
16. what is consumption The uses of goods and services for which we pay a price only come under
consumption
17. What is demand forecasting? Explain any four method of forecasting.
18. 4.write down the general principal of economics equivalent calculations equivalent calculations
made to compare alternatives requires a common time basics equivalents depends on interests
rate
19. Techniques / approaches of make or buy decision. Simple cost analysis. Economic analysis.
Break-even analysis.
20. What are the types of inflation? Creeping inflation. Walking inflation. Running inflation (or)
runaway inflation. Credit inflation. Profit inflation. War-time inflation. Demand pull or demand
push inflation. Cost push inflation. Suppressed inflation.