Managerial Economics

List of Attempted Questions and Answers

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Dual prices
Inflation
P.D.S.
R.B.I.
The consumers’ Protection Act 1986
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Cross demand is the change in the quantity
demanded of a given commodity in response
to the
Incase there were no changes in the quantity
of food sold even when its price had fallen
we would know that
The elasticity of demand for product will be
higher
The law of demand indicates
The law of demand states
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Free riders
Market economy
Negative externalities
Pure public goods
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A fall in the price of a commodity
A income demand curve for an inferior
commodity slopes
An exceptional demand curve is one that
slopes
In case of Giffen goods like bajra a fall in
price tends to
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Prosperity
Statutory reserve ratio
The general theory of employment, Interest
and money
Trade cycle
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Commodities
General Theory of Employment, Interest and
Money
Human wants
Managerial economics
Resources
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Equilibrium price is the price where the
Excess demand can be defined as
Excess supply can be defined as
Tea and sugar
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Commodities
Human wants
Managerial economics
Resources
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Economic problem
Inflation
Managerial Economics
Resource allocation decisions in free market
economy
Waste of resources
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Index number
Perfectly Elastic Demand
Rigid demand
Unchanged total outlay
Variation in demand
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General theory of employment, interest and
money
Inflation
Methods of production of commodities
Services
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A demand curve, which takes the form of a
horizontal line parallelto the quantity axis
illustrates elasticity
Cross elasticity of demand between two
perfect substitute will be
Income consumption curve
Inelastic demand curve
Normal demand curve
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Aggregate Demand Function
Effective Demand
Keynesian theory
Statutory Reserve Ratio
Trade cycle
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  Question  
  Correct Answer  
 Match The Following
  Question  
Demand curve under oligopoly is
Going rate pricing
Marginal cost pricing
Perfect competition
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
According to J. M. Keynes, there are two
factors determining the investment function,
Rise in costs due to an increase in factor
prices
The point of effective demand is the point
when
Trade Cycle
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  
  Correct Answer  
 True/False
  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Joint – sector enterprises
Satisfying behavior
State enterprises
The Homeostatic theory
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
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 Multiple Choice Single Answer
  Question  
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 True/False

  Question  

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 Multiple Choice Single Answer

  Question  

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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer

  Question  

  Correct Answer  
 Select The Blank

  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Contraction of Demand
Decrease in Demand
Extension of demand
Increase in demand
 True/False
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Multiple Answer

  Question  
  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Economic problem
Elasticity of demand
Managerial Economics
Natural Resources
Resource allocation
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Select The Blank

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Select The Blank
  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Match The Following
  Question  
Managerial Economics aims at
Managerial economics generally refers to
Managerial Economics is
Managerial economics lies on
managerial economics which explain various
concepts
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Select The Blank

  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Match The Following
  Question  
Implicit costs are the cost
Opportunity costs are also known as
The difference between average cost and
average revenue is
The difference between average total cost
&average fixed cost shows
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Match The Following
  Question  
N.G.O.S
Preference shares
Public enterprises
Sole proprietorship
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer

  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

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 True/False

  Question  

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 Multiple Choice Single Answer

  Question  

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 True/False
  Question  
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 True/False
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Authorized capital refers to
Issued capital refers to that part public of the
authorized capital
Paid – up capital is that part of the
subscribed capital
Subscribed Capital is
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Match The Following
  Question  
Firm
Partnership
Proprietary firms
Railways
 True/False

  Question  

  Correct Answer  
 True/False

  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Match The Following
  Question  
Choice is fundamental to Economic behavior
because
If there were no scarcity by Economic goods
and services it would mean that
Micro-economics deals Primarily with
Society faces economic problems
The fundamental economic problem being
faced
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Select The Blank

  Question  

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 Select The Blank

  Question  

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 Select The Blank

  Question  

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 Select The Blank

  Question  

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 Select The Blank

  Question  

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 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Select The Blank

  Question  

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 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 True/False
  Question  
  Correct Answer  
 Match The Following
  Question  
Indian Railways
Long Run
Losses
Market period
Super normal profit
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

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 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer

  Question  

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 Multiple Choice Multiple Answer

  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer

  Question  

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 Multiple Choice Multiple Answer

  Question  

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 Multiple Choice Multiple Answer

  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Match The Following
  Question  
What is consumption?
What is meant by a consumer?
What is meant by a producer?
What is meant by the term commodities?
What is production?
 True/False

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

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 Select The Blank

  Question  

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 Select The Blank

  Question  

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 Select The Blank

  Question  

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 True/False
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer

  Question  
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 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer

  Question  
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 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer

  Question  
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 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Cost benefit analysis
Macro economic policy
Unemployment, inflation
Unplanned shocks & disturbances
 Match The Following
  Question  
A monopolist gets
In oligopoly market, price
The price policy of a public enterprise should
be such as
Under monopolistic competition,
 Match The Following
  Question  
Authorized capital refers to
Issued capital refers to that part public of the
authorized capital
Paid – up capital is that part of the
subscribed capital
Subscribed Capital is
 True/False

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Multiple Answer

  Question  

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 Multiple Choice Multiple Answer

  Question  

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 Multiple Choice Multiple Answer

  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  
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 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Match The Following
  Question  
Defence service
Economic effects of public goods are
Production possibility frontier
Selection or implementation
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Diamond
Index number
Rigid demand
Variation in demand
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False
  Question  
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 True/False

  Question  

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 True/False
  Question  
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 True/False

  Question  

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 True/False

  Question  

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 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
  Correct Answer  
 Match The Following
  Question  
At the saturation point for a commodity x the
Mux is
Marginal utilities are
Marginal utility
Total utility increases marginal
Total utility is
 Select The Blank

  Question  

  Correct Answer  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Multiple Answer

  Question  

  Correct Answer  

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  Question  

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  Question  

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  Question  

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 Multiple Choice Multiple Answer
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  Question  

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  Question  

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 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Division of society’s output of goods and
services
Managerial Economics
Motor cars
Resources
Wants
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Match The Following
  Question  
Excess supply can be defined as
If demand remain unchanged on increase in
supply will result in
Market Price is a situation which
The responsiveness of demand to change in
price is measured
Unit income elasticity implies that asincome
rises demand for a commodity rises
 Select The Blank

  Question  

  Correct Answer  
  Correct Answer  
 True/False

  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Multiple Answer

  Question  

  Correct Answer  

 Select The Blank

  Question  

  Correct Answer  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
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  Question  

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  Correct Answer  
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  Question  

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  Correct Answer  
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  Question  

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  Question  
  Correct Answer  
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  Question  

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 Multiple Choice Single Answer
  Question  
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 Multiple Choice Single Answer
  Question  
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 True/False

  Question  

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 True/False

  Question  

  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Match The Following
  Question  
Excess capacity
Public enterprises may incur some social
costs
The buyers and sellers may be away from
each other and
Under perfect competition, it is assumed that
the
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Multiple Answer

  Question  

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 Multiple Choice Multiple Answer

  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

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 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

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 True/False

  Question  

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 Multiple Choice Multiple Answer
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 Multiple Choice Single Answer

  Question  

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 Multiple Choice Single Answer
  Question  
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 True/False

  Question  

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 Multiple Choice Single Answer
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 True/False
  Question  
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 True/False
  Question  
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 Multiple Choice Multiple Answer
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 True/False
  Question  
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 True/False
  Question  
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 Multiple Choice Multiple Answer
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 True/False

  Question  

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 Multiple Choice Single Answer

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 True/False

  Question  

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 Multiple Choice Single Answer
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 Multiple Choice Single Answer
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 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Match The Following
  Question  
Accounting profit
Economic profit
Reduction in demand due to a new substitute
in market
Risk taking theory
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Select The Blank
  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 True/False
  Question  
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 True/False

  Question  

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 Multiple Choice Multiple Answer
  Question  

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 Multiple Choice Single Answer

  Question  

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 True/False
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Benefits of widespread public health
Consumer's sovereignty
Emergence of slums
Pure public good
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer

  Question  
  Correct Answer  

 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Match The Following
  Question  
In oligopoly market, price
Monopsony is the monopoly
Public utilities such as railway or cooking gas
supply companies
The price policy of a public enterprise should
be such as
Under monopolistic competition
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Monopolistic competition
Monopoly
Selling cost curve
Selling costs
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Match The Following

  Question  
Equilibrium price
Long run
Market period
Perfect competition
 Multiple Choice Multiple Answer
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  
  Correct Answer  
 Match The Following
  Question  
A rightwards shift in supply schedule
indicates
Any straight line supply curve which cuts y
axis will have
Normally the isoquant slopes
The market period supply curve for
perishable commodities is
 Match The Following
  Question  
Competitive Industry
Monopoly Firm
Plant
Public Sector
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Match The Following
  Question  
Inflation
P.D.S.
R.B.I.
Railway freight rates
 Match The Following
  Question  
In contrast to J. M. Keynes,
J. M. Keynes believed in the
Keynesian analysis takes
The speculative motive
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 Select The Blank
  Question  
  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 True/False
  Question  
  Correct Answer  
 Multiple Choice Multiple Answer
  Question  

  Correct Answer  

 Multiple Choice Multiple Answer

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Select The Blank

  Question  

  Correct Answer  
 Multiple Choice Single Answer

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 True/False

  Question  

  Correct Answer  
 Multiple Choice Single Answer
  Question  

  Correct Answer  
 Match The Following
  Question  
Danger from drunken drivers
Impure public goods
Pure private goods
Self -interest
 True/False
  Question  
  Correct Answer  
 Multiple Choice Single Answer
  Question  
  Correct Answer  
 Multiple Choice Single Answer
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Administered prices
Non-price competition
Prestige price
Pricing in cooperative societies
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MC is given by
Average total unit cost curve means
Each short run average cost curve
Marginal cost curve
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 Managerial Economics
ist of Attempted Questions and Answers

Managerial economics generally refers to the integration of

economic theory with business
Practice

Every nation’s resources which are used to produce the quantities

of goods and services that would be required to satisfy all its
citizen’s wants are
insufficient

Managerial economics is also understood to refer to

applied economics

The type economic problem is

Universal

The act of making goods and services is called

production

The act of using goods and services to satisfy wants is called

Consumption

The things that are produced by factors of production are called

Commodities

The concept of just distribution of national product is a

normative

A firm under perfect competition is a price maker

False

When demand and supply rise and fall in the same proportion, the
equilibrium price changes.
False

Market means a particular area where buyers and sellers meet

False

Goods which are completely divisible and to them the principle of

exclusion applies in full measure are
Pure private goods

Market system of economy is characterized by consumer’s

sovereignty

In case of a proprietary firm the liability of the proprietor is limited

False

Macro – economics provides an exploration to the functioning of an

economy in
general

The subject matter of macro – economics includes the theory of

income and employment at an individual level
False

  Correct Answer  
Two different prices
Deficit financing
Essential commodities
General and selective credit control measures
Right to information

Depreciation is the value caused by the continuous use of a capital

asset is
loss

Accounting profit takes in to account opportunity cost.

False

According to Prof Knight, profit is the reward for uncertainty

bearing.
True

According to J.B. Clark, profit is the reward paid to the entrepreneur

for dynamism.
True

Complementary goods are demanded

jointly

  Correct Answer  

Change in the price of anothercommodity

Demand was entirely inelastic

The more available are substitutes for that product

Relationship between the price of a commodity and the quantity
Demanded
When price falls demand rises

As per the law marginal product becomes negative when total

product
falls

The law of diminishing returns is applicable to agriculture provided

the state of technology is given and
constant

Under the system of dual prices adopted by the Government for

essential goods, the weaker sections of the community are supplied
those goods through fair price shops which are
fair

Quantitative credit control measures such as ________ operations,

change in the bank rate, and changes in the ________ ratios
open market
statutory reserve

AVC is the per unit variable cost of

production

Given the price, if the cost of production of a commodity decreases

because of the use of improved technique of production, there will
be increase in supply.
True

The laws of returns to scale explain the behavior of output in

response to changes in scale.
True

An Industry
Is a group of firms , All firms dealing in the same line of business ,
The ownership and management of each firm is different

Dumping
It is possible in the case of Monopoly Market , Selling same good at
higher price in home market and lower at price in the international
market , It is encourage with a view to promote the exports

Under perfect competition, ________ is determined by the

interaction of total ________ and total supply in the market
price
demand

Advantages of Cost-Benefit Analysis

It aims at maximization of social welfare , In following this principle,
the problem of infinite target value does not arise , It shows the
measures necessary for attaining maximum net wealth
Effective Demand
Determine the level of income and output in an economy , Is total
expenditure is equal to total income in an economy , Study of
aggregate demand and aggregate supply

According to Prof. Ackley, “________ economics deals with economic

affairs in the large it concerns the ________ of economic life”.
macro
overall dimensions

Different types of business organizations are;

Private sector. , Public sector. , Joint sector.

Distinction between private sector and public sector is determined

On the basis of economic system , On the basis of motive , On the
basis of principle of pricing

Methods of Demand forecasting for new Products are:

Product life Cycle Analysis , Test Marketing , Evolutionary Approach

Index numbers may broadly be classified as:

Price indices , Quantity Indices , Special purpose indices

Economics is a ________ , which studies human behaviour as a

relationship between ________ , which have alternative uses.
science
ends and scarce means

The production function is the name given to the ________ between

the rates of ________ of productive services and rate of output of a
product
relationship
input

Internal economies are those advantages of large- scale ________ ,

which accrue to a ________ on account of its superior techniques
and management
production
firm

Elasticity of supply may be defined as the ratio of the percentage

________ or the ________ change in quantity supplied to the
percentage or proportionate change in Price.
proportionate
change

Costs may be classified as : (a) ________ , including material costs,

wage cost and interest cost (b) ________ , including costs of
advertising and (c) other costs, including insurance ch
Production costs
Selling costs

Costs, which increase because of ________ of a firm, are called

incremental costs, and costs, which have to be borne whether there
is expansion or not are, called ________ costs
expansion
sunk

The indivisible goods, whose benefits cannot be priced, and

therefore, to which the principle of exclusion does not apply, are
called
Pure public goods

The causes of inflation are :-

Increase in public expenditure , Increase in private expenditure ,
Increase in foreign demand

  Correct Answer  
Principle of exclusion and benefit of good to all without sharing cost
Freely fluctuating price mechanism
Social costs
Indivisible goods

By ' profits', the accountant means total revenue minus________.

Explicit costs

A Joint Stock Company has perpetual succession.

True

We say that a nation faces economic problems , under following

conditions
Man has unlimited wants or ends , The means or resources to
satisfy them are limited , These resources are not specific but have
alternative uses

Gross profit is the excess of total revenue of a firm over total

expenditure

Demand forecasting is predicting for the demand of a firm’s

product in
future

A fall in price tends the demand for goods to ________

expand

The main criterion of indivisibility of a good is that the good

should be equally available to all the members of society. ,
financing of the good is through public expenditure. , the principle
of exclusion does not apply.
Reasons for change in Demand (Increase or Decrease in Demand)
Change income of consumer , Change in population , Change in
fashion and customs

Defence service is an example of ________ good.

indivisible

Features of Market are

Place where buyers and sellers meet each other , A building where
a number of shops dealing in a particular commodity exist , A place
where transaction of goods and services is undertaken

In the measurement of profit, the differences in the concept of

profit arise due to differences in cost concepts.
True

Resources are said to be involuntarily un employed when their

wastage occur.
True

In general, the demand for necessaries is relatively

inelastic

One of the most disturbing characteristics of free – market

economies is that waste of resources some times occurs
True

At the level of the society, the macro economic objectives are

economic stabilization , employment generation , poverty reduction

Under perfect competition,firms are free to enter and exit in the

market.
True

The indivisible goods whose benefits cannot be priced are called

Pure public goods

Contraction of supply is traced by the downward movement on the

supply curve
True

There are no real exceptions to the law of demand

False

There is considerable slush money with politicians & Government

servants.
True

Major types of costs are

Accounting costs , Economic costs , Opportunity costs
Forms of Public Enterprises
Departmental management, Company Management or
management by boards, Public Corporations

The income which a businessman might expect from the second

best alternative use of his resources is called as
opportunity cost

The social costs and benefits are the external economies and
diseconomies resulting from the ________ activities, which are
known as, "externalities"
firm's

The characteristics of Inflation are

Excess of demand , Sustained rise in prices , Cannot be anticipated

A normal demand curve has ________+B299

negative slope

Cost-benefit analysis refers to the analysis undertaken to judge any

projects ________ whether government or private and find out its
worth.
investments

  Correct Answer  
a rise in consumers real income.

upwards to right

upwards to right.

reduce the demand

Cyclical fluctuations are recurrent in nature

True

The government has adopted a system of dual prices in the case of

essential goods

The externalities or economic effects, which flow from the

production or use of the goods to other parties or economic units,
are termed as 'neighborhood effects.'
True

Market economy or private enterprise economy is a economy which

is
planless

Features of an Industry are

All firms dealing in the same line of business , The ownership and
management of each firm is different , Is a group of firms

Supply curve shifts to the right side of the original supply curve
when, the supply
increases

Supply is predominantly determined by ________.

Stock

The index numbers which measure the changes in the general price
level of a country refers to ________
Wholesale prices index

The federal government of U.S.A. does not face the basic economic
problem.
False

“Homeostatic Approach” as an alternative objective of firms was

suggested by _________.
Prof. Kenneth Boulding

In cost benefit analysis, in the valuation of costs and benefits, for

finding the present value, one has to make use of
discount rate

Partnership in case of general business consists of minimum two

persons and maximum
20 persons

Individual Demand Schedule

Is in tabular form , It shows the prices of goods , It shows the
quantities of a commodity purchased

Implicit costs are

Cost on self owned resources , Costs of salary of the proprietor ,
Interest on the entrepreneur's own investment

Characteristics of the phase of Depression are

Decrease in economic activities , The growth rate becomes
negative , The level of national income declines rapidly

The financing of ________ goods is done through public expenditure.

public

In a market system of an economy, producers are guided by

________ motive.
profit
While discussing the product divisibility of public and private goods,
the principle of ________ may be applied in case of only those
people who do not agree to pay or who cannot pay the market
price of the goods.
Exclusion

  Correct Answer  
Expansion of credit
Quantitative credit control measure

J.M. Keynes

Wave like movement

A Joint Stock Company is managed by the Board of Directors

elected by shareholders.
True

The market system of economy is based on the following

foundations:
Consumer's Sovereignty , Non-interference by the state. , Private
Profit Motive

The externalities which cannot be priced in the market with

reference to the demand and supply behavior are termed as
non - market external effects

During a period of rising prices (inflation), the goods and services

are
scarce

Slope of supply curve is

positive

The minimum number of directors which private limited should

have is ________.
2

The externality which causes an economic gain or an economic loss

to other economic units is also referred to as ________ externality.
Pecuniary

The chemical effluents recklessly released by a chemical factory in

the river causing water pollution, is an example of ________ cost.
social

Long period supply is relatively inelastic.

False

Features of Long –run market are

It is durable goods market , Supply can be increased or reduced
according to the demand , Sellers at least recover minimum price
for their goods

In macro – economic analysis the behavior of economic agents such

as firms, households and government is seen in total, disregarding
details at particular level.
True

The act of manufacturing goods and services is called

production

True inflation starts only after reaching the level of full

Employment

During periods of inflation, the income of farmers as a class

decreases.
True

The externality in which the consumption or production levels of an

economic unit affect the other economic units in the economy is
called
technological externality

The goods become ________ only when each individual has an

access to the entire amount of it and its use by the individual does
not reduce its availability to others.
indivisible

The features of business or trade cycle are

It is a wave like movement , These fluctuations are recurrent in
nature , Expansion and contraction in trade cycle are cumulative in
effect

  Correct Answer  
goods and services
J. M. Keynes
unlimited
Decision making and forward planning
scarce

Features of monopolistic Competition are

Fairly large number of firms , Product differentiation , Selling costs
are existed

Assumptions underlying the law of Supply are :-

The cost of production is unchanged , No change in technique of
production , Government policies are unchanged

Price is the, only determinant of demand

False
The number of sellers operating under monopolistic competition as
compare to oligopoly is
larger

The salary of the proprietor or rent on own land are the ________.
Implicit cost

All the man made resources which are used in the process of
making other goods and services are called
capital

Managerial economics aims at providing help in the firms is

decision making

In a market economy ________ is the best judge of personal interest.

individual

The prosperity phase is characterized by rise in the level of

employment.
True

Like all organism, the firm too is an organism according to the

________
life-cycle theory.

Demand for safety pins is ________

inelastic

Inflation is characterized by demand which is in

excess of supply

A firm is a unit of production, where production is done with the aim

to maximize
profits

The factors of production are

Labour , Land , Capital

Price discrimination is possible in perfect competition

False

Economic problem is faced by poor countrys only.

False

Economic problem does not arise in case of a rich country.

False
In case of increase in the income, the rich person's demand for
goods will be
more

According to Keynes there are three motives for holding cash for
liquidity preference
the transactions motive , the precautionary motive , the speculative
motive

Price of a product under perfect competition is determined by the

interaction of total supply and :-
total demand

The demand curve (A.R.) of a firm under perfect competition is

perfectly elastic

  Correct Answer  
quantity demanded equals quantity supplied
quantity demanded minus quantity supplied
quantity supplied minus quantity demanded.
Complimentary goods

  Correct Answer  
Goods and services
Unlimited
Decision making and forward planning
Scarce

Economic problem arises only in case of an overpopulated country.

False

Economic problem is universal in nature

True

Scarcity of resources is the root cause of economic problem.

True

The question regarding the nature and quantities of commodities to

be produced is solely restricted to capitalist economies.
False

The enterprenuer gets Pure Profit for

undertaking risk & uncertainity , for co-ordination & organizing
production , for innovation

According to J.M. Keynes, the equilibrium between the aggregate

demand function and the aggregate supply function can, and often
does take place at
less than full employment
In the Long- run, supply of goods can be adjusted to the demand
and therefore supply curve is horizontal to the X-axis.
False

J.M. Keynes presumed an economic model as a short period model

in his analysis.
True

The registration of a partnership firm is voluntary

True

Demand for a commodity depends on the relative price of its

________
substitute goods

A group of firms dealing in the same line of business are called as

Industry

The products sold by different sellers under pure competition are of

exactly the same quality

According to the Government, the buildup of inflationary pressure

during the Nineties was attributed to
Higher Fiscal deficit

All the free gifts of nature which are commonly called natural
resources are known to economists as
Land

Quantitative credit control measures are

Open market operations , Changes in bank rates , Changes in
statutory reserve ratio

The firm may be defined as

an independently administered business unit , centre where the
decisions about what to produce how to produce are taken , a
business unit, which hires resources for production

Under perfect competition single seller can influence the price.

False

Assumptions of group equilibrium under Monopolistic Competition

are
Competing firms are selling more or less the same product , The
share of every firm in the total sales is equal , All firms are working
with same efficiency

  Correct Answer  
Universal
Reduction in purchasing power
Applied branch of knowledge
Theory of price
Involuntary unemployment

An assembly of several machines, linked together either physically

or by processes capable of producing a given quantity of a product
per day is
plant

In the cost – benefit analysis, after formulating various alternative

project capacity, each of them has to be examined in terms of its
feasibility

Joint Stock Company succession is

perpetual

In the market, any one who agrees to pay the requisite price of a
product would be excluded from their consumption
False

The prosperity phase is characterized by rise in the national output

True

Inflation is a sustained and appreciable rise in prices

True

Over the years in India the govt. expenditure is

increasing

In any business, while formulating a profit policy, the possibility of

emergence of rival firms must be taken in to account.
True

Change in income of a person may bring about in demand for

goods.
change

Demand for luxury goods is inelastic.

False

Demand for food grains is inelastic but the demand for wheat is
elastic.
True

Administered ________ are normally set on the basis of cost plus a

________ margin of profit
prices
stipulated

Costs which increase because of the expansion of a firm are called

costs
incremental

The law of supply is not hypothetical.

False

In short run period

Supply of goods can be adjusted to the demand to some extent ,
Some factors can be changed , Supply and demand determine the
price

Average Product is calculated by dividing Total product by variable

Factor Units.
True

An Industry
Is a group of firms , All firms dealing in the same line of business ,
The ownership and management of each firm is different

Under monopoly, there is ________ seller who controls the entire

________ in the market
only one
supply

Cost-benefit analysis refers to the analysis undertaken to judge any

projects ________ whether government or private and find out its
________ and facilities its comparison with other available oppor
investments
worth

Effective Demand
Determine the level of income and output in an economy , Is total
expenditure is equal to total income in an economy , Study of
aggregate demand and aggregate supply

Characteristics of Depression
Decrease in economic activities , The growth rate becomes
negative , The level of national income declines rapidly

The statement showing the varying levels of aggregate demand

prices, i.e. expected sales revenue by the ________ for the output
associated with different levels of ________ , is called the aggr
entrepreneur
employment
Causes for rise in prices in India
Mounting government expenditure , Deficit financing and increase
in money supply , Role of black money

The firm may be defined as:

An independently administered business unit. , A center of where
the decisions about what to produce how to produce are taken , A
business unit, which hires resources for production.

Exceptions to the Law of Demand are

Giffen Goods , Articles of snob Appeal , Speculation

Explicit costs are:

Out of pocket costs , Expenditure costs , These are firms
accounting expenses

The resources of a society consist not only of the free gifts of

nature such as ________ but also of ________ and of all sorts of man
made aids to further production.
land and minerals
human capacity

The ________-taking theory was developed by the ________ .

According to him, profit arises because considerable amount of risk
is involved in business.
American economist Hawley
risk

The extent of the change of demand for a commodity to a given

change in ________ , other demand determinants remaining
constant, is termed as the ________ of demand.
price
price elasticity

Wholesale ________ index numbers measure the ________ in the

general price level of a country.
Price
changes

The money payment, which a firm makes to those ________ who

supply labour services, raw materials, transport services, electricity
etc. are called ________ costs.
outsiders
explicit

In economics the question related to the selection of methods with

which commodities are produced is a subject matter of
theory of production
A Joint- Stock Company is owned by its share holders but it is
managed by
Board of Directors

The railways using a lot of coal in firing the steam locomotives put
the residential and other areas near the loco – shades to a lot of
sufferings on account of smoke nuisance, is an example of pr
False

The registration of a partnership firm is voluntary.

True

In case of sole proprietorship the owner and organization are same.

True

The Joint- sector is a form of partnership between the private sector

and the government.
True

In addition to the consumption and investment expenditure as in

the original keynesian theory of employment, the modern
economists give due recognition to the government expenditure as
an important fa
Effective demand

In Trade cycles the economic activity are

ups and downs

Inflation is a phenomena of in which prices

rises

Market system or market economy suffers from time to time from

economic depressions
True

According J.B.Clark, profit is the reward paid for

Dynamism

While calculating economic profit, only explicit costs are

considered.
False

Emergence of close substitutes to the commodity in question may

bring about demand to
decrease

If a person is habituated to the consumption of a commodity and if

he cannot easily give up its use, demand for it is generally
inelastic
The demand for life saving drugs is elastic.
False

  Correct Answer  
Statistical device
E.D. =infinity
E.D. = 0
E.D. = 1
Changes in quantity demanded

The government of India follows administered price policy in

respect of commodities which are vital and produced in the :-
Public sector

Substantial reduction in the cost of production of a firm because of

the use of improved and up- to –date machinery is an example of
economy known as
technical

Marginal Cost (M.C.) is the rate of change of fixed cost.

False

Long –run market

It is durable goods market , Supply can be increased or reduced
according to the demand , Sellers at least recover minimum price
for their goods

Conditions of Price Discrimination are:

The two markets in which the product is sold should be kept
separate , The elasticity of demand in different markets should be
different , Market must be imperfect

Under cost plus pricing :-

The price is set to cover Material, labour cost , Actual costs,
standard costs are included , Certain percentage of profit also
included

Defects of market system

Inequalities of Income and wealth , Emergence of monopolies ,
Failure to provide full employment

Features of public sector enterprises

It is controlled by the state. , Separate funds to undertake their
activity. , They are accountable to public.

Demand curve of an individual for a commodity X is based on the

following assumptions
Elasticity of demand for good X , Price of good X , Income of the
consumer
Different types of Elasticity of Demand are:
Price elasticity of demand , Income elasticity of Demand , Cross
Elasticity of Demand

Forecasts can be made at the level of

A firm , An Industry , The Nation

Diseconomies of small -Scale Production includes:

High average cost of production in initial stages , Workers in the
factory take some time to adjust with new techniques of
production. , In the initial stages production is on small scale

Determinants of supply:
Is always referred to in relation to price and time , The ability of a
seller to supply a commodity , The seller willingness to supply a
commodity

The Indian partnership Act, ________ , defines the partnership as

"the relation between two or more ________ who have agreed to
share profits of a business carried on by all or any one of them act
1932
persons

Minimum ________ persons have to come together to start a joint-

stock company. Those who take initiative to start it are called
________ .
seven
promoters

A ________ is an undertaking by a company to repay the borrowed

________ on or before the specified date at a particular interest rate,
irrespective of profit or ;loss made by the company
debenture
money

The joint sector is a form of ________ between the ________ and the
government.
partnership
private sector

Other things being equal, the higher ________ of commodity, the

smaller is the quantity ________ and lower the price , larger is the
quantity demanded.
demanded
price

Features of Pure Competition are

Large number of buyers and sellers , Homogeneous products , Free
entry and free exit of firms
Methods of measurement of elasticity are
Percentage method , Point elasticity method , Total outlay
expenditure method

The short run Average Cost (A.C.) curve is U shaped.

True

The partnership between private sector & government is called

________
Joint sector enterprise

The subject matter of Micro economics includes the study of

an individual consumer , particular market for a given commodity ,
operation of a firm

The persons who own the ________hip concern are called Partners.
Partners

The main objective of a co- operative organization is

service

With technological advances, with the given inputs, the flow of

output
increases

In the Long run perfect competition and monopolistic competition

the firm make profits which are
normal

Phases of business cycle

Expansion , Peak , Recession

In case of perfectly elastic supply, the supply curve is

horizontal

The production function can be explained by

Law of variable proportions , Laws of returns to scale , Optimum
combinations of inputs

A private limited company can be formed with 2 to 50 members

maximum, excluding ________
employee shareholders

Modern economists treat social cost and benefits as ________ of

private investment and production decisions.
externalities

Production Function implies relationship between

input & output

The divisible goods, whose benefits can be priced, are called pure
public goods.
False

  Correct Answer  
J. M. Keynes
Reduction in purchasing power
Theory of production
Intangible goods

All firms producing the homogenous or similar products together

make
an industry

The total output of all the commodities in one country over some
period, usually taken as a year is called as
Gross National Product , National Product , National Income

An individual does not voluntarily agree to pay the market price for
the milk. As a result market refuses to supply him the required
quantity of milk. In this example, milk is an :-
Divisible good

Scope of Managerial Economics deals with

Demand analysis and forecasting , Production function & cost
analysis , Inventory management adverting, price system

The number of buyers & sellers operating under perfect

competition is
large

Measurement of profit becomes difficult because of the difficulty

involved in the calculation of depreciation.
True

Economic Profit takes in to account the

implicit cost

The supply curve slopes downwards from left to right.

False

Reasonable profit target as an alternative to the objective of profit

maximization was suggested by ________.
Joel Dean

Characteristics of the phase of Recession are

Investments decline , Negative multiplier gets underway ,
Inventories pile up
Pure private goods are completely divisible and to them the
principle of exclusion applies in full measure.
True

According to Prof. F.H. Knight, profit is a reward for

uncertainty bearing

Macro economic studies are based on empirical evidence.

True

Price discrimination is possible in case of

public utilities with legal sanction , personnel services sold ,
geographical barriers

During the period of depression, a large part of a country’s

resources lie involuntarily idle.
True

In case of a partnership firm of business organization a minor can

become partner of the firm.
False

The Government attempts to increase supplies of food grains and

other essential goods in times of internal shortage through larger
imports

The out of pocket costs are ________.

Explicit costs

Economists call all human resources as

labor

Economists call all human resources mental, physical , inherited

and acquired as
Labour

All the buyers and sellers operating under perfect competition have
knowledge which is
perfect

The meaning of the word “economic” is most closely associated

with the word unlimited
True

The conditions of equilibrium of a firm are applicable to all markets

None

In case of the co-operative societies supplying cheap inputs or

supplying consumer products at fair prices, a system of subsidized
pricing is followed
True

The price of a good and the exclusion princople together is

divisibility

The liability of a sole proprietary firm is

unlimited

Institution of private property is not an essential feature of

Capitalism
False

There never was in any country at any time ‘pure capitalism’ or

‘pure communism
True

A Joint stock company has perpetual succession.

True

The management of the cooperative form of business organization

is totalitarian in nature.
False

In macro – economic analysis the behavior of economic agents such

as firms, households and government is seen in total, disregarding
details at particular level
True

New commodities due to technotogical progress may result in

demand for traditional type of goods
decrease

  Correct Answer  

Infinity.

Infinity

Upwards to the right

Vertical straight line
Downwards to right

External economies are the advantages of large scale production

enjoyed exclusively an individual firm alone.
False

Equilibrium is
The stage of maximum satisfaction , The stage of balance , The
stage of stationary

The conditions of equilibrium for a firm are :-

Marginal Revenue should be equal to Marginal Cost , The Marginal
cost curve should cut the marginal revenue curve from below at the
equilibrium point , Marginal cost curve should be increasing at
equilibrium point

Aggregate supply function

Refers to that price at which the seller is willing to supply , Refers
to show the varying level of supply at different prices , Explains the
level of out put varies with the level of employment

Recession includes
The demand is halted , Increase in production of goods , Inventories
piling up in stocks

In the ________ terminology, the ________ demand function refers to

the schedule of maximum sales proceeds, which the
entrepreneurial community actually does expect to be received
from the sale of
Keynesian
aggregate

The rate of interest, according to ________ , depends upon two

factors: (i) ________ and (ii) the quantity of money
Keynes
the liquidity preference function

Reasons for need of public distribution system

To maintain stable price conditions , An efficient management of
the supply , To supply the necessary goods to people at reasonable
price

The consumer protection Act includes

Protection from hazardous commodities , Right to a competitive
price , Right to information regarding protection

Assumptions of the Law of Demand are :-

No change in consumer’s income , No change in consumer’s
preferences , No change in fashion

Types of income elasticity of demand

Negative income elasticity , Zero income elasticity , Unit income
elasticity
Managerial ________s generally refers to the integration of economic
theory with ________ practice.
economic
business

The problem of unlimited wants and limited ________ with ________

uses has been forever confronting mankind.
means
alternative

As per the International Labour Organisation (ILO), _ ________ is a

________ association of individuals with limited income on the basis
of equal rights and responsibilities for achieving certa
Co-operation
voluntary

Like all organism, the ________ , too is an organism, according to the

________ theory.
firm
life-cycle theory

Indices constructed for one ________ should not be ________ for other
purposes where they not be fully appropriate and given erroneous
conclusions.
purpose
used

  Correct Answer  
Maximum sale proceeds expected by entrepreneurs
J. M. Keynes
Short – Period Analysis
Quantitative credit Control Measure
Wave – like movement

In cost - benefit analysis, after the step of appraisal and selection of

the project is the step of
comparison of the cash flow

Social costs cannot be included in a firm's account book.

True

Steps in cost benefit analysis are :-

Identification of a project , Formulation of the project , Appraisal
and selection of the project

The advantage of cost-benefit analysis are

Maximization of social welfare , Objective measurement of the
trade-off , Maximization of difference between total benefits & total
costs
Cost-Benefit analysis aims at ________ of social wealth.
maximization

According to many economists, the root cause of economic problem

is
scarcity

Managerial economics aims at providing guidance to the firms for

decision making

In case of a Joint-Stock Company, the liability of share holders is

limited

For an economist, Tata Eng & Locomotive Company Ltd is a

firm

Preference Shares can be classified as

Simple Shares , Cumulative Shares , Redeemable Shares

The promoters of a company can get incorporated by filing with the

registrarof companies various documents such as
Memorandum of Association , Articles of Association , Prospectus

Baumol has suggested as an alternative objective for profit

maximization , the maximization of ________
sales

The minimum number of directors which public limited should have

is ________.
3

The profit which is surplus of revenue over and above all paid out
cost is
Accounting Profit

In economics, demand means desire backed by adequate

purchasing power

When more units of a commodity are purchased in response to

decline in price of that commodity, it is called as expansion of
demand

Demand for products like tea, betel, tobacoo, sigaratte is a matter

of
habit

If the substitutes are relatively cheaper then the demand for the
commodity in question will be
less

A shift in the demand curve to the left shows increase in demand.

False

Cost function denotes

The prices of such inputs as labour and capital material , The rate
of output , The size of the plant

The law of constant returns to scale is depicted by the marginal

output curve which is ________.
horizontal

In the 3rd stage of operation of the law of variable proportions, the

marginal product becomes ________.
negative

The costs which cover the cost of advertising is ________.

Selling cost

Features of Oligopoly Market are :-

Few sellers , Restriction to entry of new firms , Price leadership

Saving is a
private virtue

To solve the unemployment problem , the level of effective demand

must decrease.
False

Market system or market economy suffers from time to time from

economic depressions.
True

In economics the questions related to the division of society’s

output of goods and services among its members are topics in
theory of distribution

In economics the questions related to the dynamic or static

( otherwise) capacity of the economy to produce goods and
services are topics in the
theory of economic growth

An industry is a group of firms dealing in the same line of

business

Pure public goods must be in the hands of public sector only.

True

The characteristics of a sole proprietorship firm is

Unlimited Capital , Ownership by a single person , Easy to form

Different types of business organizations are

private sector , public sector , joint sector

The form of organization which is best for self employment is

________.
Sole trader

In any business, while formulating a profit policy, the possibility of

emergence of rival firms must be taken in to account
True

The payments made out of the Gross Profit are

Remuneration to factors of production , Depreciation , Maintenance
Charges

reasonable profit' are

Capital Attraction , Plough Back , Normal earnings

The demand for a commodity depends on the prices of its

substitutes which are :-
Relative

Demand curve slopes downwards from left to right.

True

If the increase in all factors leads to a less than proportionate

increase in output, then the returns to scale are
decreasing

The supply of factory made goods of daily consumption is inelastic.

False

Output rises in a lesser proportion to that of the increase in input,

under the case of ________.
decreasing returns to scale

If the output rises in the greater proportion than that of the

increase in factor inputs, it is referred to as ________.
increasing returns to scale.

Under monopoly the demand curve slopes

downward

Dalal Street in Bombay is known as

Bombay Stock Exchange

The city of Banaras has specialized in the manufacture of :-

Silk

A firm under perfect competition is a price maker.

False

Features of the firm are :-

It is a business unit organized under one ownership , It is a sole
proprietorship , It is a partnership or joint stock company

Equilibrium is the stage of

maximum satisfaction , balance , stationary

The Keynesian theory emphasizes effective supply as a crucial

factor in determining the level of income and employment.
False

The government also fixes minimum procurement prices for major

crops on the recommendation of the Agricultural Prices Commission
(APC).
True

Government intervention is needed in free market mechanism to

To provide employment to all who willing to work at prevailing
wage rate , Factors of production are optimally allocated between
the various industries , All will get sufficient income to meet their
basic needs

Cost-Benefit Analysis is
The analysis undertaken to judge the investment of any project ,
Refers to finding out the worth of investment , Enable ranking of
optional investments

Characteristics of Pure Public goods are:

They are completely indivisible , Their marginal cost would be zero
or close to zero , Their benefits cannot be priced

In the context of formulation of an investment project, ________

feasibility means the availability of land, plant, machinery, raw
materials and technical know how etc.
technical

Prof. Sam Nelson calls risks from unsafe factories or nuclear power
plants as ________ economies.
negative
The suggestion of reasonable profit target as an alternative to the
objective of profit maximization is by
Joel Dean

Public corporations are managed by the board of directors

appointed by
Government

In case of a Joint Stock Company the liability of the share holders is

unlimited.
False

There is no separation of ownership and management in case of a

Joint Stock Company
False

Types of Share capital of Joint-Stock Company are

registered or authorized capital , issued capital , paid-up capital

Peas & beas, groundnut oil & til oil, tea & coffee are examples of
substitutes goods

The sum of all individual demands constitutes________

market demand

Increase in consumer’s income leads in the demand for inferior

goods to ________
decrease

The cost which enter the accounts book of the firm are referred as
________.
Accounting cost

By ' profits', the economist means total revenue minus ________.

All costs

The supply curve during market period is

perfectly inelastic

A monopolist in a price maker.

True

If demand falls and supply is constant the equilibrium price falls.

True

The General Theory of Employment, Interest and Money in 1936

was published by
J.M. Keynes
During recession, on account of decline in investment by producers,
there is decline in income and consumption.
True

According to Keynes, Effective Demand :-

Determines the level of income and output in an economy , Is total
expenditure equal to total income in an economy , Is the Study of
aggregate demand and aggregate supply

Features of stage of expansion in business cycle are

Rise in national output , Rise in consumer and capital expenditure ,
Bank advances grow rapidly

According to J.M.Keynes, the equilibrium is established at the level

less than full employment

Under the New Industrial Policy, Public enterprises which are

chronically sick and which are unlikely to be turned were referred
to BIFR
True

Public enterprises have shown a very high rate of return of the

capital invested
False

Supply management is related to the volume ofsupply & its

distribution system.
True

The fiscal policy includes

Formation of taxation policy , It is an instrument for economic
stabilization , Monitoring of public expenditure

The meaning of monetary policy is :-

It is programmed of the central bank , It controls the total supply of
money , The basic objective is to achieve economic stability

The disinvestments of industries is needed for

Phased privatization , Reducing deficit , Capital support to plans

Important theories of profits are

Risk taking theory , Uncertainty-bearing theory of profit , Dynamic
theory of profit

Important theories of profits are

Uncertainty-bearing theory of profit , Dynamic theory of profit , Life
cycle theory
In a market system of an economy procedures are guided by profit
motive.
True
By using cost-benefit analysis we can show the measures
necessary for attaining maximum ________ and optimal policy
aiming at this goal.
net wealth

________ effects are those externalities which flow from the

production or use of the good to other parties or economic units.
Third party

Micro-economics is primarily concerned with the problem of what,

how and for whom to produce?
False

Every nation, poor or rich small or great has to face basic economic
problem that is
what commodities to produce and in what quantities? , by what
methods are the commodities produced? , Is purchasing power of
money & savings constant or is it being eroded because of
inflation?

A plant is an economic unit which takes various decisions related to

production and distribution.
False

Economist's concept of profit is

Pure Profit , Economic Profit , Just Profit

Giffen goods are superior goods.

False

An upward sloping demand curve is called ________

exceptional demand curve

Demand is determined by
Price of the product , Relative prices of other goods , Tastes and
habits

Demand Curve
Is a graphical presentation , Slopes downward , Explain the relation
between price and demand

When input and output increase in the same proportion, the phase
of returns are
constant

In case of decrease in supply, the supply curve shifts to left side of

the original supply curve.
True
A supply schedule is a graphical presentation of supply patterns.
False

Increasing Returns explains

Total product increases at an increasing rate , Marginal product
increasing and it is maximum , Average product is increasing but it
is below MP

A place where buyers & sellers meet each other to effect a

business transaction is known as
Market

Variable cost are those costs which vary with the level of
output

  Correct Answer  
kinky
emphasizes the market conditions
helps the firm to become more aggressive in the market
perfectly elastic Average Revenue curve

Marginal cost pricing explains that the

Price charged should be equal to the marginal cost , Cost price sets
the lower limits for firm’s price , Cost price ensures the possible
level of profitability

The crucial factor in determining the level of income and

employment, according to Keynes is
effective demand

  Correct Answer  

namely i) the M.E.C. and ii) the rate of interest.

a cause of inflation from supply side.

A.D. = A.S.
Recession

Often monopolies purposely keep certain factors of production idle

creating artificial scarcities of their products as a result the prices
rise

Reasons for need of public distribution system are

To maintain stable price conditions , To bring an efficient
management of the supply , To supply the necessary goods to
people at reasonable price

In case of a pure public good, its marginal cost is

zero
The financing of the pure public goods has to be through public
expenditure and not through market pricing.
True

In the context of formulating an investment project, ________

feasibility means the availability of supervisors for implementing
and running the project smoothly and professionally.
management

In contrast to the normative concept of justice, efficiency and

inefficiency are positive concepts.
True

The suggestion of maximization of balanced growth rate as another

alternative objective of a firm's profit is suggested by
Prof. Morris

  Correct Answer  
Hindustan Machine Tools
Cyert R.M. and J.G. March
Public welfare
Prof. Kenneth Boulding

Gross Profit includes

remuneration for the factors of production paid by the entrepreneur
, depreciation and maintenance charges , net profit

When with a rise in price, the total outlay falls, or with a fall in
price, the total outlay rises, elasticity of demand is
>1

When demand for the product increases in the same proportion in

which income increases, Income elasticity of demand will be equal
to________
unity

In the traditional concept of equilibrium, a firm attains the

equilibrium when the firm’s Total Revenue (T.R.) =Total Cost (T.C.).
False

The Laws of Returns to scale are

Law of Increasing Returns to Scale , Law of Constant Returns to
Scale , Law of Decreasing Returns to scale

Under the decreasing returns to scale, the marginal output curve

slopes ________.
downward
Under monopoly entry of new firms is
prohibited

The economists who defined the term 'market' different from that
of the traditional sense is :-
Jevons & Cournot

Under , Perfect competition, when an individual buyer increases or

reduces his demand , the total market demand
is not all affected

When a firm’s average revenue (A.R) is less than its average cost, it
earns only normal profit.
False

Types of imperfect competition are

Monopoly , Duopoly , Oligopoly

The principle of full employment equilibrium was stated by

Say's Law of Market

During the period of recession there is increase in incomes of wage

and interest earners.
False

The feasibility, which includes the prospects of employment

generation, development of backward areas, social groups
comprises of
Economic feasibility

As far as its use is concerned, tuning in of a radio can be

categorized as:
Divisible

In a market system of economy, there is no harmony between

individual interests and interests of the community.
False

Institution of private property is not an essential feature of

Capitalism.
False

In case of defense services, all the sections of the society are

equally protected and benefited. The defense services in other
words is in character , cannot be priced in the market , a public
indivisible
good

On the ________ level, the summation of maximum individual

welfare does not automatically lead to maximum social welfare.
macro

Inflation reduces the purchasing power of people's income and

savings.
True

In a free-enterprise economy, the problems of what how and for

whom are solved by a planning committee
False

A technical unit of given capacity of output is

plant

The sole proprietorship type of organization is found in

Agriculture, , Retail trade, , Hotel,

Co-operative organizations is
voluntary organization , managed by democratic principle ,
organization, which performs its business within the members

The method of inventory valuation in which , the cost of production

is calculated on the assumption that the material which was last to
enter the inventory of the company was used first is
LIFO

Profit should be large enough for a plough – back for business

expansion.
True

Profit is regarded as
income accruing to the equity holders , wages accrue to the
labour , rent accrue to the owner

Change in income of a person may result in demand for goods to

change

With decline in price of a commodity, total expenditure spent on

the commodity is less than before, then elasticity of demand for the
commodity is
<1

  Correct Answer  
Upward movement on the demand curve
Leftward shift of the demand curve
Downward movement on the demand curve
Upward shift of the demand curve

The sum of total fixed costs and total variable costs is the total
cost.
True
Market price fluctuates very often.
True

Macro Economics is the study of

The aggregate behavior of the economy , The behavior of economic
agents , Problems such as the rates of inflation, the balance of
payments, etc

16. The phase of recovery denotes

More employment opportunities , Increase in profitability , Wage
rate increase

Goods which are paradoxical to the law of demand are ________

Giffen goods, ,

Macro-economies is a policy oriented science.

True

Economic problem does not recognize the boundaries of

caste,creed,culture Thus economic problem is always considered as
the
universal problem

  Correct Answer  
Scarcity
Micro Economics
inventory management
Land
optimum combination of inputs

Investment is significant because

Addition to the real capital assets , It leads to increase in level of
income , Increases accumulated wealth of the society

The index numbers which are compiled to measure the changes in

retail prices of various commodities refers to ________
Retail prices index

When price of a commodity falls, the supply of that commodity

increases.
False

If supply of goods and services can be increased to correspond with

every increase in demand, price level will tend to
be stable

Inflation is characterized by excess of demand.

True
The good becomes ________ so far as its use is concerned only when
it is priced in the market and the principle of exclusion is applied to
it.
divisible

Firm is an
economic unit

The city of Ahmedabad has specialized in the manufacture of

textiles

Managerial economics refers to the integration of economic theory

with business
practices

The most significant feature of perfect competition is the existence

of an automatic price mechanism.
True

Under the liberalization policy, Government added another list of

nine industries for which automatic approval upto 74 % would be
allowed
True

Changes in the value of money because of inflation make inventory

valuation of finished products difficult.
True

Goods produced on large scale have

relatively elastic supply

Jevons' , the economists who defined the term 'market' different

from that of the traditional sense is an
English economists

An impressive advertisement of a commodity may result in the

demand to
increase

  Correct Answer  
providing help in decision making by firms.
the integration of economic theory with business practice.
applied branch of knowledge
the borderline of management and economics
While economics provides the tools applies these tools to the
management of business.

J.M. Keynes' economic analysis come under

macro analysis
Features of public sector enterprises are as follows :-
it is controlled by the state , separate funds to undertake their
activity , they are accountable to public

Negative slope means curve slopes downwards from________

left to left

The features of a partnership firm are

Joint Ownership , No Remuneration to the partners , Unlimited
liability

Perfectly elastic demand curve is ________

horizontal

'Output' which means supply of product depends upon the

cost of production

When a change in income has no effect upon the quantity

demanded of a product, the income elasticity of demand is zero
True

Demand for several products like ice-cream, chocolate, bhel-puri

depends on :-
Individual tastes

  Correct Answer  
of resources owned by the firm.
alternative costs

average profit

variable cost

In the context of externalities, driving the smoke-emitting buses

and trucks in the cities is an example of ________ cost.
social

Assets =
Liabilities + Proprietorship

The liability of a Karta in a Joint Hindu Family Business firm is

________.
limited

The indivisible goods to which the principle of exclusion does not

apply are called ______ goods.
pure public

Demand and desire are one and the same.

False

  Correct Answer  
Voluntary social work
Fixed rate of dividend
State control
Unlimited liability

The private sector is owned by

private individuals

The methods of calculating depreciation is

Diminishing Balance Method , Annuity Method , Service Unit Method

In the Dynamic Theory of Profit, Prof. Clark has pointed out the
types of changes, which are
Changes in the supply of capital , Changes in population , Changes
in the techniques of production

Given the price, if the cost of production increases because of

higher price of raw materials, the supply
decreases

In a market economy, a firm in the private sector basically aims at

maximization of
money profits

The principle of exclusion cannot be applied to the goods, which are

indivisible

In a market economy, characterized by Capitalism, there is full

interference by the State in the economic activities of consumers
and producers.
False

According to J.M. Keynes, there is inducement to invest, when the

marginal efficiency of capital is greater than
rate of interest

In experimental price approach the firms takes some cognizance of

the demand for the product and proceeds to fix a price by a trial –
and – error method.
True

Contraction of demand is defined as a situation, when lesser

quantity of a commodity is demanded only because the price of the
commodity in question has
risen
Pure (Net) profit contains an element of monopoly profit.
False

In market period supply is elastic.

False

The distinction between fixed costs and variable costs is relevant in

the short period only.
True

The assumption of perfect competition in all the analytical theories

is made by
Classical economists

A monopolist’s product is a unique product.

True

Depreciation is the value caused by the continuous use of a capital

asset, which indicates
loss

  Correct Answer  
the maximum amount which can be raised by a company by selling
shares.
which is issued for subscription by dividing into shares.
which the public directly pay – up to the company, as part payment
of the
that share
part of the issued capital which is actually subscribed by the
public.

The Risk theory of profit was developed by

Hawley

Forecasts made either through experience or through methodigistic

are
statistical

  Correct Answer  
Economic unit
Unlimited liability
Ownership by a single person
State enterprise

The congress government led by Narsimha Rao announced the New

Industrial Policy in July 1991.
True

Micro-economics theory studies how a free enterprise economy

determines the price of goods and services.
False

Demand forecasts are of no use to a firm, for long term investment

decision.
False

Accounting profit includes:

Wages, Rent, Interest

Types of income elasticity of demand

Negative income elasticity, Zero income elasticity, Unit income
elasticity

Quantitative credit control measures such as ______ operations,

change in the bank rate, and changes in the_______ ratios
open market, statutory reserve

Market is
Place where buyers and sellers meet each other, A building where a
number of shops deal in a particular commodity, A place where
transaction of goods and services is undertaken.

Consumer’s ________ numbers are the specialized forms of ________

indices in which only prices of those commodities are considered
which enter into the consumption of different classes of people.
price index, retail price

The public enterprises refer to enterprises which are ________

managed and ________ by the government either central or state or
local self governments.
owned, controlled

Public corporations are created by special acts of the parliament.

True

A private limited company can be formed with ________ members

maximum excluding ________ of the company.
Two to fifty, employee shareholders

Oligopoly is a type of ________ market. A ________ exists in the

industry
Imperfect, few firms

Any point on the production possibility curve indicates under

utilization of resources
False

  Correct Answer  
Resources are scarce in relation to peoples wants
There would be no wants unsatisfied at least no left economic
wants
comparative static equilibrium and positive economics partial
Peoples wants are unlimited
multiplicity of wants of scarcity of resources

Marginal cost pricing explains

Price charged should be equal to the marginal cost , It sets the
lower limits for firm’s price , It ensures the possible level of
profitability

The study of the working and allocation of resources in the free

market economies is the topic in the
theory of price

A tabular statement of ________ relationship is known as the

________ schedule, there are two types of demand schedules: (1)
the individual demand schedule, and (ii) the market demand
schedule
Price-quantity, demand

Profit is regarded as:

Income accruing to equity holders, Wages accrue to labour, Rent
accrue to the owner

The suggestion of maximization of balanced growth rate as another

alternative objective of a firm is by
Prof. Morris

The rate of interest, according to ________, depends upon two

factors: (i) ________ and (ii) the quantity of money
Keynes, the liquidity preference function

According to Keynes, the ______ between the aggregate demand

function and the aggregate supply function can, and often does,
take place at a point ______
Equilibrium, less than full employment

The problem of unlimited wants and limited ________ with ________

uses has been forever confronting mankind.
Means, alternative

Keynes defined the ________ efficiency of ________ as the highest

rate of return over cost expected from producing an additional unit
of a special asset.
Marginal, capital

Income elasticity of demand can be defined as the ________ of

proportionate ________ in the quantity demanded of the commodity
to a given proportionate change in income of the consumer.
Ratio, change
A competitive industry has three basic characteristics, they are;
Large number of firms, Homogeneous product, Freedom or entry &
exit.

Costs, which increase because of ____ of a firm, are called

incremental costs and costs, which have to be borne whether there
is expansion or not are called ______ costs.
Expansion, sunk

The Law of Diminishing Returns states that, “As the proportion of

one factor in a combination of factors is ________ after a point, first
the ________ and then the average product of that factor will
diminish.” (F. Benham)
Increased, marginal

The ‘fiscal policy’ refers to the variations in taxation and ______

expenditure programmes by ________ to achieve the predetermined
objectives.
Public, government

Recession includes
The demand is halted, Inc. in production of goods, Inventories piling
up in stocks.

The concept of selling costs is relevant under perfect competition.

False

  Correct Answer  
Monopoly
Horizontal supply curve
A.C.> A.R
Perishable goods
A.R.> A.C.

Under monopoly the demand curve slopes

Downward.

The wage and salary earners who get fixed income in terms of
money are benefited during inflation.
False

Consumer’s protection involves protection from ____ trade practices

for the purpose of promoting sales and making money at the cost
of the _____ and well being.
Unfair, consumer’s health.

Gross profit is the excess of total revenue of a firm over total

Expenditure.
In the cost – benefit analysis, the first step involved is that the
investor has to choose a few project alternatives promising a rate
of return which is
High.

In the cost - benefit analysis, the first step involved is that the
investor has to choose a few project alternatives promising a
high rate of return

The basic economic problems that are faced by various types of

Economies.
What commodities are being produced? By what methods are these
commodities produced? How is society’s output of goods and
services divided among its members?

Long – run market

It is durable goods market, Supply can be increased or reduced
according to the demand, Sellers at least recover minimum price
for their goods.

Features of monopolistic Competition

Fairly Large numbers of firms, Product differentiation, Selling costs
are existed.

Features of public sector enterprises

It is controlled by the state, Separate funds to undertake their
activity, They are accountable to public.

Joint-Stock company is
A voluntary organization, Managed by Elected Board of Directors, A
common seal.

The sources of economic problems are:

Man has unlimited wants or ends, The means or resources to satisfy
them are limited; These resources are not specific but have
alternative uses.

Defects of market system

Inequalities of Income and wealth, Emergence of monopolies,
Failure to provide full employment.

Goods produced on small scale of supply is

Inelastic

Economist’s concept of profit i.e. pure profit is a return over and

above cost is
Implicit

  Correct Answer  
The act of using goods and services to satisfy wants.
Anyone who consumes goods and services to satisfy his or her
wants.
Anyone who helps to produce goods or services
The goods and services that are produced by factors of production.
The act of making goods and services.

In the contraction of price index number, selection of the base year

needs to be done with utmost care.
True

The law of variable proportion means the same thing as the laws of
returns to scale.
False

J.M. Keynes presumed an economic model as a short period model

in his analysis
True

Other things being equal, the higher ________ of commodity, the

smaller is the quantity ________ and lower the price, larger is the
quantity demanded.
Demand, Price.

Every nation's ________ are insufficient to produce the quantities of

________ than would be required to satisfy all of its citizens' wants.
Resources, Goods & Services.

The word _____ has different meanings to businessmen, _______, tax

collectors, workers and economists and it is often used in a loose
sense that buries its real significance.
Profit, Accountants.

There are two factors determining the __________ functions, namely

(i) __________ and (ii) the rate of interest
Marginal efficiency of capital, The investment.

Minimum ________ persons have to come together to start a joint-

stock company. Those who take initiative to start it are called
________.
Seven, Promoters.

Economic theory provides the basis for the _______ making process.
There is some difference between the generalizations based on
abstraction and actual practices. Besides economic theory,
mathematics & ________ help in decision-making.
Decision, Statistics.

As per the International Labour Organization (ILO), ________ is a

________ association of individuals with limited income on the basis
of equal rights and responsibilities for achieving certain economic
interest common to all of them.
Co-operation, Voluntary.
Supply management is related to the volume of supply & its
distribution system.
True

To solve the unemployment problem, the level of effective demand

must decrease.
False

Inflation is a great opportunity for merchants to earn more profit.

True

Under the disinvestment process, there is full transfer of ownership.

True

In India, the first phase of economic reforms is believed to have

begun in 1985 when Vishwanath Pratap Singh was the Prime
Minister of the country.
False

Economists like A.C. Harberger have shown that the cost benefit
analysis can be applied to ________ analysis.
General equilibrium

Goods which are paradoxical to the law of demand are ________

Giffen goods.

The necessary condition of profit maximization of a firm is that

Marginal Revenue (M.R) must be equal to ________.
Marginal cost (M.C)

The consumer protection Act includes

Protection from hazardous commodities, Right to a competitive
price, Right to information regarding protection

Demand forecasts are necessary for

Fulfillment of objective of the plans, Preparation of a budget,
Expansion of firms

Consumption function refers to

income consumption relationship, representation as c=f(y),
functional relationship between two aggregates

Preference Shares can be classified as

Simple Shares, Cumulative Shares, Redeemable Shares

The important determinants of supply are

Always referred to in relation to price & time, Govt policy,
Availability of factors of prod.
Marginal Propensity to consume is characterized as follows :-
It is defined as the ratio of the change in consumption to the
change in income, It is rate of change in the average propensity to
consume as income changes, It is derived by the formula mpc =
change in c/change in y

Methods of forecasting demand for new products are

Product life cycle analysis, Test marketing, Evolutionary approach

There is separation of ownership and management in a

Joint Stock Company

A firm gets an opportunity to produce multiple products because

changes in business activity in a firms is
cyclical

The study of the supply side of product pricing is done under the
Theory of Production

Question related to the efficient production and allocation belong to

the branch of economic theory called
Welfare Economics

  Correct Answer  
Maximization of net wealth
Government
Economic evils
Free enterprise system

  Correct Answer  
Abnormal profit.
Tends to be rigid at the kink on the demand curve.
To enable it to operate at the lowest cost possible and maximize
efficiency.
Expenditure is incurred by the firms on cross transportation.

  Correct Answer  
The maximum amount which can be raised by a company by selling
shares.
Which is issued for subscription by dividing into shares.
Which the public directly pay – up to the company, as part payment
of thepart
That share
of the issued capital which is actually subscribed by the
public.
The Defence services are indivisible in the sense that they cannot
be priced in the market in order to deprive some members of the
society from its use or benefits.
True
Marshall has classified the period of time into three heads
Short run, Long run, Market period

Various kinds of economic policies are

Industrial licensing policy, Commercial policy, Fiscal policy

Economist's concept of profit is

Pure Profit, Economic Profit, Just Profit

The production function can be studied in three ways or explained

by
Law of variable proportion, Laws of return to scale, Optimum
combination of inputs

The Laws of Returns to scale are

Law of Increasing Returns to Scale, Law of Constant Returns to
Scale, Law of Decreasing Returns to scale

The main criterion of indivisibility of a good is that the good

Should be equally available to all the members of society, financing
of the good are through public expenditure, the principle of
exclusion does not apply.

Different types of Elasticity of Demand are

Price elasticity of demand, Income elasticity of demand, Cross
elasticity of demand

The form of market in which there is monopoly of two firms is

known as
Duopoly

Incorporation of government company is

Compulsory

The Keynesian Theory is

Demand oriented

Under the imperfect market, the market in which few firms exists is
called as
Oligopoly

  Correct Answer  
Indivisible
Spill over effect
Maximization of output
Step of cost benefit analysis

A responsible factor for inflation is

hike in prices
The city of Ludiana has developed a big market for
hosiery

Features of Dumping are

It is possible in the case of monopoly market , Selling same good at
higher price in home market and lower at price in international
market , It is encouraged with a view to promote the exports

J.M. Keynes stated that effective demand is determined by the

interaction of the aggregate supply function and
aggregate demand function

Baumol has pointed out three main contributions of economic

theory.
EconomicThey are offers clarity to various concepts used in the
theory
business anlayses , Economic theory contributes in building
anlyatical model to rocognize managerial problems , Economic
theory contributes to ,'a set of analytical methods' which enhance
the analytical capabilities of business analyasis

The subject matter of managerial economics covers two important

areas namely decision-making and
forward Planning

  Correct Answer  
Snob Appeal
Statistical device
E.D. = 0
Changes in quantity demanded

The cost recorded in the books of accounts are considered as :-

explicit costs

Under competitive conditions, market mechanism would

automatically bring equilibrium at the level of
full employment

Inflation reduces the purchasing power of money and savings.

True

The supply curve during market period is perfectly

inelastic

The price policy under monopolistic competition is dependent on

the prices charged by other rival firms
True
Private profit motive is an essential feature of Capitalism
True

‘Free riders’ is a term associated with the people who would like to
have benefit of a good without sharing the cost of its supply
True

Inflation is a great opportunity for merchants to benefit more.

True

The various phases of business cycles are shown by the line of

cycle which moves up and down the steady growth line
True

In the measurement of profit, the differences in the concept of

profit arise out of the differences in cost concepts
True

Under the monetary measures to control inflation, the R. B. I relies

heavily on selective credit controls on bank loans against food
grains, sugar, oils, oilseeds, cotton etc so as to discourage
Speculative hoarding

The opportunity cost of a product is the opportunity gained of being

able to produce some other product.
False

The supply curve in case of unitary elastic supply is rectangular

hyperbola.
False

Under monopsony, there are ________ sellers but ________ buyer

many
only one

  Correct Answer  
Zero
Demand curve of a commodity
Addition to total utility
Posative and declining
Marginal utility is zero

By using cost-benefit analysis we can show the ________ necessary

for attaining maximum ________ and optimal policy aiming at this
goal
measures
net wealth
Average propensity to consume
It is defined as the ratio of consumption expenditure to any
particular level of income , It is found by dividing consumption
expenditure by income , It is expressed as the percentage of
income consumed

Inflation means
It is a phenomenon of rising prices , It is a general and dynamic
phenomenon , It includes an excess of demand

Aggregate supply function refers to a ________ of the various

minimum amounts of proceeds or ________ , which must be
expected to be received by the entrepreneur class from the sale of
output result
schedule
revenues

The meaning of monetary policy

It is programme of the central bank , It controls the total supply of
money , The basic objective is to achieve economic stability

Managerial economics deals with

Integration of economic theory with business practice , Using logic
of economics, mathematics & statistics. , The use of economic
modes of thought to analyze business solution.

The sources of economic problems are:

Man has unlimited wants or ends , The means or resources to
satisfy them are limited. , These resources are not specific but have
alternative uses.

Different types of business organizations are;

Private sector. , Public sector. , Joint sector.

Proprietary firm is
Owned by a single person. , Easy to form. , An organization of
single person.

Economic theory provides the basis for the ________ _ making

process, there is some difference between the generalization based
on abstraction and actual practices. Besides economic theory, mat
decision making
statistics

Individual or sole ________ , which is also called sole- ________ , or

single entrepreneurship is the most common, the simplest and the
oldest form of business organisation.
proprietorship
trader ship
Nominal cost is the ________ cost of production, it is also called
expenses of production. The real cost is the ________ cost of
production.
money
opportunity

The costs of self owned resources, which are employed by the

________ , are non- expenditure or , ________
firm
implicit costs .

In equilibrium analysis of a firm, it is assumed that every individual

proprietor exhibits rational economic
behavior

  Correct Answer  
The theory of distribution
Prescriptive in nature
Tangible goods
Alternative uses
Insatiable

The firm is the unit that makes the decisions regarding employment
of and the output of commodities are
factors of production

During the phase of depression, the level of national income and

expenditure rises rapidly
False

  Correct Answer  
Quantity supplied minus quantity demanded

A rise in equilibrium quantity

The supply is perfectly elastic

Elasticity of demand

In the same proportion

Greater scope for the ________ sector may mean incremental

________ , which connotes the expansion of public sector
undertakings, can be left to some private companies
private
disinvestments

In the stage I of the law of diminishing returns, the marginal

product goes on increasing
True

Where ________ is charging a ________ in the home market and a

lower price in the international market, it is called Dumping
monopolist
higher price

The number of sellers operating under this type of competition is

________ under oligopoly, but less than under ________
larger than
perfect ompetition

Marginal Propensity to consume

It is defined as the ratio of the change in consumption to the
change in income , It is rate of change in the average propensity to
consume as income changes , It is derived by the formula mpc=
change in C/change in Y

Investment
It adds to capital equipments , It leads to increase in level of
income , It includes new plant and equipment

In the words of ________ , “inflation occurs when the ________ of

prices and cost is rising”.
Prof. Samuelson
general level

Specific organizational goals of Firms are:

Maximisation of profit , Reasonable Profit Target , Sales revenue
Maximization
In a competitive industry, there is a large number of firms so that
the action of ________ firm has ________ on the price and output of
the whole industry.
a single
no effect

The word ________ has different meanings to businessmen,

________ , tax collectors, workers and economists and it is often
used in a loose sense that buries its real significance
Profit
accountants

The demand curve is ________ representation of a demand

schedule, demand curve slopes ________ ward from left to right.
graphical
down

The ________ that is ________ is the opportunity cost of the

commodity produced.
commodity
sacrificed

Prof Samuelson calls the air and water pollution or dangers from
drunken drivers as economies that are
negative

In Capitalism, the sovereign consumers express their preferences

through :-
price mechanism

Expansion of supply is shown by the movement in the supply curve

which is
upward

During the period of depression, demand for bank credit reaches its
low level and banks experience mounting of their cash balances.
True

The subject matter of macro – economics includes the theory of

income and employment at an individual level.
False

The private sector is owned by ________.

private individuals

During the phase of depression, the level of national income and

expenditure rises rapidly.
False

  Correct Answer  
monopolistic competition
which private enterprise may not bear at all.
yet they may constitute a market over telephone or through
internet
cost of transportation does not exist

The production function studies :-

Input and out put relation , Factors of production and final
production , Technology used in production

The economic stabilization means

Preventing excessive economic fluctuations , Efficient utilization of
labor and other factors of production , Encouraging free competitive
enterprise
The effective solution to the problem of internationalizing of
externality involves
Government action , Private action providing correctives ,
Externality taxes
Objectives of economic policy are
To increase the efficiency and international competitiveness of
industrial production , To improve the performance and rationalize
the scope of the public sector , To reform and modernize the
financial sector

The production function can be studied in three ways

Law of variable proportion , Laws to return to scale , Optimum
combination of inputs

Keynes’s theory of employment explains

Effective demand , Aggregate supply , Aggregate demand

While calculating accounting profit, the costs which are considered

are by nature
explicit

Poverty is the root cause of Economic problem.

False

In economics, the problem related to the selection of methods for

producing different commodities is a subject matter of the
Theory of production

Under perfect competition, price is determined by the interaction of

total demand and total supply in the market.
False

The slope of Supply curve of labour is always

backward

Features of market period are

Related to few hours or few days , Related to perishable goods ,
The entire supply is to be disposed off on the same day

Cournot' , the economists who defined the term 'market' different

from that of the traditional sense is an
French economists

The act of production involves

transformation of inputs into outputs

While Disinvestments process, Government retains 50% of the

equity with itself & transfers 49% to private sectors
False
Total Revenue - (explicit costs + implicit costs), this equation is
used for calculating
Pure Profit

A fall in quantity demanded without a fall in price shows decrease

in demand.
True

In case of a proprietary firm the liability of the proprietor is limited.

False

Diseconomies of small scale production includes

High average cost of production in initial stages , Workers in the
factory take some time to adjust with new techniques of production
, Wastage of raw material & power

It is easy to estimate the amount of black money

False

Bargaining is one of the remedies of corrective action.

False

Internal Economies involves

Advantages of large-scale production , Low cost of production , It
avails benefits of cheaper finance

The public sector is owned & controlled by

state enterprises

The city of Kashmir has specialized in the manufacture of

shawls

Market mechanism is characterized by

instability

In case of defense services, all the sections of the society are

equally protected and benefited. The defense services in other
words is good , indivisible in character , cannot be priced in the
a public
market

The term externalities may also be referred as:

Spill-over effects , Neighborhood effects , Third party effects

The examples of negative externalities are

nuclear power plants , gargantuan trucks , unsafe factories

According to Keynes, Aggregate supply function refers to

the minimum price of revenue which the entrepreneurs must get ,
Associated with different levels of employment , Explains that the
level of out put varies with the level of employment

The defence services are indivisible in the sense that they cannot
be priced in the market in order to deprive some members of the
society from its use or benefits.
True

Goods which are completely divisible and to them the principle of

exclusion applies in full measure, are called
Pure public goods

A monopolist can decide both price and the quantity of a product

that he is going produce and sell in the market.
True

The market which deals with the all the goods as a whole are
considered as
Commodity Market

The city of Surat has specialized in

diamond polishing

Consumer’s protection involves protection to the consumers from

unfair trade practices.
True

Car & petrol, tea & sugar, shoes & socks, sarees & blouse are
examples of
complimentary goods

The products sold by different sellers under pure competition are

heterogeneous.
False

  Correct Answer  
Explicit costs
Pure profit

Uncertainity

Hawley

Which statement is true about Pure Private goods

Principle of Exclusion applies to them

There never was in any country at any time 'pure capitalism' or

'pure communism.'
True
According to the World Bank's approach, the trade able items would
be valued at the corresponding world prices and the non-trade able
items at the ________.
shadow prices

Factors influencing selling costs are

Type of product , Introduction of new goods , Technology changes

Pure inflation starts only after reaching the full employment level.
True

The demand curve has a negative slope.

True

The rise in prices is basically because of shortages of basic goods &

services and a rapid growth of money supply.
True

The railways use a lot of coal in firing the steam locomotives. This
act causes
a lot of sufferings to the people near the railway. , cost to the
society. , no cost to the railways.

The study of , what commodities are being produced and in what

quantites I.e the study of allocation of resources is discussed under
the
Theory of price

Saving is a private virtue

True

The externalities that may be an economic gain or economic losses

to other economic units are referred to as technological
externalities.
False

Liability of a sole trader is

unlimited

the concept ,of Perfect competition includes all the features of

Pure competition

In case of a proprietory firm, the liability for all his debts is

unlimited

J.M. Keynes, on the basis of a fundamental psychological law of

consumption, observed that as income increases, consumption also
increases, but proportionately :-
less
  Correct Answer  
Market economy
Market economy
Social cost
Economies of scale

One of the serious limitations of market mechanism is that it results

in distribution of income and wealth which is
unequal

Macro economics is the study of the

aggregate behavior of economy

The Risk Taking Theory was developed by Hawley, who was an

American Economist

If the substitutes are relatively costly then the demand for the
commodity in question will be
more

Effective Demand covers

Consumption outlay for the households , Investment outlay in the
private sector , Government’s spending for consumption as well as
investment
Under perfect competition there are large number of buyers and
few sellers.
False

The profits which must be deducted from the gross profits to arrive
at net profits are :-
Monopoly Profits

The city of Kanpur has developed a big market for

leather goods

Various binds of economic policies are

Industrial liscencing policy , Commercial policy , Fiscal policy

The partners are joint owners of the property a partnership firm.

True

" The General Theory of Employment, Interest and Money" by Prof.J.

M. Keynes was published in
1936

According to Lionel Robbins definition of economics, "Economics is

a science which
studies human behaviour , relationship between ends and scarse
resources , scarce means have alternate uses

Demand is related to price, time and place.

True

The city of Coimbatore has developed a big market for

spinning

The firm is a center, where all the decisions are taken about
production

  Correct Answer  
tends to be rigid at the kink on the demand curve
from buyer’s side

are allowed under the law to make price discrimination

to enable it to operate at the lowest cost possible and maximise

efficiency
expenditure is incurred by the firms on cross transportation

During the period of depression various factors of production are

exhausted

Consumption function refers to

income consumption relationship , representation as c=f(y) ,
functional relationship between two aggregates

When a want can be satisfied by alternative similar other goods,

they are called as
substitute goods

  Correct Answer  
Prof. Edward Chamberlin
Price discrimination
U shaped
Monopolistic competition

Under perfect competition, generally demand and supply act and

react upon each other and determine the price which is in
equilibrium

The concept of economic profit differs from that of normal profit.

False

In case of a partnership firm, the liability of a partner is limited

False

Generally, the larger the income of a consumer, his demand for

overall commodities tends to be relatively elastic.
False

Profit is regarded as
income accruing to the equity holders , wages accrue to the
labour , rent accrue to the owner

  Correct Answer  
Demand and supply
Non perishable goods
Perishable goods
Automatic price mechanism

Types of income elasticity of demand

Negative income elasticity , Zero income elasticity , Unit income
elasticity

Implicit costs are

Cost on self owned resources , Costs of salary of the proprietor ,
Interest on the entrepreneur's own investment

According to Lionel Robbins, "Economics is a science which studies

human behavior

  Correct Answer  
an increase in supply.

zero elasticity of supply.

upward from right to left.

perfectly inelastic.

  Correct Answer  
Homogenous Product
One Firm
Technical Unit
Life Insurance Corporation

Features of short run period are

Supply of goods can be adjusted to the demand to some extent ,
Supply and demand determine the price , Some factors can be
changed

Suggestion of maximization of sales revenue as an alternative

objective to profit maximization is given by
Baumol
The method of calculating depreciation in which the actual working
hours of a capital asset are taken in to account is
service unit

A firm is a technical unit of a given capacity of output.

False

Under perfect competition, if demand increases, supply being

constant, the price would
rise

  Correct Answer  
Deficit financing
Essential commodities
General and selective credit control measures
Administered prices

  Correct Answer  
the modern economists define effective demand as C + I + G + (X-
M).
short run philosophy of life.
a general view of the economic system as a whole.
Liquidity preference

The pioneering analysis of imperfect competition was done by Mrs.

Jaon Robinson from the :-
Cambridge University

Normally, a larger quantity is demanded at

lower price

Public enterprises have shown a very high rate of return of the

capital invested.
False

When a firm’s average revenue (A.R.) is equal to its average cost

(A.C.), it gets ________.
Normal profit

Sole Proprietorship which is also called sole ________

Tradership

Under monopoly, the entire supply is controlled by ________.

One sellers

The important feature of monopolistic competition is ________.

Product differentiation
Under perfect competition, price is determined by the interaction of
total demand and ________.
Total supply

The market price is determined by the interaction of the market

demand curve and ________.
Supply curve

In market, period supply is elastic.

False

Main aims of the New Industrial Policy (1991) are :-

To unshackle the Indian industrial economy from the cobwebs of
unnecessary bureaucratic control , To introduce liberalization with a
view to integrate the Indian economy with the world economy , To
remove restrictions on direct foreign investment as also to free the
domestic entrepreneur from the restriction of MRTP act

Distinction between private sector and public sector is determined

on the basis of :-
Economic system , Motive , Principle of pricing

When people expect a rise in prices, businessmen ________ their

investment & this leads in the demand for capital goods to
Increase.
Increase

Problems regarding economy’s capacity to produce goods and

services growing from year to year or is it remaining static are the
topics in the Theory of ________.
Economic growth

When in order to satisfy a given want, 2 or more goods are needed

in combination, these goods are called :-
Complimentary goods

Goods produced on small scale have :-

Relatively inelastic supply

Under pure competition, the entry & exit of firms is

free

The damage being done by the factories at and around Agra to Taj
Mahal is an example of social cost for private benefit.
True
An individual consumer or particular market for a given commodity
are the subject matter of
Micro Economics

  Correct Answer  
Negative economies
Quasi - public goods
Divisible goods
Market economy

Capitalism emphasis more on turnover rather than creating profits

False

The firm is an economic unit that makes the decisions regarding

employment of
factors of production

The city of Faridabad has specialized in the manufacture of

bangles

In case of indivisible goods, which are not priced, the decisions

regarding their demand preferences are taken through price
mechanism.
False

Specific organizational goals of Firms are

maximization of profit , reasonable profit target , sales revenue
maximization

  Correct Answer  
public sector undertaking.
advertisement.
high price on account of prestige considerations.
state government.

The supply of agricultural goods is ________.

Inelastic

As per the New Industrial Policy of 1991, the government had

decided to provide approval for direct foreign investment up to 41%
of foreign equity in order to invite foreign investment in high
priority industries requiring large investment and advanced
technology.
False

When there is ________ in foreign demand for the goods

manufactured in a country, exports increase and prices of
commodities in the country Increase.
Increase

The Dual prices system was adopted by the Government in case of

________.
Essential goods

During Nineties & Eighties, the CRR was raised from 6% to

statutory maximum of ________.
0.15

Accounting profit takes into account opportunity cost.

False

  Correct Answer  
The slope of the TVC curve or slope of the TC curve.
The cost of producing one unit.
Has to touch the long run cost curve.
Has the shape of an inverted U.

Under Perfect competition, when an individual buyer increases or

reduces his demand, the total market demand :-
Is not at all affected

When supply increases, demand remaining the same, the

equilibrium price ________.
Falls

Advertising forms an integral part of decision-making and________.

Forward - planning

The cost-benefit analysis is useful to achieve the following :-

Maximization of social welfare , Objective measurement of the
trade-off , Maximization of difference between total benefits & total
costs

Statutory Reserve ratios are quantitative credit control measures

undertaken by ________.
The State Bank of India

"The purpose of Managerial economics is to show how economic

analysis can be used in formulating business policies". This
definition is given by :-
Prof. Joel Dean

In Disinvestment process, Government retains 50% of the equity

with itself & transfers 49% to private sectors.
False

Oligopoly is a type of ________.

Imperfect market
The use of a good by one more member of the society does not
reduce its availability to others. This applies in case of
Pure public good

Economists like A.C.Harberger have shown that the cost benefit

analysis can be applied to ________ analysis.
general equilibrium

Firm is an
economic unit

Pure public goods are subject to the law of decreasing average

cost, because of the
economies of scale

The features of a Joint Stock-Company are

perpetual succession , limited liability , free transferability of shares

Average propensity to consume is characterized as follows

the ratio of consumption expenditure to any particular level of
income , It is found by dividing consumption expenditure by income
, It is expressed as the percentage of income consumed

During inflation, the pensioners whose income is permanently

fixed, are substantially benefited.
False

During period of depression various factors of production lie

unutilized.
True

Joint Stock Company is an incorporated association with a

perpetual succession

The market which covers capital market & all banking and non-
banking institutions are together taken as
Financial Market

The indivisible goods to which the principle exclusion does not

apply are called ________ goods.
pure public

Features of Perfect Competition

Large number of buyers and sellers , Homogeneous products , Free
Entry and Free exit of firms

When is price discrimination possible

In Monopoly Market , In case of Services sold , In case of
geographical barriers

Public enterprises may incur some social costs which private

enterprise may not bear.
True

Consumers protection involves protection from ________ trade

practices for the purpose of promoting sales and making money at
the cost of the ________ and well being
unfair
consumers health

Price effect is the result of in reality substitution

True

Q = f ( N, L, K, T ) , this algebraic expression is used for

Production Function

TR - (W+R+I+M), this equation is used for calculating

Accounting Profit

In the law of variable proportion, a stage is reached when marginal

product is
zero

Services need support functions to assist its operation, they are

transport, telecom, power

What is to be done to all functions of insurance such as marketing,

finance etc so that the balance is achieved in insurance?
co-ordinating

Disclosures should provide ________ and relevant data to

shareholders.
transparent

The factors coming under philosophy of scientific management are:

Co-operation , Maximum output , Harmony

________ is one of the major barriers to entry.

Government policy

Just like planning, controlling process can achieve the objective and
goals, if it is
Continuous

Economists have pointed out that the real world is full of

Imperfect competition
Under the disinvestments process, there is full transfer of
ownership
True

When a company rasies additional finance by borrowing from the

public for a specific period of time at a particular rate of interest, it
is called as
Debentures

The observation of economic histories of the United States & West

European countries shows that competition , the heart of market
mechanism gives rise to
monopolies

Demand curve slopes upwards from left to right.

False

The relation between variable input and ouput

is direct

A downward movement from one point to another point on the

same demand curve implies
expansion

The three more items which the Government of India had decided
to dereserve from the list of 18 industries in April 1993 were motor
cars, white goods and raw hides and skins and patented leather.
TRUE

As far as its use is concerned, the defence service can be

categorized as:
Indivisible

Every seller and a buyer under pure competition

is Price taker

Under the New Industrial Policy, inorder to invite foreign investment

in high priority industries, it was decided to provide approval for
direct foreign investment upto 51 %equity in such industries
TRUE

Like a particular street in a city , the entire city may sometimes

specialize in the production of a particular commodity . The city
acquire the status of a
national market

In a proprietory firm the business is owned, managed and

controlled by
Proprietor

Preference share holders get a rate of dividend which is

fixed
In economics, supply is considered to be a
relative term

Micro-economic theory studies how a free enterprise economy

determines the price of economic resources
False

Break-Even analysis is derived by

Fixed cost , Average variable cost , Quantity of goods and price
 Managerial Economics
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 Managerial Economics
ist of Attempted Questions and Answers

By ' profits', the accountant means total revenue minus________.

Explicit costs

A fall in price tends the demand for goods to ________

expand

Defence service is an example of ________ good.

indivisible

The social costs and benefits are the external economies and
diseconomies resulting from the ________ activities, which are
known as, "externalities"
firm's

A normal demand curve has ________+B299

negative slope

Cost-benefit analysis refers to the analysis undertaken to judge any

projects ________ whether government or private and find out its
worth.
investments

Supply is predominantly determined by ________.

Stock

The index numbers which measure the changes in the general price
level of a country refers to ________
Wholesale prices index

“Homeostatic Approach” as an alternative objective of firms was

suggested by _________.
Prof. Kenneth Boulding

The financing of ________ goods is done through public expenditure.

public

In a market system of an economy, producers are guided by

________ motive.
profit

While discussing the product divisibility of public and private goods,

the principle of ________ may be applied in case of only those
people who do not agree to pay or who cannot pay the market
price of the goods.
Exclusion
The minimum number of directors which private limited should
have is ________.
2

The externality which causes an economic gain or an economic loss

to other economic units is also referred to as ________ externality.
Pecuniary

The chemical effluents recklessly released by a chemical factory in

the river causing water pollution, is an example of ________ cost.
social

The goods become ________ only when each individual has an

access to the entire amount of it and its use by the individual does
not reduce its availability to others.
indivisible

The salary of the proprietor or rent on own land are the ________.
Implicit cost

In a market economy ________ is the best judge of personal interest.

individual

Like all organism, the firm too is an organism according to the

________
life-cycle theory.

Demand for safety pins is ________

inelastic

Demand for a commodity depends on the relative price of its

________
substitute goods

The partnership between private sector & government is called

________
Joint sector enterprise

The persons who own the ________hip concern are called Partners.
Partners

A private limited company can be formed with 2 to 50 members

maximum, excluding ________
employee shareholders

Modern economists treat social cost and benefits as ________ of

private investment and production decisions.
externalities
Reasonable profit target as an alternative to the objective of profit
maximization was suggested by ________.
Joel Dean

The out of pocket costs are ________.

Explicit costs

Cost-Benefit analysis aims at ________ of social wealth.

maximization

Baumol has suggested as an alternative objective for profit

maximization , the maximization of ________
sales

The minimum number of directors which public limited should have

is ________.
3

The law of constant returns to scale is depicted by the marginal

output curve which is ________.
horizontal

In the 3rd stage of operation of the law of variable proportions, the

marginal product becomes ________.
negative

The costs which cover the cost of advertising is ________.

Selling cost

The form of organization which is best for self employment is

________.
Sole trader

Output rises in a lesser proportion to that of the increase in input,

under the case of ________.
decreasing returns to scale

If the output rises in the greater proportion than that of the

increase in factor inputs, it is referred to as ________.
increasing returns to scale.

In the context of formulation of an investment project, ________

feasibility means the availability of land, plant, machinery, raw
materials and technical know how etc.
technical
Prof. Sam Nelson calls risks from unsafe factories or nuclear power
plants as ________ economies.
negative

The sum of all individual demands constitutes________

market demand

Increase in consumer’s income leads in the demand for inferior

goods to ________
decrease

The cost which enter the accounts book of the firm are referred as
________.
Accounting cost

By ' profits', the economist means total revenue minus ________.

All costs

By using cost-benefit analysis we can show the measures

necessary for attaining maximum ________ and optimal policy
aiming at this goal.
net wealth

________ effects are those externalities which flow from the

production or use of the good to other parties or economic units.
Third party

An upward sloping demand curve is called ________

exceptional demand curve

In the context of formulating an investment project, ________

feasibility means the availability of supervisors for implementing
and running the project smoothly and professionally.
management

When demand for the product increases in the same proportion in

which income increases, Income elasticity of demand will be equal
to________
unity

Under the decreasing returns to scale, the marginal output curve

slopes ________.
downward

On the ________ level, the summation of maximum individual

welfare does not automatically lead to maximum social welfare.
macro

Goods which are paradoxical to the law of demand are ________

Giffen goods, ,

The index numbers which are compiled to measure the changes in

retail prices of various commodities refers to ________
Retail prices index

The good becomes ________ so far as its use is concerned only when
it is priced in the market and the principle of exclusion is applied to
it.
divisible

Negative slope means curve slopes downwards from________

left to left

Perfectly elastic demand curve is ________

horizontal

In the context of externalities, driving the smoke-emitting buses

and trucks in the cities is an example of ________ cost.
social

The liability of a Karta in a Joint Hindu Family Business firm is

________.
limited

The indivisible goods to which the principle of exclusion does not

apply are called ______ goods.
pure public

Quantitative credit control measures such as ______ operations,

change in the bank rate, and changes in the_______ ratios
open market, statutory reserve

Consumer’s ________ numbers are the specialized forms of ________

indices in which only prices of those commodities are considered
which enter into the consumption of different classes of people.
price index, retail price

The public enterprises refer to enterprises which are ________

managed and ________ by the government either central or state or
local self governments.
owned, controlled

A private limited company can be formed with ________ members

maximum excluding ________ of the company.
Two to fifty, employee shareholders

Oligopoly is a type of ________ market. A ________ exists in the

industry
Imperfect, few firms
A tabular statement of ________ relationship is known as the
________ schedule, there are two types of demand schedules: (1)
the individual demand schedule, and (ii) the market demand
schedule
Price-quantity, demand

The rate of interest, according to ________, depends upon two

factors: (i) ________ and (ii) the quantity of money
Keynes, the liquidity preference function

According to Keynes, the ______ between the aggregate demand

function and the aggregate supply function can, and often does,
take place at a point ______
Equilibrium, less than full employment

The problem of unlimited wants and limited ________ with ________

uses has been forever confronting mankind.
Means, alternative

Keynes defined the ________ efficiency of ________ as the highest

rate of return over cost expected from producing an additional unit
of a special asset.
Marginal, capital

Income elasticity of demand can be defined as the ________ of

proportionate ________ in the quantity demanded of the commodity
to a given proportionate change in income of the consumer.
Ratio, change

Costs, which increase because of ____ of a firm, are called

incremental costs and costs, which have to be borne whether there
is expansion or not are called ______ costs.
Expansion, sunk

The Law of Diminishing Returns states that, “As the proportion of

one factor in a combination of factors is ________ after a point, first
the ________ and then the average product of that factor will
diminish.” (F. Benham)
Increased, marginal

The ‘fiscal policy’ refers to the variations in taxation and ______

expenditure programmes by ________ to achieve the predetermined
objectives.
Public, government

Consumer’s protection involves protection from ____ trade practices

for the purpose of promoting sales and making money at the cost
of the _____ and well being.
Unfair, consumer’s health.
Other things being equal, the higher ________ of commodity, the
smaller is the quantity ________ and lower the price, larger is the
quantity demanded.
Demand, Price.

Every nation's ________ are insufficient to produce the quantities of

________ than would be required to satisfy all of its citizens' wants.
Resources, Goods & Services.

The word _____ has different meanings to businessmen, _______, tax

collectors, workers and economists and it is often used in a loose
sense that buries its real significance.
Profit, Accountants.

There are two factors determining the __________ functions, namely

(i) __________ and (ii) the rate of interest
Marginal efficiency of capital, The investment.

Minimum ________ persons have to come together to start a joint-

stock company. Those who take initiative to start it are called
________.
Seven, Promoters.

Economic theory provides the basis for the _______ making process.
There is some difference between the generalizations based on
abstraction and actual practices. Besides economic theory,
mathematics & ________ help in decision-making.
Decision, Statistics.

As per the International Labour Organization (ILO), ________ is a

________ association of individuals with limited income on the basis
of equal rights and responsibilities for achieving certain economic
interest common to all of them.
Co-operation, Voluntary.

Economists like A.C. Harberger have shown that the cost benefit
analysis can be applied to ________ analysis.
General equilibrium

Goods which are paradoxical to the law of demand are ________

Giffen goods.

The necessary condition of profit maximization of a firm is that

Marginal Revenue (M.R) must be equal to ________.
Marginal cost (M.C)

The private sector is owned by ________.

private individuals
According to the World Bank's approach, the trade able items would
be valued at the corresponding world prices and the non-trade able
items at the ________.
shadow prices

When a firm’s average revenue (A.R.) is equal to its average cost

(A.C.), it gets ________.
Normal profit

Sole Proprietorship which is also called sole ________

Tradership

Under monopoly, the entire supply is controlled by ________.

One sellers

The important feature of monopolistic competition is ________.

Product differentiation

Under perfect competition, price is determined by the interaction of

total demand and ________.
Total supply

The market price is determined by the interaction of the market

demand curve and ________.
Supply curve

When people expect a rise in prices, businessmen ________ their

investment & this leads in the demand for capital goods to
Increase.
Increase

Problems regarding economy’s capacity to produce goods and

services growing from year to year or is it remaining static are the
topics in the Theory of ________.
Economic growth

The supply of agricultural goods is ________.

Inelastic

When there is ________ in foreign demand for the goods

manufactured in a country, exports increase and prices of
commodities in the country Increase.
Increase

The Dual prices system was adopted by the Government in case of

________.
Essential goods

During Nineties & Eighties, the CRR was raised from 6% to

statutory maximum of ________.
0.15

When supply increases, demand remaining the same, the

equilibrium price ________.
Falls

Advertising forms an integral part of decision-making and________.

Forward - planning

Statutory Reserve ratios are quantitative credit control measures

undertaken by ________.
The State Bank of India

Oligopoly is a type of ________.

Imperfect market

Economists like A.C.Harberger have shown that the cost benefit

analysis can be applied to ________ analysis.
general equilibrium

The indivisible goods to which the principle exclusion does not

apply are called ________ goods.
pure public

Disclosures should provide ________ and relevant data to

shareholders.
transparent

________ is one of the major barriers to entry.

Government policy

Quantitative credit control measures such as ________ operations,

change in the bank rate, and changes in the ________ ratios
open market
statutory reserve

Under perfect competition, ________ is determined by the

interaction of total ________ and total supply in the market
price
demand

According to Prof. Ackley, “________ economics deals with economic

affairs in the large it concerns the ________ of economic life”.
macro
overall dimensions
Economics is a ________ , which studies human behaviour as a
relationship between ________ , which have alternative uses.
science
ends and scarce means

The production function is the name given to the ________ between

the rates of ________ of productive services and rate of output of a
product
relationship
input

Internal economies are those advantages of large- scale ________ ,

which accrue to a ________ on account of its superior techniques
and management
production
firm

Elasticity of supply may be defined as the ratio of the percentage

________ or the ________ change in quantity supplied to the
percentage or proportionate change in Price.
proportionate
change

Costs may be classified as : (a) ________ , including material costs,

wage cost and interest cost (b) ________ , including costs of
advertising and (c) other costs, including insurance ch
Production costs
Selling costs

Costs, which increase because of ________ of a firm, are called

incremental costs, and costs, which have to be borne whether there
is expansion or not are, called ________ costs
expansion
sunk

Administered ________ are normally set on the basis of cost plus a

________ margin of profit
prices
stipulated

Under monopoly, there is ________ seller who controls the entire

________ in the market
only one
supply

Cost-benefit analysis refers to the analysis undertaken to judge any

projects ________ whether government or private and find out its
________ and facilities its comparison with other available oppor
investments
worth

The statement showing the varying levels of aggregate demand

prices, i.e. expected sales revenue by the ________ for the output
associated with different levels of ________ , is called the aggr
entrepreneur
employment

The resources of a society consist not only of the free gifts of

nature such as ________ but also of ________ and of all sorts of man
made aids to further production.
land and minerals
human capacity

The ________-taking theory was developed by the ________ .

According to him, profit arises because considerable amount of risk
is involved in business.
American economist Hawley
risk

The extent of the change of demand for a commodity to a given

change in ________ , other demand determinants remaining
constant, is termed as the ________ of demand.
price
price elasticity

Wholesale ________ index numbers measure the ________ in the

general price level of a country.
Price
changes

The money payment, which a firm makes to those ________ who

supply labour services, raw materials, transport services, electricity
etc. are called ________ costs.
outsiders
explicit

The Indian partnership Act, ________ , defines the partnership as

"the relation between two or more ________ who have agreed to
share profits of a business carried on by all or any one of them act
1932
persons

Minimum ________ persons have to come together to start a joint-

stock company. Those who take initiative to start it are called
________ .
seven
promoters
A ________ is an undertaking by a company to repay the borrowed
________ on or before the specified date at a particular interest rate,
irrespective of profit or ;loss made by the company
debenture
money

The joint sector is a form of ________ between the ________ and the
government.
partnership
private sector

Other things being equal, the higher ________ of commodity, the

smaller is the quantity ________ and lower the price , larger is the
quantity demanded.
demanded
price

In the ________ terminology, the ________ demand function refers to

the schedule of maximum sales proceeds, which the
entrepreneurial community actually does expect to be received
from the sale of
Keynesian
aggregate

The rate of interest, according to ________ , depends upon two

factors: (i) ________ and (ii) the quantity of money
Keynes
the liquidity preference function

Managerial ________s generally refers to the integration of economic

theory with ________ practice.
economic
business

The problem of unlimited wants and limited ________ with ________

uses has been forever confronting mankind.
means
alternative

As per the International Labour Organisation (ILO), _ ________ is a

________ association of individuals with limited income on the basis
of equal rights and responsibilities for achieving certa
Co-operation
voluntary

Like all organism, the ________ , too is an organism, according to the

________ theory.
firm
life-cycle theory
Indices constructed for one ________ should not be ________ for other
purposes where they not be fully appropriate and given erroneous
conclusions.
purpose
used

Under monopsony, there are ________ sellers but ________ buyer

many
only one

By using cost-benefit analysis we can show the ________ necessary

for attaining maximum ________ and optimal policy aiming at this
goal
measures
net wealth

Aggregate supply function refers to a ________ of the various

minimum amounts of proceeds or ________ , which must be
expected to be received by the entrepreneur class from the sale of
output result
schedule
revenues

Economic theory provides the basis for the ________ _ making

process, there is some difference between the generalization based
on abstraction and actual practices. Besides economic theory, mat
decision making
statistics

Individual or sole ________ , which is also called sole- ________ , or

single entrepreneurship is the most common, the simplest and the
oldest form of business organisation.
proprietorship
trader ship

Nominal cost is the ________ cost of production, it is also called

expenses of production. The real cost is the ________ cost of
production.
money
opportunity

The costs of self owned resources, which are employed by the

________ , are non- expenditure or , ________
firm
implicit costs .

Greater scope for the ________ sector may mean incremental

________ , which connotes the expansion of public sector
undertakings, can be left to some private companies
private
disinvestments

Where ________ is charging a ________ in the home market and a

lower price in the international market, it is called Dumping
monopolist
higher price

The number of sellers operating under this type of competition is

________ under oligopoly, but less than under ________
larger than
perfect ompetition

In the words of ________ , “inflation occurs when the ________ of

prices and cost is rising”.
Prof. Samuelson
general level

In a competitive industry, there is a large number of firms so that

the action of ________ firm has ________ on the price and output of
the whole industry.
a single
no effect

The word ________ has different meanings to businessmen,

________ , tax collectors, workers and economists and it is often
used in a loose sense that buries its real significance
Profit
accountants

The demand curve is ________ representation of a demand

schedule, demand curve slopes ________ ward from left to right.
graphical
down

The ________ that is ________ is the opportunity cost of the

commodity produced.
commodity
sacrificed

Consumers protection involves protection from ________ trade

practices for the purpose of promoting sales and making money at
the cost of the ________ and well being
unfair
consumers health
 Managerial Economics
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 Managerial Economics
ist of Attempted Questions and Answers

Managerial economics generally refers to the integration of

economic theory with business
Practice

Every nation’s resources which are used to produce the quantities

of goods and services that would be required to satisfy all its
citizen’s wants are
insufficient

Managerial economics is also understood to refer to

applied economics

The type economic problem is

Universal

The act of making goods and services is called

production

The act of using goods and services to satisfy wants is called

Consumption

The things that are produced by factors of production are called

Commodities

The concept of just distribution of national product is a

normative

Goods which are completely divisible and to them the principle of

exclusion applies in full measure are
Pure private goods

Market system of economy is characterized by consumer’s

sovereignty

Macro – economics provides an exploration to the functioning of an

economy in
general

Depreciation is the value caused by the continuous use of a capital

asset is
loss

Complementary goods are demanded

jointly
As per the law marginal product becomes negative when total
product
falls

The law of diminishing returns is applicable to agriculture provided

the state of technology is given and
constant

Under the system of dual prices adopted by the Government for

essential goods, the weaker sections of the community are supplied
those goods through fair price shops which are
fair

AVC is the per unit variable cost of

production

The indivisible goods, whose benefits cannot be priced, and

therefore, to which the principle of exclusion does not apply, are
called
Pure public goods

Gross profit is the excess of total revenue of a firm over total

expenditure

Demand forecasting is predicting for the demand of a firm’s

product in
future

In general, the demand for necessaries is relatively

inelastic

The indivisible goods whose benefits cannot be priced are called

Pure public goods

The income which a businessman might expect from the second

best alternative use of his resources is called as
opportunity cost

The government has adopted a system of dual prices in the case of

essential goods

Market economy or private enterprise economy is a economy which

is
planless

Supply curve shifts to the right side of the original supply curve
when, the supply
increases
In cost benefit analysis, in the valuation of costs and benefits, for
finding the present value, one has to make use of
discount rate

Partnership in case of general business consists of minimum two

persons and maximum
20 persons

The externalities which cannot be priced in the market with

reference to the demand and supply behavior are termed as
non - market external effects

During a period of rising prices (inflation), the goods and services

are
scarce

Slope of supply curve is

positive

The act of manufacturing goods and services is called

production

True inflation starts only after reaching the level of full

Employment

The externality in which the consumption or production levels of an

economic unit affect the other economic units in the economy is
called
technological externality

The number of sellers operating under monopolistic competition as

compare to oligopoly is
larger

All the man made resources which are used in the process of
making other goods and services are called
capital

Managerial economics aims at providing help in the firms is

decision making

Inflation is characterized by demand which is in

excess of supply

A firm is a unit of production, where production is done with the aim

to maximize
profits
In case of increase in the income, the rich person's demand for
goods will be
more

Price of a product under perfect competition is determined by the

interaction of total supply and :-
total demand

The demand curve (A.R.) of a firm under perfect competition is

perfectly elastic

According to J.M. Keynes, the equilibrium between the aggregate

demand function and the aggregate supply function can, and often
does take place at
less than full employment

A group of firms dealing in the same line of business are called as

Industry

The products sold by different sellers under pure competition are of

exactly the same quality

According to the Government, the buildup of inflationary pressure

during the Nineties was attributed to
Higher Fiscal deficit

All the free gifts of nature which are commonly called natural
resources are known to economists as
Land

An assembly of several machines, linked together either physically

or by processes capable of producing a given quantity of a product
per day is
plant

In the cost – benefit analysis, after formulating various alternative

project capacity, each of them has to be examined in terms of its
feasibility

Joint Stock Company succession is

perpetual

Over the years in India the govt. expenditure is

increasing

Change in income of a person may bring about in demand for

goods.
change

Costs which increase because of the expansion of a firm are called

costs
incremental

In economics the question related to the selection of methods with

which commodities are produced is a subject matter of
theory of production

A Joint- Stock Company is owned by its share holders but it is

managed by
Board of Directors

In addition to the consumption and investment expenditure as in

the original keynesian theory of employment, the modern
economists give due recognition to the government expenditure as
an important fa
Effective demand

In Trade cycles the economic activity are

ups and downs

Inflation is a phenomena of in which prices

rises

According J.B.Clark, profit is the reward paid for

Dynamism

Emergence of close substitutes to the commodity in question may

bring about demand to
decrease

If a person is habituated to the consumption of a commodity and if

he cannot easily give up its use, demand for it is generally
inelastic

The government of India follows administered price policy in

respect of commodities which are vital and produced in the :-
Public sector

Substantial reduction in the cost of production of a firm because of

the use of improved and up- to –date machinery is an example of
economy known as
technical

The main objective of a co- operative organization is

service

With technological advances, with the given inputs, the flow of

output
increases
In the Long run perfect competition and monopolistic competition
the firm make profits which are
normal

In case of perfectly elastic supply, the supply curve is

horizontal

Production Function implies relationship between

input & output

All firms producing the homogenous or similar products together

make
an industry

An individual does not voluntarily agree to pay the market price for
the milk. As a result market refuses to supply him the required
quantity of milk. In this example, milk is an :-
Divisible good

The number of buyers & sellers operating under perfect

competition is
large

Economic Profit takes in to account the

implicit cost

According to Prof. F.H. Knight, profit is a reward for

uncertainty bearing

The Government attempts to increase supplies of food grains and

other essential goods in times of internal shortage through larger
imports

Economists call all human resources as

labor

Economists call all human resources mental, physical , inherited

and acquired as
Labour

All the buyers and sellers operating under perfect competition have
knowledge which is
perfect

The conditions of equilibrium of a firm are applicable to all markets

None

The price of a good and the exclusion princople together is

divisibility

The liability of a sole proprietary firm is

unlimited

New commodities due to technotogical progress may result in

demand for traditional type of goods
decrease

In cost - benefit analysis, after the step of appraisal and selection of

the project is the step of
comparison of the cash flow

According to many economists, the root cause of economic problem

is
scarcity

Managerial economics aims at providing guidance to the firms for

decision making

In case of a Joint-Stock Company, the liability of share holders is

limited

For an economist, Tata Eng & Locomotive Company Ltd is a

firm

The profit which is surplus of revenue over and above all paid out
cost is
Accounting Profit

In economics, demand means desire backed by adequate

purchasing power

When more units of a commodity are purchased in response to

decline in price of that commodity, it is called as expansion of
demand

Demand for products like tea, betel, tobacoo, sigaratte is a matter

of
habit

If the substitutes are relatively cheaper then the demand for the
commodity in question will be
less

Saving is a
private virtue
In economics the questions related to the division of society’s
output of goods and services among its members are topics in
theory of distribution

In economics the questions related to the dynamic or static

( otherwise) capacity of the economy to produce goods and
services are topics in the
theory of economic growth

An industry is a group of firms dealing in the same line of

business

The demand for a commodity depends on the prices of its

substitutes which are :-
Relative

If the increase in all factors leads to a less than proportionate

increase in output, then the returns to scale are
decreasing

Under monopoly the demand curve slopes

downward

Dalal Street in Bombay is known as

Bombay Stock Exchange

The city of Banaras has specialized in the manufacture of :-

Silk

The suggestion of reasonable profit target as an alternative to the

objective of profit maximization is by
Joel Dean

Public corporations are managed by the board of directors

appointed by
Government

Peas & beas, groundnut oil & til oil, tea & coffee are examples of
substitutes goods

The supply curve during market period is

perfectly inelastic

The General Theory of Employment, Interest and Money in 1936

was published by
J.M. Keynes

According to J.M.Keynes, the equilibrium is established at the level

less than full employment
When input and output increase in the same proportion, the phase
of returns are
constant

A place where buyers & sellers meet each other to effect a

business transaction is known as
Market

Variable cost are those costs which vary with the level of
output

The crucial factor in determining the level of income and

employment, according to Keynes is
effective demand

Often monopolies purposely keep certain factors of production idle

creating artificial scarcities of their products as a result the prices
rise

In case of a pure public good, its marginal cost is

zero

The suggestion of maximization of balanced growth rate as another

alternative objective of a firm's profit is suggested by
Prof. Morris

When with a rise in price, the total outlay falls, or with a fall in
price, the total outlay rises, elasticity of demand is
>1

Under monopoly entry of new firms is

prohibited

The economists who defined the term 'market' different from that
of the traditional sense is :-
Jevons & Cournot

Under , Perfect competition, when an individual buyer increases or

reduces his demand , the total market demand
is not all affected

The principle of full employment equilibrium was stated by

Say's Law of Market

The feasibility, which includes the prospects of employment

generation, development of backward areas, social groups
comprises of
Economic feasibility

As far as its use is concerned, tuning in of a radio can be

categorized as:
Divisible

A technical unit of given capacity of output is

plant

The method of inventory valuation in which , the cost of production

is calculated on the assumption that the material which was last to
enter the inventory of the company was used first is
LIFO

Change in income of a person may result in demand for goods to

change

With decline in price of a commodity, total expenditure spent on

the commodity is less than before, then elasticity of demand for the
commodity is
<1

Economic problem does not recognize the boundaries of

caste,creed,culture Thus economic problem is always considered as
the
universal problem

If supply of goods and services can be increased to correspond with

every increase in demand, price level will tend to
be stable

Firm is an
economic unit

The city of Ahmedabad has specialized in the manufacture of

textiles

Managerial economics refers to the integration of economic theory

with business
practices

Goods produced on large scale have

relatively elastic supply

Jevons' , the economists who defined the term 'market' different

from that of the traditional sense is an
English economists

An impressive advertisement of a commodity may result in the

demand to
increase
J.M. Keynes' economic analysis come under
macro analysis

'Output' which means supply of product depends upon the

cost of production

Demand for several products like ice-cream, chocolate, bhel-puri

depends on :-
Individual tastes

Assets =
Liabilities + Proprietorship

The private sector is owned by

private individuals

Given the price, if the cost of production increases because of

higher price of raw materials, the supply
decreases

In a market economy, a firm in the private sector basically aims at

maximization of
money profits

The principle of exclusion cannot be applied to the goods, which are

indivisible

According to J.M. Keynes, there is inducement to invest, when the

marginal efficiency of capital is greater than
rate of interest

Contraction of demand is defined as a situation, when lesser

quantity of a commodity is demanded only because the price of the
commodity in question has
risen

The assumption of perfect competition in all the analytical theories

is made by
Classical economists

Depreciation is the value caused by the continuous use of a capital

asset, which indicates
loss

The Risk theory of profit was developed by

Hawley
Forecasts made either through experience or through methodigistic
are
statistical

The study of the working and allocation of resources in the free

market economies is the topic in the
theory of price

The suggestion of maximization of balanced growth rate as another

alternative objective of a firm is by
Prof. Morris

Under monopoly the demand curve slopes

Downward.

Gross profit is the excess of total revenue of a firm over total

Expenditure.

In the cost – benefit analysis, the first step involved is that the
investor has to choose a few project alternatives promising a rate
of return which is
High.

In the cost - benefit analysis, the first step involved is that the
investor has to choose a few project alternatives promising a
high rate of return

Goods produced on small scale of supply is

Inelastic

Economist’s concept of profit i.e. pure profit is a return over and

above cost is
Implicit

There is separation of ownership and management in a

Joint Stock Company

A firm gets an opportunity to produce multiple products because

changes in business activity in a firms is
cyclical

The study of the supply side of product pricing is done under the
Theory of Production

Question related to the efficient production and allocation belong to

the branch of economic theory called
Welfare Economics

The form of market in which there is monopoly of two firms is

known as
Duopoly

Incorporation of government company is

Compulsory

The Keynesian Theory is

Demand oriented

Under the imperfect market, the market in which few firms exists is
called as
Oligopoly

A responsible factor for inflation is

hike in prices

The city of Ludiana has developed a big market for

hosiery

J.M. Keynes stated that effective demand is determined by the

interaction of the aggregate supply function and
aggregate demand function

The subject matter of managerial economics covers two important

areas namely decision-making and
forward Planning

The cost recorded in the books of accounts are considered as :-

explicit costs

Under competitive conditions, market mechanism would

automatically bring equilibrium at the level of
full employment

The supply curve during market period is perfectly

inelastic

Under the monetary measures to control inflation, the R. B. I relies

heavily on selective credit controls on bank loans against food
grains, sugar, oils, oilseeds, cotton etc so as to discourage
Speculative hoarding

In equilibrium analysis of a firm, it is assumed that every individual

proprietor exhibits rational economic
behavior

The firm is the unit that makes the decisions regarding employment
of and the output of commodities are
factors of production

Prof Samuelson calls the air and water pollution or dangers from
drunken drivers as economies that are
negative

In Capitalism, the sovereign consumers express their preferences

through :-
price mechanism

Expansion of supply is shown by the movement in the supply curve

which is
upward

While calculating accounting profit, the costs which are considered

are by nature
explicit

In economics, the problem related to the selection of methods for

producing different commodities is a subject matter of the
Theory of production

The slope of Supply curve of labour is always

backward

Cournot' , the economists who defined the term 'market' different

from that of the traditional sense is an
French economists

The act of production involves

transformation of inputs into outputs

Total Revenue - (explicit costs + implicit costs), this equation is

used for calculating
Pure Profit

The public sector is owned & controlled by

state enterprises

The city of Kashmir has specialized in the manufacture of

shawls

Market mechanism is characterized by

instability

Goods which are completely divisible and to them the principle of

exclusion applies in full measure, are called
Pure public goods
The market which deals with the all the goods as a whole are
considered as
Commodity Market

The city of Surat has specialized in

diamond polishing

Car & petrol, tea & sugar, shoes & socks, sarees & blouse are
examples of
complimentary goods

Which statement is true about Pure Private goods

Principle of Exclusion applies to them

The study of , what commodities are being produced and in what

quantites I.e the study of allocation of resources is discussed under
the
Theory of price

Liability of a sole trader is

unlimited

the concept ,of Perfect competition includes all the features of

Pure competition

In case of a proprietory firm, the liability for all his debts is

unlimited

J.M. Keynes, on the basis of a fundamental psychological law of

consumption, observed that as income increases, consumption also
increases, but proportionately :-
less

One of the serious limitations of market mechanism is that it results

in distribution of income and wealth which is
unequal

Macro economics is the study of the

aggregate behavior of economy

The Risk Taking Theory was developed by Hawley, who was an

American Economist

If the substitutes are relatively costly then the demand for the
commodity in question will be
more
The profits which must be deducted from the gross profits to arrive
at net profits are :-
Monopoly Profits

The city of Kanpur has developed a big market for

leather goods

" The General Theory of Employment, Interest and Money" by Prof.J.

M. Keynes was published in
1936

The city of Coimbatore has developed a big market for

spinning

The firm is a center, where all the decisions are taken about
production

During the period of depression various factors of production are

exhausted

When a want can be satisfied by alternative similar other goods,

they are called as
substitute goods

Under perfect competition, generally demand and supply act and

react upon each other and determine the price which is in
equilibrium

According to Lionel Robbins, "Economics is a science which studies

human behavior

Suggestion of maximization of sales revenue as an alternative

objective to profit maximization is given by
Baumol

The method of calculating depreciation in which the actual working

hours of a capital asset are taken in to account is
service unit

Under perfect competition, if demand increases, supply being

constant, the price would
rise

The pioneering analysis of imperfect competition was done by Mrs.

Jaon Robinson from the :-
Cambridge University
Normally, a larger quantity is demanded at
lower price

When in order to satisfy a given want, 2 or more goods are needed

in combination, these goods are called :-
Complimentary goods

Goods produced on small scale have :-

Relatively inelastic supply

Under pure competition, the entry & exit of firms is

free

An individual consumer or particular market for a given commodity

are the subject matter of
Micro Economics

The firm is an economic unit that makes the decisions regarding

employment of
factors of production

The city of Faridabad has specialized in the manufacture of

bangles

Under Perfect competition, when an individual buyer increases or

reduces his demand, the total market demand :-
Is not at all affected

"The purpose of Managerial economics is to show how economic

analysis can be used in formulating business policies". This
definition is given by :-
Prof. Joel Dean

The use of a good by one more member of the society does not
reduce its availability to others. This applies in case of
Pure public good

Firm is an
economic unit

Pure public goods are subject to the law of decreasing average

cost, because of the
economies of scale

Joint Stock Company is an incorporated association with a

perpetual succession
The market which covers capital market & all banking and non-
banking institutions are together taken as
Financial Market

Q = f ( N, L, K, T ) , this algebraic expression is used for

Production Function

TR - (W+R+I+M), this equation is used for calculating

Accounting Profit

In the law of variable proportion, a stage is reached when marginal

product is
zero

Services need support functions to assist its operation, they are

transport, telecom, power

What is to be done to all functions of insurance such as marketing,

finance etc so that the balance is achieved in insurance?
co-ordinating

Just like planning, controlling process can achieve the objective and
goals, if it is
Continuous

Economists have pointed out that the real world is full of

Imperfect competition

When a company rasies additional finance by borrowing from the

public for a specific period of time at a particular rate of interest, it
is called as
Debentures

The observation of economic histories of the United States & West

European countries shows that competition , the heart of market
mechanism gives rise to
monopolies

The relation between variable input and ouput

is direct

A downward movement from one point to another point on the

same demand curve implies
expansion

As far as its use is concerned, the defence service can be

categorized as:
Indivisible

Every seller and a buyer under pure competition

is Price taker
Like a particular street in a city , the entire city may sometimes
specialize in the production of a particular commodity . The city
acquire the status of a
national market

In a proprietory firm the business is owned, managed and

controlled by
Proprietor

Preference share holders get a rate of dividend which is

fixed

In economics, supply is considered to be a

relative term
 Managerial Economics
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 Managerial Economics
ist of Attempted Questions and Answers

A firm under perfect competition is a price maker

False

When demand and supply rise and fall in the same proportion, the
equilibrium price changes.
False

Market means a particular area where buyers and sellers meet

False

In case of a proprietary firm the liability of the proprietor is limited

False

The subject matter of macro – economics includes the theory of

income and employment at an individual level
False

Accounting profit takes in to account opportunity cost.

False

According to Prof Knight, profit is the reward for uncertainty

bearing.
True

According to J.B. Clark, profit is the reward paid to the entrepreneur

for dynamism.
True

Given the price, if the cost of production of a commodity decreases

because of the use of improved technique of production, there will
be increase in supply.
True

The laws of returns to scale explain the behavior of output in

response to changes in scale.
True

A Joint Stock Company has perpetual succession.

True

In the measurement of profit, the differences in the concept of

profit arise due to differences in cost concepts.
True
Resources are said to be involuntarily un employed when their
wastage occur.
True

One of the most disturbing characteristics of free – market

economies is that waste of resources some times occurs
True

Under perfect competition,firms are free to enter and exit in the

market.
True

Contraction of supply is traced by the downward movement on the

supply curve
True

There are no real exceptions to the law of demand

False

There is considerable slush money with politicians & Government

servants.
True

Cyclical fluctuations are recurrent in nature

True

The externalities or economic effects, which flow from the

production or use of the goods to other parties or economic units,
are termed as 'neighborhood effects.'
True

The federal government of U.S.A. does not face the basic economic
problem.
False

A Joint Stock Company is managed by the Board of Directors

elected by shareholders.
True

Long period supply is relatively inelastic.

False

In macro – economic analysis the behavior of economic agents such

as firms, households and government is seen in total, disregarding
details at particular level.
True

During periods of inflation, the income of farmers as a class

decreases.
True
Price is the, only determinant of demand
False

The prosperity phase is characterized by rise in the level of

employment.
True

Price discrimination is possible in perfect competition

False

Economic problem is faced by poor countrys only.

False

Economic problem does not arise in case of a rich country.

False

Economic problem arises only in case of an overpopulated country.

False

Economic problem is universal in nature

True

Scarcity of resources is the root cause of economic problem.

True

The question regarding the nature and quantities of commodities to

be produced is solely restricted to capitalist economies.
False

In the Long- run, supply of goods can be adjusted to the demand

and therefore supply curve is horizontal to the X-axis.
False

J.M. Keynes presumed an economic model as a short period model

in his analysis.
True

The registration of a partnership firm is voluntary

True

Under perfect competition single seller can influence the price.

False

In the market, any one who agrees to pay the requisite price of a
product would be excluded from their consumption
False
The prosperity phase is characterized by rise in the national output
True

Inflation is a sustained and appreciable rise in prices

True

In any business, while formulating a profit policy, the possibility of

emergence of rival firms must be taken in to account.
True

Demand for luxury goods is inelastic.

False

Demand for food grains is inelastic but the demand for wheat is
elastic.
True

The law of supply is not hypothetical.

False

Average Product is calculated by dividing Total product by variable

Factor Units.
True

The railways using a lot of coal in firing the steam locomotives put
the residential and other areas near the loco – shades to a lot of
sufferings on account of smoke nuisance, is an example of pr
False

The registration of a partnership firm is voluntary.

True

In case of sole proprietorship the owner and organization are same.

True

The Joint- sector is a form of partnership between the private sector

and the government.
True

Market system or market economy suffers from time to time from

economic depressions
True

While calculating economic profit, only explicit costs are

considered.
False

The demand for life saving drugs is elastic.

False

Marginal Cost (M.C.) is the rate of change of fixed cost.

False

The short run Average Cost (A.C.) curve is U shaped.

True

The divisible goods, whose benefits can be priced, are called pure
public goods.
False

Measurement of profit becomes difficult because of the difficulty

involved in the calculation of depreciation.
True

The supply curve slopes downwards from left to right.

False

Pure private goods are completely divisible and to them the

principle of exclusion applies in full measure.
True

Macro economic studies are based on empirical evidence.

True

During the period of depression, a large part of a country’s

resources lie involuntarily idle.
True

In case of a partnership firm of business organization a minor can

become partner of the firm.
False

The meaning of the word “economic” is most closely associated

with the word unlimited
True

In case of the co-operative societies supplying cheap inputs or

supplying consumer products at fair prices, a system of subsidized
pricing is followed
True

Institution of private property is not an essential feature of

Capitalism
False

There never was in any country at any time ‘pure capitalism’ or

‘pure communism
True

A Joint stock company has perpetual succession.

True

The management of the cooperative form of business organization

is totalitarian in nature.
False

In macro – economic analysis the behavior of economic agents such

as firms, households and government is seen in total, disregarding
details at particular level
True

External economies are the advantages of large scale production

enjoyed exclusively an individual firm alone.
False

Social costs cannot be included in a firm's account book.

True

A shift in the demand curve to the left shows increase in demand.

False

To solve the unemployment problem , the level of effective demand

must decrease.
False

Market system or market economy suffers from time to time from

economic depressions.
True

Pure public goods must be in the hands of public sector only.

True

In any business, while formulating a profit policy, the possibility of

emergence of rival firms must be taken in to account
True

Demand curve slopes downwards from left to right.

True

The supply of factory made goods of daily consumption is inelastic.

False

A firm under perfect competition is a price maker.

False

The Keynesian theory emphasizes effective supply as a crucial

factor in determining the level of income and employment.
False

The government also fixes minimum procurement prices for major

crops on the recommendation of the Agricultural Prices Commission
(APC).
True

In case of a Joint Stock Company the liability of the share holders is

unlimited.
False

There is no separation of ownership and management in case of a

Joint Stock Company
False

A monopolist in a price maker.

True

If demand falls and supply is constant the equilibrium price falls.

True

During recession, on account of decline in investment by producers,

there is decline in income and consumption.
True

Under the New Industrial Policy, Public enterprises which are

chronically sick and which are unlikely to be turned were referred
to BIFR
True

Public enterprises have shown a very high rate of return of the

capital invested
False

Supply management is related to the volume ofsupply & its

distribution system.
True

In a market system of an economy procedures are guided by profit

motive.
True

Micro-economics is primarily concerned with the problem of what,

how and for whom to produce?
False

A plant is an economic unit which takes various decisions related to

production and distribution.
False

Giffen goods are superior goods.

False

In case of decrease in supply, the supply curve shifts to left side of

the original supply curve.
True

A supply schedule is a graphical presentation of supply patterns.

False

The financing of the pure public goods has to be through public

expenditure and not through market pricing.
True

In contrast to the normative concept of justice, efficiency and

inefficiency are positive concepts.
True

In the traditional concept of equilibrium, a firm attains the

equilibrium when the firm’s Total Revenue (T.R.) =Total Cost (T.C.).
False

When a firm’s average revenue (A.R) is less than its average cost, it
earns only normal profit.
False

During the period of recession there is increase in incomes of wage

and interest earners.
False

In a market system of economy, there is no harmony between

individual interests and interests of the community.
False

Institution of private property is not an essential feature of

Capitalism.
False

Inflation reduces the purchasing power of people's income and

savings.
True

In a free-enterprise economy, the problems of what how and for

whom are solved by a planning committee
False
Profit should be large enough for a plough – back for business
expansion.
True

The sum of total fixed costs and total variable costs is the total
cost.
True

Market price fluctuates very often.

True

Macro-economies is a policy oriented science.

True

When price of a commodity falls, the supply of that commodity

increases.
False

Inflation is characterized by excess of demand.

True

The most significant feature of perfect competition is the existence

of an automatic price mechanism.
True

Under the liberalization policy, Government added another list of

nine industries for which automatic approval upto 74 % would be
allowed
True

Changes in the value of money because of inflation make inventory

valuation of finished products difficult.
True

When a change in income has no effect upon the quantity

demanded of a product, the income elasticity of demand is zero
True

Demand and desire are one and the same.

False

In a market economy, characterized by Capitalism, there is full

interference by the State in the economic activities of consumers
and producers.
False

In experimental price approach the firms takes some cognizance of

the demand for the product and proceeds to fix a price by a trial –
and – error method.
True

Pure (Net) profit contains an element of monopoly profit.

False

In market period supply is elastic.

False

The distinction between fixed costs and variable costs is relevant in

the short period only.
True

A monopolist’s product is a unique product.

True

The congress government led by Narsimha Rao announced the New

Industrial Policy in July 1991.
True

Micro-economics theory studies how a free enterprise economy

determines the price of goods and services.
False

Demand forecasts are of no use to a firm, for long term investment

decision.
False

Public corporations are created by special acts of the parliament.

True

Any point on the production possibility curve indicates under

utilization of resources
False

The concept of selling costs is relevant under perfect competition.

False

The wage and salary earners who get fixed income in terms of
money are benefited during inflation.
False

In the contraction of price index number, selection of the base year

needs to be done with utmost care.
True

The law of variable proportion means the same thing as the laws of
returns to scale.
False
J.M. Keynes presumed an economic model as a short period model
in his analysis
True

Supply management is related to the volume of supply & its

distribution system.
True

To solve the unemployment problem, the level of effective demand

must decrease.
False

Inflation is a great opportunity for merchants to earn more profit.

True

Under the disinvestment process, there is full transfer of ownership.

True

In India, the first phase of economic reforms is believed to have

begun in 1985 when Vishwanath Pratap Singh was the Prime
Minister of the country.
False

The Defence services are indivisible in the sense that they cannot
be priced in the market in order to deprive some members of the
society from its use or benefits.
True

Inflation reduces the purchasing power of money and savings.

True

The price policy under monopolistic competition is dependent on

the prices charged by other rival firms
True

Private profit motive is an essential feature of Capitalism

True

‘Free riders’ is a term associated with the people who would like to
have benefit of a good without sharing the cost of its supply
True

Inflation is a great opportunity for merchants to benefit more.

True

The various phases of business cycles are shown by the line of

cycle which moves up and down the steady growth line
True
In the measurement of profit, the differences in the concept of
profit arise out of the differences in cost concepts
True

The opportunity cost of a product is the opportunity gained of being

able to produce some other product.
False

The supply curve in case of unitary elastic supply is rectangular

hyperbola.
False

During the phase of depression, the level of national income and

expenditure rises rapidly
False

In the stage I of the law of diminishing returns, the marginal

product goes on increasing
True

During the period of depression, demand for bank credit reaches its
low level and banks experience mounting of their cash balances.
True

The subject matter of macro – economics includes the theory of

income and employment at an individual level.
False

During the phase of depression, the level of national income and

expenditure rises rapidly.
False

Poverty is the root cause of Economic problem.

False

Under perfect competition, price is determined by the interaction of

total demand and total supply in the market.
False

While Disinvestments process, Government retains 50% of the

equity with itself & transfers 49% to private sectors
False

A fall in quantity demanded without a fall in price shows decrease

in demand.
True

In case of a proprietary firm the liability of the proprietor is limited.

False

It is easy to estimate the amount of black money

False

Bargaining is one of the remedies of corrective action.

False

The defence services are indivisible in the sense that they cannot
be priced in the market in order to deprive some members of the
society from its use or benefits.
True

A monopolist can decide both price and the quantity of a product

that he is going produce and sell in the market.
True

Consumer’s protection involves protection to the consumers from

unfair trade practices.
True

The products sold by different sellers under pure competition are

heterogeneous.
False

There never was in any country at any time 'pure capitalism' or

'pure communism.'
True

Pure inflation starts only after reaching the full employment level.
True

The demand curve has a negative slope.

True

The rise in prices is basically because of shortages of basic goods &

services and a rapid growth of money supply.
True

Saving is a private virtue

True

The externalities that may be an economic gain or economic losses

to other economic units are referred to as technological
externalities.
False

Under perfect competition there are large number of buyers and

few sellers.
False
The partners are joint owners of the property a partnership firm.
True

Demand is related to price, time and place.

True

The concept of economic profit differs from that of normal profit.

False

In case of a partnership firm, the liability of a partner is limited

False

Generally, the larger the income of a consumer, his demand for

overall commodities tends to be relatively elastic.
False

A firm is a technical unit of a given capacity of output.

False

Public enterprises have shown a very high rate of return of the

capital invested.
False

In market, period supply is elastic.

False

The damage being done by the factories at and around Agra to Taj
Mahal is an example of social cost for private benefit.
True

Capitalism emphasis more on turnover rather than creating profits

False

In case of indivisible goods, which are not priced, the decisions

regarding their demand preferences are taken through price
mechanism.
False

As per the New Industrial Policy of 1991, the government had

decided to provide approval for direct foreign investment up to 41%
of foreign equity in order to invite foreign investment in high
priority industries requiring large investment and advanced
technology.
False

Accounting profit takes into account opportunity cost.

False
In Disinvestment process, Government retains 50% of the equity
with itself & transfers 49% to private sectors.
False

During inflation, the pensioners whose income is permanently

fixed, are substantially benefited.
False

During period of depression various factors of production lie

unutilized.
True

Public enterprises may incur some social costs which private

enterprise may not bear.
True

Price effect is the result of in reality substitution

True

Under the disinvestments process, there is full transfer of

ownership
True

Demand curve slopes upwards from left to right.

False

The three more items which the Government of India had decided
to dereserve from the list of 18 industries in April 1993 were motor
cars, white goods and raw hides and skins and patented leather.
TRUE

Under the New Industrial Policy, inorder to invite foreign investment

in high priority industries, it was decided to provide approval for
direct foreign investment upto 51 %equity in such industries
TRUE

Micro-economic theory studies how a free enterprise economy

determines the price of economic resources
False
 Managerial Economics
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 Managerial Economics
ist of Attempted Questions and Answers

An Industry
Is a group of firms , All firms dealing in the same line of business ,
The ownership and management of each firm is different

Dumping
It is possible in the case of Monopoly Market , Selling same good at
higher price in home market and lower at price in the international
market , It is encourage with a view to promote the exports

Advantages of Cost-Benefit Analysis

It aims at maximization of social welfare , In following this principle,
the problem of infinite target value does not arise , It shows the
measures necessary for attaining maximum net wealth

Effective Demand
Determine the level of income and output in an economy , Is total
expenditure is equal to total income in an economy , Study of
aggregate demand and aggregate supply

Different types of business organizations are;

Private sector. , Public sector. , Joint sector.

Distinction between private sector and public sector is determined

On the basis of economic system , On the basis of motive , On the
basis of principle of pricing

Methods of Demand forecasting for new Products are:

Product life Cycle Analysis , Test Marketing , Evolutionary Approach

Index numbers may broadly be classified as:

Price indices , Quantity Indices , Special purpose indices

The causes of inflation are :-

Increase in public expenditure , Increase in private expenditure ,
Increase in foreign demand

We say that a nation faces economic problems , under following

conditions
Man has unlimited wants or ends , The means or resources to
satisfy them are limited , These resources are not specific but have
alternative uses

The main criterion of indivisibility of a good is that the good

should be equally available to all the members of society. ,
financing of the good is through public expenditure. , the principle
of exclusion does not apply.

Reasons for change in Demand (Increase or Decrease in Demand)

Change income of consumer , Change in population , Change in
fashion and customs

Features of Market are

Place where buyers and sellers meet each other , A building where
a number of shops dealing in a particular commodity exist , A place
where transaction of goods and services is undertaken

At the level of the society, the macro economic objectives are

economic stabilization , employment generation , poverty reduction

Major types of costs are

Accounting costs , Economic costs , Opportunity costs

Forms of Public Enterprises

Departmental management, Company Management or
management by boards, Public Corporations

The characteristics of Inflation are

Excess of demand , Sustained rise in prices , Cannot be anticipated

Features of an Industry are

All firms dealing in the same line of business , The ownership and
management of each firm is different , Is a group of firms

Individual Demand Schedule

Is in tabular form , It shows the prices of goods , It shows the
quantities of a commodity purchased

Implicit costs are

Cost on self owned resources , Costs of salary of the proprietor ,
Interest on the entrepreneur's own investment

Characteristics of the phase of Depression are

Decrease in economic activities , The growth rate becomes
negative , The level of national income declines rapidly

The market system of economy is based on the following

foundations:
Consumer's Sovereignty , Non-interference by the state. , Private
Profit Motive

Features of Long –run market are

It is durable goods market , Supply can be increased or reduced
according to the demand , Sellers at least recover minimum price
for their goods

The features of business or trade cycle are

It is a wave like movement , These fluctuations are recurrent in
nature , Expansion and contraction in trade cycle are cumulative in
effect

Features of monopolistic Competition are

Fairly large number of firms , Product differentiation , Selling costs
are existed

Assumptions underlying the law of Supply are :-

The cost of production is unchanged , No change in technique of
production , Government policies are unchanged

The factors of production are

Labour , Land , Capital

According to Keynes there are three motives for holding cash for
liquidity preference
the transactions motive , the precautionary motive , the speculative
motive

The enterprenuer gets Pure Profit for

undertaking risk & uncertainity , for co-ordination & organizing
production , for innovation

Quantitative credit control measures are

Open market operations , Changes in bank rates , Changes in
statutory reserve ratio

The firm may be defined as

an independently administered business unit , centre where the
decisions about what to produce how to produce are taken , a
business unit, which hires resources for production

Assumptions of group equilibrium under Monopolistic Competition

are
Competing firms are selling more or less the same product , The
share of every firm in the total sales is equal , All firms are working
with same efficiency

In short run period

Supply of goods can be adjusted to the demand to some extent ,
Some factors can be changed , Supply and demand determine the
price

An Industry
Is a group of firms , All firms dealing in the same line of business ,
The ownership and management of each firm is different
Effective Demand
Determine the level of income and output in an economy , Is total
expenditure is equal to total income in an economy , Study of
aggregate demand and aggregate supply

Characteristics of Depression
Decrease in economic activities , The growth rate becomes
negative , The level of national income declines rapidly

Causes for rise in prices in India

Mounting government expenditure , Deficit financing and increase
in money supply , Role of black money

The firm may be defined as:

An independently administered business unit. , A center of where
the decisions about what to produce how to produce are taken , A
business unit, which hires resources for production.

Exceptions to the Law of Demand are

Giffen Goods , Articles of snob Appeal , Speculation

Explicit costs are:

Out of pocket costs , Expenditure costs , These are firms
accounting expenses

Long –run market

It is durable goods market , Supply can be increased or reduced
according to the demand , Sellers at least recover minimum price
for their goods

Conditions of Price Discrimination are:

The two markets in which the product is sold should be kept
separate , The elasticity of demand in different markets should be
different , Market must be imperfect

Under cost plus pricing :-

The price is set to cover Material, labour cost , Actual costs,
standard costs are included , Certain percentage of profit also
included

Defects of market system

Inequalities of Income and wealth , Emergence of monopolies ,
Failure to provide full employment

Features of public sector enterprises

It is controlled by the state. , Separate funds to undertake their
activity. , They are accountable to public.
Demand curve of an individual for a commodity X is based on the
following assumptions
Elasticity of demand for good X , Price of good X , Income of the
consumer

Different types of Elasticity of Demand are:

Price elasticity of demand , Income elasticity of Demand , Cross
Elasticity of Demand

Forecasts can be made at the level of

A firm , An Industry , The Nation

Diseconomies of small -Scale Production includes:

High average cost of production in initial stages , Workers in the
factory take some time to adjust with new techniques of
production. , In the initial stages production is on small scale

Determinants of supply:
Is always referred to in relation to price and time , The ability of a
seller to supply a commodity , The seller willingness to supply a
commodity

Features of Pure Competition are

Large number of buyers and sellers , Homogeneous products , Free
entry and free exit of firms

Methods of measurement of elasticity are

Percentage method , Point elasticity method , Total outlay
expenditure method

The subject matter of Micro economics includes the study of

an individual consumer , particular market for a given commodity ,
operation of a firm

Phases of business cycle

Expansion , Peak , Recession

The production function can be explained by

Law of variable proportions , Laws of returns to scale , Optimum
combinations of inputs

The total output of all the commodities in one country over some
period, usually taken as a year is called as
Gross National Product , National Product , National Income

Scope of Managerial Economics deals with

Demand analysis and forecasting , Production function & cost
analysis , Inventory management adverting, price system
Characteristics of the phase of Recession are
Investments decline , Negative multiplier gets underway ,
Inventories pile up

Price discrimination is possible in case of

public utilities with legal sanction , personnel services sold ,
geographical barriers

Equilibrium is
The stage of maximum satisfaction , The stage of balance , The
stage of stationary

The conditions of equilibrium for a firm are :-

Marginal Revenue should be equal to Marginal Cost , The Marginal
cost curve should cut the marginal revenue curve from below at the
equilibrium point , Marginal cost curve should be increasing at
equilibrium point

Aggregate supply function

Refers to that price at which the seller is willing to supply , Refers
to show the varying level of supply at different prices , Explains the
level of out put varies with the level of employment

Recession includes
The demand is halted , Increase in production of goods , Inventories
piling up in stocks

Reasons for need of public distribution system

To maintain stable price conditions , An efficient management of
the supply , To supply the necessary goods to people at reasonable
price

The consumer protection Act includes

Protection from hazardous commodities , Right to a competitive
price , Right to information regarding protection

Assumptions of the Law of Demand are :-

No change in consumer’s income , No change in consumer’s
preferences , No change in fashion

Types of income elasticity of demand

Negative income elasticity , Zero income elasticity , Unit income
elasticity

Steps in cost benefit analysis are :-

Identification of a project , Formulation of the project , Appraisal
and selection of the project

The advantage of cost-benefit analysis are

Maximization of social welfare , Objective measurement of the
trade-off , Maximization of difference between total benefits & total
costs

Preference Shares can be classified as

Simple Shares , Cumulative Shares , Redeemable Shares

The promoters of a company can get incorporated by filing with the

registrarof companies various documents such as
Memorandum of Association , Articles of Association , Prospectus

Cost function denotes

The prices of such inputs as labour and capital material , The rate
of output , The size of the plant

Features of Oligopoly Market are :-

Few sellers , Restriction to entry of new firms , Price leadership

The characteristics of a sole proprietorship firm is

Unlimited Capital , Ownership by a single person , Easy to form

Different types of business organizations are

private sector , public sector , joint sector

The payments made out of the Gross Profit are

Remuneration to factors of production , Depreciation , Maintenance
Charges

reasonable profit' are

Capital Attraction , Plough Back , Normal earnings

Features of the firm are :-

It is a business unit organized under one ownership , It is a sole
proprietorship , It is a partnership or joint stock company

Equilibrium is the stage of

maximum satisfaction , balance , stationary

Government intervention is needed in free market mechanism to

To provide employment to all who willing to work at prevailing
wage rate , Factors of production are optimally allocated between
the various industries , All will get sufficient income to meet their
basic needs

Cost-Benefit Analysis is
The analysis undertaken to judge the investment of any project ,
Refers to finding out the worth of investment , Enable ranking of
optional investments

Characteristics of Pure Public goods are:

They are completely indivisible , Their marginal cost would be zero
or close to zero , Their benefits cannot be priced

Types of Share capital of Joint-Stock Company are

registered or authorized capital , issued capital , paid-up capital

According to Keynes, Effective Demand :-

Determines the level of income and output in an economy , Is total
expenditure equal to total income in an economy , Is the Study of
aggregate demand and aggregate supply

Features of stage of expansion in business cycle are

Rise in national output , Rise in consumer and capital expenditure ,
Bank advances grow rapidly

The fiscal policy includes

Formation of taxation policy , It is an instrument for economic
stabilization , Monitoring of public expenditure

The meaning of monetary policy is :-

It is programmed of the central bank , It controls the total supply of
money , The basic objective is to achieve economic stability

The disinvestments of industries is needed for

Phased privatization , Reducing deficit , Capital support to plans

Important theories of profits are

Risk taking theory , Uncertainty-bearing theory of profit , Dynamic
theory of profit

Important theories of profits are

Uncertainty-bearing theory of profit , Dynamic theory of profit , Life
cycle theory

Every nation, poor or rich small or great has to face basic economic
problem that is
what commodities to produce and in what quantities? , by what
methods are the commodities produced? , Is purchasing power of
money & savings constant or is it being eroded because of
inflation?

Economist's concept of profit is

Pure Profit , Economic Profit , Just Profit

Demand is determined by
Price of the product , Relative prices of other goods , Tastes and
habits

Demand Curve
Is a graphical presentation , Slopes downward , Explain the relation
between price and demand

Increasing Returns explains

Total product increases at an increasing rate , Marginal product
increasing and it is maximum , Average product is increasing but it
is below MP

Marginal cost pricing explains that the

Price charged should be equal to the marginal cost , Cost price sets
the lower limits for firm’s price , Cost price ensures the possible
level of profitability

Reasons for need of public distribution system are

To maintain stable price conditions , To bring an efficient
management of the supply , To supply the necessary goods to
people at reasonable price

Gross Profit includes

remuneration for the factors of production paid by the entrepreneur
, depreciation and maintenance charges , net profit

The Laws of Returns to scale are

Law of Increasing Returns to Scale , Law of Constant Returns to
Scale , Law of Decreasing Returns to scale

Types of imperfect competition are

Monopoly , Duopoly , Oligopoly

In case of defense services, all the sections of the society are

equally protected and benefited. The defense services in other
words is in character , cannot be priced in the market , a public
indivisible
good

The sole proprietorship type of organization is found in

Agriculture, , Retail trade, , Hotel,

Co-operative organizations is
voluntary organization , managed by democratic principle ,
organization, which performs its business within the members

Profit is regarded as
income accruing to the equity holders , wages accrue to the
labour , rent accrue to the owner

Macro Economics is the study of

The aggregate behavior of the economy , The behavior of economic
agents , Problems such as the rates of inflation, the balance of
payments, etc

16. The phase of recovery denotes

More employment opportunities , Increase in profitability , Wage
rate increase

Investment is significant because

Addition to the real capital assets , It leads to increase in level of
income , Increases accumulated wealth of the society

Features of public sector enterprises are as follows :-

it is controlled by the state , separate funds to undertake their
activity , they are accountable to public

The features of a partnership firm are

Joint Ownership , No Remuneration to the partners , Unlimited
liability

The methods of calculating depreciation is

Diminishing Balance Method , Annuity Method , Service Unit Method

In the Dynamic Theory of Profit, Prof. Clark has pointed out the
types of changes, which are
Changes in the supply of capital , Changes in population , Changes
in the techniques of production

Accounting profit includes:

Wages, Rent, Interest

Types of income elasticity of demand

Negative income elasticity, Zero income elasticity, Unit income
elasticity

Market is
Place where buyers and sellers meet each other, A building where a
number of shops deal in a particular commodity, A place where
transaction of goods and services is undertaken.

Marginal cost pricing explains

Price charged should be equal to the marginal cost , It sets the
lower limits for firm’s price , It ensures the possible level of
profitability

Profit is regarded as:

Income accruing to equity holders, Wages accrue to labour, Rent
accrue to the owner

A competitive industry has three basic characteristics, they are;

Large number of firms, Homogeneous product, Freedom or entry &
exit.

Recession includes
The demand is halted, Inc. in production of goods, Inventories piling
up in stocks.
The basic economic problems that are faced by various types of
Economies.
What commodities are being produced? By what methods are these
commodities produced? How is society’s output of goods and
services divided among its members?

Long – run market

It is durable goods market, Supply can be increased or reduced
according to the demand, Sellers at least recover minimum price
for their goods.

Features of monopolistic Competition

Fairly Large numbers of firms, Product differentiation, Selling costs
are existed.

Features of public sector enterprises

It is controlled by the state, Separate funds to undertake their
activity, They are accountable to public.

Joint-Stock company is
A voluntary organization, Managed by Elected Board of Directors, A
common seal.

The sources of economic problems are:

Man has unlimited wants or ends, The means or resources to satisfy
them are limited; These resources are not specific but have
alternative uses.

Defects of market system

Inequalities of Income and wealth, Emergence of monopolies,
Failure to provide full employment.

The consumer protection Act includes

Protection from hazardous commodities, Right to a competitive
price, Right to information regarding protection

Demand forecasts are necessary for

Fulfillment of objective of the plans, Preparation of a budget,
Expansion of firms

Consumption function refers to

income consumption relationship, representation as c=f(y),
functional relationship between two aggregates

Preference Shares can be classified as

Simple Shares, Cumulative Shares, Redeemable Shares

The important determinants of supply are

Always referred to in relation to price & time, Govt policy,
Availability of factors of prod.
Marginal Propensity to consume is characterized as follows :-
It is defined as the ratio of the change in consumption to the
change in income, It is rate of change in the average propensity to
consume as income changes, It is derived by the formula mpc =
change in c/change in y

Methods of forecasting demand for new products are

Product life cycle analysis, Test marketing, Evolutionary approach

Marshall has classified the period of time into three heads

Short run, Long run, Market period

Various kinds of economic policies are

Industrial licensing policy, Commercial policy, Fiscal policy

Economist's concept of profit is

Pure Profit, Economic Profit, Just Profit

The production function can be studied in three ways or explained

by
Law of variable proportion, Laws of return to scale, Optimum
combination of inputs

The Laws of Returns to scale are

Law of Increasing Returns to Scale, Law of Constant Returns to
Scale, Law of Decreasing Returns to scale

The main criterion of indivisibility of a good is that the good

Should be equally available to all the members of society, financing
of the good are through public expenditure, the principle of
exclusion does not apply.

Different types of Elasticity of Demand are

Price elasticity of demand, Income elasticity of demand, Cross
elasticity of demand

Features of Dumping are

It is possible in the case of monopoly market , Selling same good at
higher price in home market and lower at price in international
market , It is encouraged with a view to promote the exports

Baumol has pointed out three main contributions of economic

theory.
EconomicThey are offers clarity to various concepts used in the
theory
business anlayses , Economic theory contributes in building
anlyatical model to rocognize managerial problems , Economic
theory contributes to ,'a set of analytical methods' which enhance
the analytical capabilities of business analyasis

Average propensity to consume

It is defined as the ratio of consumption expenditure to any
particular level of income , It is found by dividing consumption
expenditure by income , It is expressed as the percentage of
income consumed

Inflation means
It is a phenomenon of rising prices , It is a general and dynamic
phenomenon , It includes an excess of demand

The meaning of monetary policy

It is programme of the central bank , It controls the total supply of
money , The basic objective is to achieve economic stability

Managerial economics deals with

Integration of economic theory with business practice , Using logic
of economics, mathematics & statistics. , The use of economic
modes of thought to analyze business solution.

The sources of economic problems are:

Man has unlimited wants or ends , The means or resources to
satisfy them are limited. , These resources are not specific but have
alternative uses.

Different types of business organizations are;

Private sector. , Public sector. , Joint sector.

Proprietary firm is
Owned by a single person. , Easy to form. , An organization of
single person.

Marginal Propensity to consume

It is defined as the ratio of the change in consumption to the
change in income , It is rate of change in the average propensity to
consume as income changes , It is derived by the formula mpc=
change in C/change in Y

Investment
It adds to capital equipments , It leads to increase in level of
income , It includes new plant and equipment

Specific organizational goals of Firms are:

Maximisation of profit , Reasonable Profit Target , Sales revenue
Maximization

The production function studies :-

Input and out put relation , Factors of production and final
production , Technology used in production

The economic stabilization means

Preventing excessive economic fluctuations , Efficient utilization of
labor and other factors of production , Encouraging free competitive
enterprise
The effective solution to the problem of internationalizing of
externality involves
Government action , Private action providing correctives ,
Externality taxes

Objectives of economic policy are

To increase the efficiency and international competitiveness of
industrial production , To improve the performance and rationalize
the scope of the public sector , To reform and modernize the
financial sector

The production function can be studied in three ways

Law of variable proportion , Laws to return to scale , Optimum
combination of inputs

Keynes’s theory of employment explains

Effective demand , Aggregate supply , Aggregate demand

Features of market period are

Related to few hours or few days , Related to perishable goods ,
The entire supply is to be disposed off on the same day

Diseconomies of small scale production includes

High average cost of production in initial stages , Workers in the
factory take some time to adjust with new techniques of production
, Wastage of raw material & power

Internal Economies involves

Advantages of large-scale production , Low cost of production , It
avails benefits of cheaper finance

In case of defense services, all the sections of the society are

equally protected and benefited. The defense services in other
words
a is good , indivisible in character , cannot be priced in the
public
market

The term externalities may also be referred as:

Spill-over effects , Neighborhood effects , Third party effects

The examples of negative externalities are

nuclear power plants , gargantuan trucks , unsafe factories

According to Keynes, Aggregate supply function refers to

the minimum price of revenue which the entrepreneurs must get ,
Associated with different levels of employment , Explains that the
level of out put varies with the level of employment

Factors influencing selling costs are

Type of product , Introduction of new goods , Technology changes
The railways use a lot of coal in firing the steam locomotives. This
act causes
a lot of sufferings to the people near the railway. , cost to the
society. , no cost to the railways.

Effective Demand covers

Consumption outlay for the households , Investment outlay in the
private sector , Government’s spending for consumption as well as
investment

Various binds of economic policies are

Industrial liscencing policy , Commercial policy , Fiscal policy

According to Lionel Robbins definition of economics, "Economics is

a science which
studies human behaviour , relationship between ends and scarse
resources , scarce means have alternate uses

Consumption function refers to

income consumption relationship , representation as c=f(y) ,
functional relationship between two aggregates

Profit is regarded as
income accruing to the equity holders , wages accrue to the
labour , rent accrue to the owner

Types of income elasticity of demand

Negative income elasticity , Zero income elasticity , Unit income
elasticity

Implicit costs are

Cost on self owned resources , Costs of salary of the proprietor ,
Interest on the entrepreneur's own investment

Features of short run period are

Supply of goods can be adjusted to the demand to some extent ,
Supply and demand determine the price , Some factors can be
changed

Main aims of the New Industrial Policy (1991) are :-

To unshackle the Indian industrial economy from the cobwebs of
unnecessary bureaucratic control , To introduce liberalization with a
view to integrate the Indian economy with the world economy , To
remove restrictions on direct foreign investment as also to free the
domestic entrepreneur from the restriction of MRTP act

Distinction between private sector and public sector is determined

on the basis of :-
Economic system , Motive , Principle of pricing
Specific organizational goals of Firms are
maximization of profit , reasonable profit target , sales revenue
maximization

The cost-benefit analysis is useful to achieve the following :-

Maximization of social welfare , Objective measurement of the
trade-off , Maximization of difference between total benefits & total
costs

The features of a Joint Stock-Company are

perpetual succession , limited liability , free transferability of shares

Average propensity to consume is characterized as follows

the ratio of consumption expenditure to any particular level of
income , It is found by dividing consumption expenditure by income
, It is expressed as the percentage of income consumed

Features of Perfect Competition

Large number of buyers and sellers , Homogeneous products , Free
Entry and Free exit of firms

When is price discrimination possible

In Monopoly Market , In case of Services sold , In case of
geographical barriers

The factors coming under philosophy of scientific management are:

Co-operation , Maximum output , Harmony

Break-Even analysis is derived by

Fixed cost , Average variable cost , Quantity of goods and price
 Managerial Economics
List of Attempted Questions and Answers

 Match The Following

  Question  
Free riders
1
Market economy
Negative externalities
Pure public goods
 Match The Following
  Question  
A fall in the price of a commodity
A income demand curve for an inferior
2
commodity slopes
An exceptional demand curve is one that
slopes
In case of Giffen goods like bajra a fall in
price tends to
 Match The Following
  Question  
Prosperity
3 Statutory reserve ratio
The general theory of employment, Interest
and money
Trade cycle
 Match The Following
  Question  
Equilibrium price is the price where the
4
Excess demand can be defined as
Excess supply can be defined as
Tea and sugar
 Match The Following
  Question  
Commodities
5
Human wants
Managerial economics
Resources
 Match The Following
  Question  
General theory of employment, interest and
6 money
Inflation
Methods of production of commodities
Services
 Match The Following
  Question  
Demand curve under oligopoly is
7
7
Going rate pricing
Marginal cost pricing
Perfect competition
 Match The Following
  Question  
According to J. M. Keynes, there are two
8 factors determining the investment function,
Rise in costs due to an increase in factor
prices
The point of effective demand is the point
when
Trade Cycle
 Match The Following
  Question  
Joint – sector enterprises
9
Satisfying behavior
State enterprises
The Homeostatic theory
 Match The Following
  Question  
Contraction of Demand
10
Decrease in Demand
Extension of demand
Increase in demand
 Match The Following
  Question  
Implicit costs are the cost
Opportunity costs are also known as
11
The difference between average cost and
average revenue is
The difference between average total cost
&average fixed cost shows
 Match The Following
  Question  
N.G.O.S
12
Preference shares
Public enterprises
Sole proprietorship
 Match The Following
  Question  
Authorized capital refers to
13 Issued capital refers to that part public of the
authorized capital
Paid – up capital is that part of the
subscribed capital
Subscribed Capital is
 Match The Following
  Question  
Firm
14
Partnership
14

Proprietary firms
Railways
 Match The Following
  Question  
Cost benefit analysis
15
Macro economic policy
Unemployment, inflation
Unplanned shocks & disturbances
 Match The Following
  Question  
A monopolist gets
16 In oligopoly market, price
The price policy of a public enterprise should
be such as
Under monopolistic competition,
 Match The Following
  Question  
Authorized capital refers to
17 Issued capital refers to that part public of the
authorized capital
Paid – up capital is that part of the
subscribed capital
Subscribed Capital is
 Match The Following
  Question  
Defence service
18
Economic effects of public goods are
Production possibility frontier
Selection or implementation
 Match The Following
  Question  
Diamond
19
Index number
Rigid demand
Variation in demand
 Match The Following
  Question  
Excess capacity
Public enterprises may incur some social
20
costs
The buyers and sellers may be away from
each other and
Under perfect competition, it is assumed that
the
 Match The Following
  Question  
Accounting profit
21 Economic profit
Reduction in demand due to a new substitute
in market
21

Risk taking theory

 Match The Following
  Question  
Benefits of widespread public health
22
Consumer's sovereignty
Emergence of slums
Pure public good
 Match The Following
  Question  
Monopolistic competition
23
Monopoly
Selling cost curve
Selling costs
 Match The Following
  Question  
Equilibrium price
24
Long run
Market period
Perfect competition
 Match The Following
  Question  
A rightwards shift in supply schedule
indicates
Any straight line supply curve which cuts y
25
axis will have
Normally the isoquant slopes
The market period supply curve for
perishable commodities is
 Match The Following
  Question  
Competitive Industry
26
Monopoly Firm
Plant
Public Sector
 Match The Following
  Question  
Inflation
27
P.D.S.
R.B.I.
Railway freight rates
 Match The Following
  Question  
In contrast to J. M. Keynes,
28
J. M. Keynes believed in the
Keynesian analysis takes
The speculative motive
 Match The Following
  Question  
29
 Danger from drunken drivers
29
Impure public goods
Pure private goods
Self -interest
 Match The Following
  Question  
Administered prices
30
Non-price competition
Prestige price
Pricing in cooperative societies
 Match The Following
  Question  
MC is given by
31
Average total unit cost curve means
Each short run average cost curve
Marginal cost curve
 Match The Following
  Question  
Dual prices
32 Inflation
P.D.S.
R.B.I.
The consumers’ Protection Act 1986
 Match The Following
  Question  
Cross demand is the change in the quantity
demanded of a given commodity in response
to the
33 Incase there were no changes in the quantity
of food sold even when its price had fallen
we would know that
The elasticity of demand for product will be
higher
The law of demand indicates
The law of demand states
 Match The Following
  Question  
Commodities
General Theory of Employment, Interest and
34
Money
Human wants
Managerial economics
Resources
 Match The Following
  Question  
Economic problem
35 Inflation
Managerial Economics
Resource allocation decisions in free market
economy
Waste of resources
  Match The Following
  Question  
Index number
36 Perfectly Elastic Demand
Rigid demand
Unchanged total outlay
Variation in demand
 Match The Following
  Question  
A demand curve, which takes the form of a
horizontal line parallelto the quantity axis
illustrates elasticity
37 Cross elasticity of demand between two
perfect substitute will be
Income consumption curve
Inelastic demand curve
Normal demand curve
 Match The Following
  Question  
Aggregate Demand Function
38 Effective Demand
Keynesian theory
Statutory Reserve Ratio
Trade cycle
 Match The Following
  Question  
Economic problem
39 Elasticity of demand
Managerial Economics
Natural Resources
Resource allocation
 Match The Following
  Question  
Managerial Economics aims at
Managerial economics generally refers to
40
Managerial Economics is
Managerial economics lies on
managerial economics which explain various
concepts
 Match The Following
  Question  
Choice is fundamental to Economic behavior
because
If there were no scarcity by Economic goods
41
and services it would mean that
Micro-economics deals Primarily with
Society faces economic problems
The fundamental economic problem being
faced
 Match The Following

42
   Question  
Indian Railways
42 Long Run
Losses
Market period
Super normal profit
 Match The Following
  Question  
What is consumption?
43 What is meant by a consumer?
What is meant by a producer?
What is meant by the term commodities?
What is production?
 Match The Following
  Question  
At the saturation point for a commodity x the
Mux is
44 Marginal utilities are
Marginal utility
Total utility increases marginal
Total utility is
 Match The Following
  Question  
Division of society’s output of goods and
services
45 Managerial Economics
Motor cars
Resources
Wants
 Match The Following
  Question  
Excess supply can be defined as
If demand remain unchanged on increase in
supply will result in
46
Market Price is a situation which
The responsiveness of demand to change in
price is measured
Unit income elasticity implies that asincome
rises demand for a commodity rises
 Match The Following
  Question  
In oligopoly market, price
Monopsony is the monopoly
47 Public utilities such as railway or cooking gas
supply companies
The price policy of a public enterprise should
be such as
Under monopolistic competition
 Managerial Economics
ist of Attempted Questions and Answers

  Correct Answer  
Principle of exclusion and benefit of good to all without sharing cost
Freely fluctuating price mechanism
Social costs
Indivisible goods

  Correct Answer  
a rise in consumers real income.

upwards to right

upwards to right.

reduce the demand

  Correct Answer  
Expansion of credit
Quantitative credit control measure

J.M. Keynes

Wave like movement

  Correct Answer  
quantity demanded equals quantity supplied
quantity demanded minus quantity supplied
quantity supplied minus quantity demanded.
Complimentary goods

  Correct Answer  
Goods and services
Unlimited
Decision making and forward planning
Scarce

  Correct Answer  
J. M. Keynes
Reduction in purchasing power
Theory of production
Intangible goods

  Correct Answer  
kinky
emphasizes the market conditions
helps the firm to become more aggressive in the market
perfectly elastic Average Revenue curve

  Correct Answer  

namely i) the M.E.C. and ii) the rate of interest.

a cause of inflation from supply side.

A.D. = A.S.
Recession

  Correct Answer  
Hindustan Machine Tools
Cyert R.M. and J.G. March
Public welfare
Prof. Kenneth Boulding

  Correct Answer  
Upward movement on the demand curve
Leftward shift of the demand curve
Downward movement on the demand curve
Upward shift of the demand curve

  Correct Answer  
of resources owned by the firm.
alternative costs

average profit

variable cost

  Correct Answer  
Voluntary social work
Fixed rate of dividend
State control
Unlimited liability

  Correct Answer  
the maximum amount which can be raised by a company by selling
shares.
which is issued for subscription by dividing into shares.
which the public directly pay – up to the company, as part payment
of the
that share
part of the issued capital which is actually subscribed by the
public.

  Correct Answer  
Economic unit
Unlimited liability
Ownership by a single person
State enterprise

  Correct Answer  
Maximization of net wealth
Government
Economic evils
Free enterprise system

  Correct Answer  
Abnormal profit.
Tends to be rigid at the kink on the demand curve.
To enable it to operate at the lowest cost possible and maximize
efficiency.
Expenditure is incurred by the firms on cross transportation.

  Correct Answer  
The maximum amount which can be raised by a company by selling
shares.
Which is issued for subscription by dividing into shares.
Which the public directly pay – up to the company, as part payment
of thepart
That share
of the issued capital which is actually subscribed by the
public.

  Correct Answer  
Indivisible
Spill over effect
Maximization of output
Step of cost benefit analysis

  Correct Answer  
Snob Appeal
Statistical device
E.D. = 0
Changes in quantity demanded

  Correct Answer  
monopolistic competition
which private enterprise may not bear at all.
yet they may constitute a market over telephone or through
internet
cost of transportation does not exist

  Correct Answer  
Explicit costs
Pure profit

Uncertainity
Hawley

  Correct Answer  
Market economy
Market economy
Social cost
Economies of scale

  Correct Answer  
Prof. Edward Chamberlin
Price discrimination
U shaped
Monopolistic competition

  Correct Answer  
Demand and supply
Non perishable goods
Perishable goods
Automatic price mechanism

  Correct Answer  
an increase in supply.

zero elasticity of supply.

upward from right to left.

perfectly inelastic.

  Correct Answer  
Homogenous Product
One Firm
Technical Unit
Life Insurance Corporation

  Correct Answer  
Deficit financing
Essential commodities
General and selective credit control measures
Administered prices

  Correct Answer  
the modern economists define effective demand as C + I + G + (X-
M).
short run philosophy of life.
a general view of the economic system as a whole.
Liquidity preference

  Correct Answer  
Negative economies
Quasi - public goods
Divisible goods
Market economy

  Correct Answer  
public sector undertaking.
advertisement.
high price on account of prestige considerations.
state government.

  Correct Answer  
The slope of the TVC curve or slope of the TC curve.
The cost of producing one unit.
Has to touch the long run cost curve.
Has the shape of an inverted U.

  Correct Answer  
Two different prices
Deficit financing
Essential commodities
General and selective credit control measures
Right to information

  Correct Answer  

Change in the price of anothercommodity

Demand was entirely inelastic

The more available are substitutes for that product

Relationship between the price of a commodity and the quantity
Demanded
When price falls demand rises

  Correct Answer  
goods and services
J. M. Keynes
unlimited
Decision making and forward planning
scarce

  Correct Answer  
Universal
Reduction in purchasing power
Applied branch of knowledge
Theory of price
Involuntary unemployment
  Correct Answer  
Statistical device
E.D. =infinity
E.D. = 0
E.D. = 1
Changes in quantity demanded

  Correct Answer  

Infinity.

Infinity

Upwards to the right

Vertical straight line
Downwards to right

  Correct Answer  
Maximum sale proceeds expected by entrepreneurs
J. M. Keynes
Short – Period Analysis
Quantitative credit Control Measure
Wave – like movement

  Correct Answer  
Scarcity
Micro Economics
inventory management
Land
optimum combination of inputs

  Correct Answer  
providing help in decision making by firms.
the integration of economic theory with business practice.
applied branch of knowledge
the borderline of management and economics
While economics provides the tools applies these tools to the
management of business.

  Correct Answer  
Resources are scarce in relation to peoples wants
There would be no wants unsatisfied at least no left economic
wants
comparative static equilibrium and positive economics partial
Peoples wants are unlimited
multiplicity of wants of scarcity of resources
  Correct Answer  
Monopoly
Horizontal supply curve
A.C.> A.R
Perishable goods
A.R.> A.C.

  Correct Answer  
The act of using goods and services to satisfy wants.
Anyone who consumes goods and services to satisfy his or her
wants.
Anyone who helps to produce goods or services
The goods and services that are produced by factors of production.
The act of making goods and services.

  Correct Answer  
Zero
Demand curve of a commodity
Addition to total utility
Posative and declining
Marginal utility is zero

  Correct Answer  
The theory of distribution
Prescriptive in nature
Tangible goods
Alternative uses
Insatiable

  Correct Answer  
Quantity supplied minus quantity demanded

A rise in equilibrium quantity

The supply is perfectly elastic

Elasticity of demand

In the same proportion

  Correct Answer  
tends to be rigid at the kink on the demand curve
from buyer’s side

are allowed under the law to make price discrimination

to enable it to operate at the lowest cost possible and maximise

efficiency
expenditure is incurred by the firms on cross transportation