DEPARTMENT OF BUSINESS ADMINISTRATION

GOMAL UNIVERSITY, D. I. KHAN

MID TERM EXAMINATION
Total marks:

30

Time Allowed: 2 hours

Name: ________________________
OBJECTIVE PORTION:

Roll No.____________

Please encircle each correct answer. Overwriting will be

treated as wrong answer. Each objective carries equal marks.

1.

Law of demand indicates___________________ relationship between

price and quantity demanded

2.

Which one of the following is not a factor of production?

a) Land b) Capital c) Labor d) Currency notes

3.

The basic economic problem is :

a) Market forces b) Government intervention
c) A mixture of government intervention and the free market
d) availability of scarce resources.

4.

Which best describes a demand curve?

a) The quantity consumers would like to buy in an ideal world
b) The quantity consumers are willing to sell
c) The quantity consumers are willing and able to buy at each and
every income all other things unchanged
d) The quantity consumers are willing and able to buy at each and
every price all other things unchanged

5.

At mid point of demand curve, price elasticity of demand will be:

a) More elastic b) Perfect inelastic
d) Unitary elastic

c) Perfect elastic

6.

An increase in price, all other things unchanged leads to decrease demand

indicates:
a) Shift demand outwards b) Shift demand inwards
c) A contraction of demand d) An extension of demand

7.

Marginal revenue means price per unit.

8.

For normal good, income elasticity of demand is _______________.

9.
10.

True

False

Law of supply shows _____________ relation between ______________ and

quantity supplied.
Under perfect competition, MR is always less than AR.

True

False

Question No. 2
a.
b.
c.
d.
e.

Briefly explain the following

Define MR and AR.
Define Homogeneous commodity.
Define Substitute goods.
Define supply
Define monopoly.

Question No. 3. Define law of demand. Explain why demand curve has negative
slope.
Question No. 4. With the help of proper schedule and graph show the
relationship between MR and AR under perfect competition.