1. 1. What Is Managerial Economics?

Economics is a social science, which studies human behavior in

relation to optimizing allocation of available resources to achieve the
given ends.

The application of economic science is all pervasive. More specifically

economic laws and tools of economic analysis are applied a great deal
in the progress of business decision making. This has led to the
emergence of a separate branch of study called Managerial Economics.

Managerial Economics is the study of economics theories, logic and

tools of economic analysis that are used in the process of business
decision making. Economic theory and technique of economic analysis
are applied to analyse business problems, evaluate business options
and opportunities with a view to arriving at appropriate business
decision. Managerial economic is thus constituted as that part of
economic knowledge, logic, theories and analytical tools that are used
for rational business decision making .

2. 2. What Is Managerial Economics? What Is Its Relevance To

Engineers/managers?
Study of economic theories, logic and methodology for solving the
practical problems of business. It is used to analyze business problems
for rational business decisions. It is also called as Business Economics
or Economics for firms.
Relevance to engineers/Managers:
Engineering and Management involves a lot of strategic decision
making situations. Managerial economics helps in rational decision
making. The various economic concepts help a manger to take right
decisions. The scope of managerial economics is:

 The selection of the production or the service to be

produced.
 The choice of production methods and resource
combinations.
 The choice of best price and quantity combinations.
 Promotional strategy and activities.
 The selection of location from which to produce.
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3. 3. What Are The Basic Economical Concepts?
The basic/fundamental economic concepts are:
  Incremental concept
 Discounting concept
 Time perspective
 Opportunity cost
 Equimarginal concept.
4. 4. What Is Micro And Macro Economics?
The study of economics is divided into two parts.

 Micro Economics
 Macro Economics
Micro economics:
 The word micro means a millionth part. Microeconomics is
the study of the small part or component of the whole
economy that we are analyzing. For example we may be
studying an individual firm or in any particular industry. In
Microeconomics we study of the price of the particular
product or particular factor of the production.
  theory studies the behavior of individual decision-making
units such as consumers, recourse owners and business
firms.
Macro Economics
 Macro economics is the study of behavior of the economy
as a whole. It examines the overall level of nations out put,
employment, price and foreign trade.
 Macroeconomics is concerned with aggregate and average
of entire economy.
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5. 5. What Are The Differences Between Micro Economics And
Macro Economics?
MICRO ECONOMICS
 Micro economics is the study of small part of component of
the whole economy.
 Micro economics is called the price theory. It’s explained its
composition, or allocation of total production why more of
something is produced than of others.
 In Micro study about individual consumer behavior or
individuals firm or what happens in any particular
industry.
 If it be an analysis of price, we study about the price of a
particular producer or of a particular factor of production.
 If it is demand we analysis demand of an individual or that
of an industry.
 Here we study the income of an individual.
 MACRO ECONOMICS
 Macro economics is the study and analysis of economic
system as a whole.
 Macro economics is called income theory. It explains the
level of total production and why the level rises and fall.
 In Macro we study how the aggregates and the averages of
the economy as whole is determined and what causes
fluctuation in them.
 In macro we study the general price level in country.
 In macro we study the aggregate demand of the entire
country.
 Here we study the national income of the country.
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6. 6. State Law Of Demand ?
law of demand basically says when the price of a certain product goes
up,quantity demanded of that product goes down. when price goes
down, quantity demanded goes up.

7. 7. What Does Perfect Competition Mean?

Perfect competition is basically an economic model that helps to
describe a hypothetical market form. In this form the producer or the
consumer does have any kind of market authority in order to make
changes in prices.

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Business Management Interview Questions
8. 8. What Is A Demand Forecast?
A demand forecast is the prediction of what will happen to your
company’s existing product sales. It would be best to determine the
demand forecast using a multi-functional approach. The inputs from
sales and marketing, finance, and production should be considered.
The final demand forecast is the consensus of all participating
managers. You may also want to put up a Sales and Operations
Planning group composed of representatives from the different
departments that will be tasked to prepare the demand forecast.

9. 9. What Is Equilibrium Of The Firm And Industry ?

According to Miller, “Firm is an organisation that buys and hires
resources and sells goods and services”. Lipsey has defined as “firm is
the unit that employs factors of production to produce commodities
that it sells to other firms, to households, or to the government.”
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10.10. Explain Factors Influencing Managerial Decision ?
Critical managerial decision making is the key to superior performance
at work. One has to refer to critical Data, past records and performance
metrics and analysis before making decisions. 

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11. 11. How Will You Arrive At A Business Decision? What Is A
Business Environment?
Managerial Decisions/ Decision Analysis is the Process of selecting the
best out of alternative opportunities, open to the firm.
To arrive at a business decision, the four main phases are:

1. Determine and define the objective.

2. Collection of information regarding economic, social,
political and technological environment and foreseeing the
necessity and occasion for decision.
3. Inventing, developing and analyzing possible courses of
action.
4. Selecting a particular course of action from the available
alternatives.
Business environment
comprises of the economic, social, political and technological
environment.
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12. 12. What Are Firms?
Firm is an organization owned by one or jointly by a few or many
people, engaged in a productive activity, with a definite aim.

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13. 13. What Are The Factors Of Production?
There are three types of factor of production.

1. Land.
2. Labor
3. Capital.
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14. 14. What Are The Main Techniques Of Demand Estimation?
Demand estimation
is predicting future demand form a product. The information
regarding future demand is essential for planning and scheduling
production, purchase of raw materials, acquision of finance and
 advertising.
The various techniques of demand estimation: 
1. Survey Method
2. Statistical Method.
15. 15. What Is The Significance Of Foreign Exchange Rate Risk
And How Can This Risk Be Mitigated?
Foreign exchange risk is also known as hedging. Those people who are
risk averse follow this kind of transaction to save firm from unexpected
loses. Since exchange rate can change in either way i.e. it can
depreciate or appreciate, company can gain at the same time but to
mitigate loses they engage into forward contracts.

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16. 16. What Is Pricing Of Factors Of Production?
Whenever we have touched on the pricing of productive factors, we
have signified the prices of their unit services, i.e., their rents. In order
to set aside consideration of the pricing of the factors as “wholes,” as
embodiments of a series of future unit services, we have been assuming
that no businessmen purchase factors (whether land, labor, or capital
goods) outright, but only unit services of these factors. This
assumption will be continued for the time being. Later on, we shall
drop this restrictive assumption and consider the pricing of “whole
factors.”

17. 17. What Are The Types Of Market Economies?

There are 4 main types of market economies. They are also known as
Economic Systems. They are

 Free Market,
 Mixed Market,
 Command and
 Traditional Economy.
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18.18. What Is The Importance Of Microeconomics In Study Of
Managerial Economics?
It’s a economics for decision making where we have to be very optimize
and implement those situation which will be helpful in profit
maximization in our business effectively and efficiently.

Since the microeconomics explains the concepts like demand,

production, supply analysis, so that it maximizes the profit.
Corporate Governance and Business Ethics Interview Questions
19. 19. What Is The Difference Between Project Proposal And
Project Feasibility Study?
Project feasibility study is required to make a decision whether the
project proposal is technically and economically feasible. After
finalization of the project feasibility report by the experts (technical &
economical), the decision for going ahead for preparation of Detailed
Project Report (DPR) for the project proposal.

20. 20. Why Does An Indifference Curve Never Meet?

No indifference curve can intersect because all points on indifference
curve are ranked equally preferred and ranked either or less more
preferred than every other point on the curve.

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21. 21. What Is Full Employment Gdp?
The market value of all final goods and services produced at full
employment. There is no more resources to be deployed. At this stage
if there is further expansion of output, then it will lead to inflation.

22. 22. What Is The Importance Of Strategic Management

Towards The Success Of A Business?
Strategic management used to play a different after the Second World
War. Strategic plans of the past usually range 3 to 5 years. Some
companies could even have plans for 10 good years. That is not
possible today given rapid evolution of our society.

23.23. What Are The Functions Of Price Mechanism In A Free

Market Economy?
Price Mechanism
 Price mechanism is the point, which equilibrates supply
and demand within a market. It is a mechanism of pricing.
The price mechanism is one, which allows the prices of
goods and services to be decided by the interplay between
supply and demand. There is no centralized price fixing.
 The price mechanism is the concept that the free market,
when left to its own devices, will formulate fair prices of the
goods or services on its own by the natural laws of supply
and demand.
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24. 24. What Is Social Cost Benefit Analysis?
  It refers to the study of feasibility of a project in terms of its
total economic cost and total economic benefits.
 it means to compare total cost will total benefit if we add
external cost with private cost, it’s called total social cost if
we add external benefit with private benefit, called total
social benefit.
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25.25. What Is Collateral Management?
Collateral Management is a function to manage collateral effectively. It
provides interface to enter collateral data, and it has a master data of
collateral descriptions and types. It maintains customer, collateral, and
credit account relationships so the amount of idle collateral can be
determined. It is usually packaged in an application or part of the core-
banking application.

26. 26. How Do Tax Cuts Affect The Economy?

Tax cuts improve the economy by giving the people more spending
power and higher consumer confidence, which leads to them spending
more of all of their income which leads to more jobs, more business
investment in more efficient technologies, and ultimately higher GDP
growth.

27.27. What Is Meant By The Term National Debt?

When a government spends more than it receives in taxes, it runs a
budget deficit, which is usually covered by issuing debt obligations to
domestic and/or international investors. In the US, these obligations
are Treasury bills, Treasury notes, and Treasury bonds. The total
outstanding amount of such obligations constitutes a National Debt.

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28. 28. What Is Pps?
Packets per second (pps) are a measure of throughput for network
devices such as bridges, routers, and switches. It is a reliable
measurement only if all packet sizes are the same. Vendors will often
rate their equipment based on pps, but make sure comparisons are
made using the same packet sizes.

29. 29. What Is Universal Banking?

It generally refers to the combination of commercial banking and
investment banking. It is a supermarket for both wholesaler and
retailer financial services as it offers a wide range of financial services.
 30. 30. What Are The Advantage Of Capitalism?
The advantage of capitalism is that the governments have limited
control over other business.

31. 31. What Does Macroeconomics Mean?

The study of the overall aspects and workings of a national economy is
such as income, output, and the interrelationship among diverse
economic sectors. It is the study of all aspects of the economy. It is
different from microeconomics, which studies how individual entities
(such as people, families, or even corporations) fit in the economy.

32.32. How Does Outsourcing Affect The Economy?

In principle, outsourcing makes things a little cheaper and increase
profitability. However, some things need to be done ‘in house’. For
example, some employers (largely) outsource recruitment to key posts.
The people making the decisions may be good at picking bright people,
but they often do not really know what is needed by the employer. In
Britain, it often said that corporations ‘hire people who are good at
getting jobs but bad at doing them’. To the extent that this is true, it is
damaging for all concerned.

33.33. How Do You Explain Gni Per Capita?

A measure of the wealth is earned by nations through economic
activates all around the world.
Gross National Income comprises the total value of goods and services
produced within a country (i.e. its Gross Domestic Product), together
with its income received from other countries (notably interest and
dividends), and less similar payments made to other countries. It is
also known as GNP.
It can be calculated as follows:

GNI = Gross Domestic Product + Net property income from abroad.

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34. 34. What Is The Difference Between Service Industry And
Industry In Economy?
Industry is a generic term, but is most commonly used as a substitute
term for a manufacturer of goods such as Pepsi or Ford. The term
industry can also be used to refer to a very specific group of companies.

The service industry is essentially non-good producing industries such

as retail trade, wholesale trade, and the service industries. According to
the U.S. Census Bureau, these companies make up 70% of the total
 economic activity in the United States. Good examples of the service
industry include health care, hospitality & accommodations, and real
estate. The financial and insurance sectors would also be included
within the service industry.

35.35. What Is Profitability Analysis?

This is an analysis of costs and revenue to determine whether a venture
will make a profit. This is important information in deciding on
whether to make an investment. The length of time required to repay
the initial investment can be a critical factor.

36. 36. What Is A Tariff?

A tariff is nothing but the tax on goods leaving or entering some place.

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37.37. What Is Bop?
It is called as Balance of payments – an economic term. (BOP)
measures the payments that flow between any individual country and
all other countries. It is used to summarize all international economic
transactions for that country during a specific time, usually a year. The
BOP is determined by the country’s exports and imports of goods,
services, and financial capital, as well as financial transfers. It reflects
all payments and liabilities to foreigners (debits) and all payments and
obligations received from foreigners (credits).

38. 38. What Is The Incidence Of Tax?

tax incidence refers to who actually pays the tax.

Tax incidence can be divided into:

1. Formal incidence
:
the party liable to the tax.
2. Informal incidence:
party, who actually pays the tax.
The tax incidence is decided by the elasticity of demand and supply for
a good or service.

39. 39. Which Is A Better Measure Of Economic Well-being

Real Gdp Or Nominal Gdp?
 Well real GDP takes into account the inflation rate and thus is more
accurate at recording the actual increase in production activities.
Therefore, Real GDP is better.

40. 40. What Is The Difference Between An Economic Luxury

And An Economic Necessity?
An economic luxury is wasting land on pools huge garden, etc. An
economic necessity is what you need a certain amount of space
(houses) to make something very necessary (to live in).

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41. 41. How To Find The Marginal Cost Of A Product?
In economics and finance, marginal cost is the change in total cost that
arises when the quantity produced changes by one unit. That is, it is
the cost of producing one more unit of a good. Mathematically, the
marginal cost (MC) function is expressed as the first (order) derivative
of the total cost (TC) function with respect to quantity (Q).

42. 42. What Is The Marginal Cost Of Capital?

Marginal or incremental cost of capital is cost of the additional capital
raised in a given period.

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43. 43. What Is Consumer Demand?
Consumer Demand is how much of something that consumers are
wanting. A company needs to know the consumer demand so they
know how much of a product to make.

44. 44. What Are The Advantages Of Free Market Economy?

There are many advantages to a free market economy. They range from
the moral issues to the practical issues. We will deal mainly with the
practical ones.

Unprecedented innovation
– Free markets are wrought with inventions and the capital to research
them. Countries classified as having a free market have been
responsible for the vast majority of inventions since the 19th century.
Very high-income mobility
– This means that under a free market system it is easier to move
around income brackets. It is just easier to become rich or poor when
you are left to your own devices as opposed to a controlled economy
where resources are allocated by the government.
45.45. What Is A Retention Bonus?
A Retention bonus is an incentive paid to a key employee to retain
them through a critical business cycle. This could be a transitional
period (such as mergers and acquisitions) to ensure productivity or to
meet a critical milestone. It has proven to be a very good tool in
persuading employees to stay.

46. 46. What Is Ramsay Pricing?

It assigns costs based on the price elasticity of demand. At higher the
elasticity (elastic), the lower the charge of fixed costs when allocated
amongst products.

47.47. How Do Reductions In Government Spending Affect The

Economy?
Generally the government is very good at wasting money and resources
so less spending, by the government helps the economy as those
resources are allocated in areas that are more efficient.

48. 48. What Perfect Competitive Market And Pure Monopoly

Market Have In Common?
A perfect competitive market and pure monopoly market both have to
follow the “law of demand”.

49. 49. How Do You Define A Control In Economics?

A control in economics means a steady profit rate that is increasing.

50. 50. What Is Price Level?

The price level refers to the monetary value of a good or service.

51. 51. What Are Financial Centers?

Banks and brokerage firms are considered financial centers.

52.52. What Is Explanatory Research?

Explanatory research is research conducted in order to explain any
behavior in the market. It could be done through using questionnaires,
group discussions, interviews, random sampling, etc.

53.53. What Is The Advantage Of Mixed Economy System?

Advantages are
:
1. People can make their own decisions.
 2. The government has limited control, which is good for
structure.
3. Provides freedoms such as Enterprise, ownership, Social
Welfare, Profit Earnings, Political Freedom.
4. All national resources are utilized under mixed economy.
5. It will activate the government support and direction.
54.54. What Is An Opportunity Cost?
Opportunity cost is cost of an alternative that must be forgone in order
to pursue a certain action. Put another way, the benefits you could
have received by taking an alternative action. Concept of opportunity
cost is central to economics because it reminds us that every day we
each have choices to make and for each choice, that we make there is a
second best option that we forego {that we pass up}.

55.55. What Is An Oligopoly?

Oligopoly is a market where the supply is controlled by a small group
of companies. In this condition, the actions of one company will have a
material effect on the entire market for a product.

Several characteristics of an Oligopoly:

1. Substantial barriers to entry.

2. Market dominated by a few large firms.
3. Differentiated products.
4. Price rigidity.
56.56. What Is Privatization?
Privatization is the transfer of ownership from the public sector
(government) to the private sector (business).

57.57. Why Do Prices Tend To Up?

Prices tend to move up mainly due to increase in the supply of money,
demand and cost of production.

58. 58. What Is Meaning Of Market Economy?

The meaning of a market economy is in which the decision and
production are made. The consumption of goods services are based on
voluntary exchange in markets.
[PDF Notes] What do you mean by the term Monopoly?
The term monopoly means a single seller. In economics, this term refers to a firm the
product of which has no close substitute in the market. It is, in that sense, a single-
firm industry. Moreover, irrespective of the profit income of the existing producer
firm, new firms cannot enter the industry. Hurdles to their entry may be on account
of various reasons. There may be legal barriers, or the producer may own a
technology or a naturally occurring substance which others cannot avail of. It is also
possible that the size of the market may be too small and no new firm may find it
economically worthwhile to enter it.

In the absence of a substitute product, the monopolist is free to fix a price of his
choice. He can refuse to sell his product for a price below the one decided by him.

However, he cannot determine the demand for his product. He cannot force the
buyers to buy his product at a price of his choice. A buyer will buy it only if its price
does not exceed its marginal utility to him. Therefore, if the monopolist wants to
increase his sales, he has to reduce the price of his product so as to induce

 Existing buyers to buy more and

 New buyers to enter the market.
Therefore, the demand conditions for his product are not the ones, which are
associated with a firm under competitive conditions. Instead, the demand conditions
faced by him are similar to the ones, which are faced by the industry as a whole. In
other words, the monopolist faces a negatively sloped demand curve for his product.
In the long run, the demand curve can shift both in its slope and location. However,
there is no theoretical basis for determining the direction and extent of this shift.

As regards his cost of production, it may be assumed that the monopolist faces a
given technology. Moreover, the monopolist faces conditions similar to those faced
by a single firm under competitive conditions. He is not the sole buyer of the inputs
used by his firm but only in the entire market. He has no control over the prices of
the inputs used by him.

[PDF Notes] Here is your Paragraph on Monopoly

The word ‘Monopoly’ has been derived from the two Greek words ‘Monos’ and
‘Polus’. ‘Monos’ means single and ‘Polus’ means seller. Hence, monopoly means
single seller. The extreme form of imperfect competition is monopoly. The
monopolist is the sole producer or seller of the products. The product he produces or
sells has no close substitutes. Monopoly also implies exclusive control. In monopoly,
the firm and industry are identical. Even the remote substitutes of his product are
not available. A single producer or seller controls the market. He is the firm and he
also constitutes the industry. Thus under monopoly, the distinction between the firm
and industry disappears. In monopoly, there is no need to differentiate products.
The monopolist has wide latitude of choice in his price policy. He controls the supply
and can fix the price. Monopoly is that market situation in which a firm has the sole
right over production or sale of the product. He has no competitor over production
or sale of the product in the market. He can adopt any price he likes. He can charge
uniform price or different prices to different consumers. He is a price marker.
Monopoly is the antithesis of competition. The ultimate aim of the monopolist is to
maximise profits. In the words of Triffin, “Pure monopoly is that where the cross
elasticity of demand for the monopolist’s product is zero.” According to A.J. Braff,
“The monopolist is a price maker.” According to Watson, “A monopolist is the only
producer of a product that has no close substitutes.” The basic features of monopoly
are: 1. there is a single seller with numerous buyers, 2. there are no close substitutes
for the product of the monopolist, 3. there are strong barriers, artificial or natural,
economic or institutional to the entry of other firms into the industry.

[PDF Notes] 5 essential characteristics of Monopoly

1. Large number of firms:
The number of firms under monopolistic competition is very large. But the size of
each firm is very small. The number of buyers is also large. The implication of large
number of firms is that each firm produces or sells an insignificant portion of the
total output. Hence, it cannot influence the market price by its individual action.
Individual firm has not to bother about the reactions of the rival firms. It can follow
an independent price and output policy.

2. Product differentiation:
Under monopolistic competition, each firm produces a differentiated product.
Products are close substitutes but not perfect substitutes. Products are alike but not
equal. For example, Close-up toothpaste is slightly different from Pepsodent
toothpaste. Similarly, lux soap is slightly different from Cinthol soap. Monopolistic
competition is found in case of toothpaste, toothbrush, toilet soap, washing shop,
detergent power, shoes etc. here one product is different from another in the opinion
of a consumer. The differences may be real or imaginary but it creates attachment.
Product differentiation can be done by two ways. First, differentiating the quality of
the product and second, by sales technique. Product differentiation protects market
for the individual firms. Under monopolistic competition, consumers prefer one
product to another. Here sellers can create demand for their products by skillfully
displaying their salesmanship. Effective advertising techniques, attractive
showrooms, home delivery system and credit facility, promptness of service and
good behavior of the seller are some example of sales promotion.

3. Free entry and exit:

Firms under monopolistic competition are free to join and leave the industry. They
produce close substitutes. Each firm is a monopolist regarding its own product. They
command a meager amount of resources. Hence, in the event of losses they may
easily quit the market. A firm has no control over other firms. There is open
competition in the market. Firms may come and go away when they like.

4. Lack of perfect knowledge of the market:

There are innumerable products in the market. Each product is a close substitute of
the other. As a result, buyers do not know about the products, their qualities and
prices. Similarly, a seller does not know the exact preference of the buyers.

5. Advertisement Cost:
Under monopolistic competition, there are many firms. Products of their firms are
not identical but slightly different. Each firm wants to sell larger amount of its own
product. So it tries to establish superiority of its own product. Therefore, it makes
advertisement. Expenditure on advertisement is known as the selling cost.

[PDF Notes] What do you mean by the term demand

Analysis ?
Analysis of the determination of prices of goods and services in the market is an
indispensable part of the subject matter of economic theory. When an economy is
guided by market mechanism, prices are determined by interaction between demand
and supply forces, that is, they are the result of an interaction between decisions
taken by buyers and sellers.

This is so at all levels of prices, right from the price of an individual good to where all
prices are considered simultaneously. To analyze the determination of all prices
simultaneously is obviously a very complex task and can be handled only in stages.
Therefore, we begin with a small part of the problem and extend the findings, in
stages, to the economy as a whole. It goes without saying that, at each stage, both
demand and supply sides have to be studied and analyzed.

In this task, we begin with the question of determination of price of a single good or
service (the terms good or service will be used interchangeably by us). Decisions
relating to its supply are taken by the body of its suppliers comprising all the ‘firms’
of an ‘industry’. As is obvious, their decisions vary with the market structure and
other circumstances. Similarly, decisions relating to its demand are taken by the
body of its buyers. Their decisions are also influenced by the market structure and
several other relevant considerations.

While analyzing the demand side, we assume that the good service in question is
consumption good. We start with the factors, which determine the decision-making
of a typical consumer, and extend the conclusions to the market and the economy as
a whole. Therefore, as a first step, various relevant questions are asked and their
answers used to determine the demand behavior of a typical individual consumer.
These findings are then extended to arrive at the ‘market demand’ for the good, that
is, the demand by all the potential consumers taken together. Finally, the
determination of price of an individual good is analyzed by incorporating its supply
side that is the decision-making behavior of its suppliers.

Demand for a good by a consumer is not the same thing as his desire to buy it. A
desire becomes a demand only when it is ‘effective’ which means that, given the price
of the good, the consumer should be both willing and able to pay for the quantity,
which he wants to buy.

[PDF Notes] What are the main reasons for price

discrimination in monopolist market?
Three main reasons for price discrimination are as follows:

(a) The monopolist is aware of consumer ignorance for the cost of product due to
lack of knowledge and communication of proper information.

(b) In rendering professional services or personal services discriminating price can

be charged by a monopolist from different customers. A doctor specialist having
monopoly in his professional specialization can charge higher fee from rich and
lesser fee from poor clients. Such discrimination is possible when the service
rendered or commodities cannot be resold.

(c) Price discrimination may be practiced under the circumstances when cost
difference might exist due to distance between one market or another, lower price in
poorer market and higher prices in sophisticated market could be charged. Such
price discrimination occurs when firm’s different markets are separated by distance
or by national frontiers; cheaper commodity in one market may not be resold at
dearer markets because of excessive cost of transportation.

[PDF Notes] Main market forms and equilibrium price

under perfect competition
Market is the characteristic phenomenon of economic life. Price is a powerful
regulator. Market in Economics refers to a group of buyers and sellers in sufficiently
close contact with one another that exchange takes place among them. Market refers
to a commodity.

The main forms of market are perfect market, monopoly, monopolistic competition
and oligopoly.

The classification of market is based on the number of buyers and sellers of the
commodity, the nature of the commodity produced by the sellers whether
homogeneous or heterogeneous, degree of freedom in the movement of goods and
factors of production state of knowledge on the part of both buyers and sellers, the
size, differences in time, existence of substitutes of the goods produced and the
condition of entry etc. a perfect market is featured by large number of buyers and
sellers, homogeneous good, single price, free entry and exit, perfect mobility of
factors of production, perfect knowledge and nil transport cost.

The difference between pure competition and perfect competition is only one of
degree and not of kind. Under perfect competition, sellers and buyers are price
takers. Perfect competition is a myth. The demand curve facing on individual seller
is horizontal in shape.

Monopoly is the opposite of perfect competition. Monopoly means single seller.

There are no closer substitutes for the product the monopolist sells. Besides, there
are strong barriers, economic or institutional, legal or artificial that prevents entry of
other firms. The monopolist is a price maker. Under monopolistic competition
characteristics, both of perfect competition and monopoly are found. The number of
sellers is large. Products are heterogeneous. Price of the products is not uniform.
Producers influence consumers through advertisement. Under oligopoly, there are
few sellers. It is multiple monopoly or incomplete or imperfect monopoly. It is a
form of imperfect competition. It is featured by interdependence among sellers,
differential or perfectly identical products, group behavior, advertising or selling cost
and indeterminate demand curve. Oligopoly may be pure or differentiated. It is of
the greatest importance in the present century.

There has been a controversy regarding the price – determination of a good.

According to old economists like Smith, Ricardo and Mill, cost of production
(Supply) determines the price of a good. According to the Austrian economists like
Manger, Wiser, Bohme Bawerk and Jevons, marginal utility (demand) determines
the ‘price’. But each group has taken the one sided view of the pricing problem.

Dr. Marshall has synthesized both the views. According to Dr. Marshall, the price of
a good is determined by both demand and supply just like two blades of a pair of
scissors to cut a piece of paper. Both demand and supply are equally important.

The equilibrium price brings about a balance between demand and supply. If
demand conditions or supply conditions change, then the equilibrium price and
equilibrium quantity also change. Demand condition change due to various factors
like change in income, taste, preference of the consumers etc. it is the change in the
demand function. Supply conditions change due to the change in the price of labor.
Raw materials, machinery etc. This is the change in the supply function.
[PDF Notes] Difference between perfect competition and
pure competition
Sometimes, economists distinguish between pure competition and perfect
competition.

Pure competition is said to exist in a market where (a) there is a large number of
buyers and sellers (b) products are homogeneous and (c) there is freedom of entry
and exit of buyers and sellers. The implication of these conditions taken as a whole is
that no individual seller is in a position to influence the price in the market. In
perfect competition, all the three features of pure competition exist. Besides these,
perfect competition has more features. These are (d) perfect knowledge of the buyers
and sellers regarding the market conditions (e) perfect mobility of factors of
production (f) absence of transport cost and (g) uniform price.

Thus, perfect competition is not only pure but also free from other imperfection. It is
a broader concept than pure competition. The essential feature of pure competition
is the absence of any monopoly element.

In the words of Chamberlin, pure competition means “Competition unalloyed with

monopoly elements” whereas perfect competition involves “perfection in many other
respects than the absence of monopoly.” It is possible to come across pure
competition in real life but not perfect competition.

The American economists attach great importance to pure competition whereas the
English economists emphasize perfect competition. The difference between the two
is one of degree and not of kind.

The demand curve facing a firm under pure and perfect competition is a horizontal
straight line. It is due to their characteristics. Under perfect competition, there is
large number of buyers and sellers. The products are homogeneous.

There is freedom of entry and exist of buyers and sellers. Factors of production are
freely mobile. The transport cost is nil. There is no place for advertisement. Single
price prevails in the market. Buyers and sellers are price takers. Sellers are output
adjusters. Each seller and each buyer faces a price that is determined by the market
forces, which are beyond his control.

[PDF Notes] 10 essential Features of Perfect Competition

A perfect market is one where there is perfect competition. This is a model market. It
implies absence of rivalry.
According to Boulding, “the competitive market may be defend as a large number of
buyers and sellers all engaged in the purchase and sale of identically similar
commodity, who are in close contact with one another and who buy and sell freely
among themselves”.

Features of Perfect Competition

1. Large number:
In perfect competition, there must be large number of buyers and sellers. Each buyer
buys a small quantity of the total amount. Each seller is so large that no single buyer
or seller can influence the price and affect the market. According to Scitovsky buyers
and sellers are price takers in the purely competitive market. Each seller (or firm)
sells its products at the price determined by the market. Similarly, each buyer buys
the commodity at the price determined by the market.

2. Homogeneous product:
Under perfect competition, the product offered for sale by all the seller must be
identical in every respect. The goods offered for sale are perfect substitutes of one
another. Buyers have no special preference for the product of a particular seller. No
seller can raise the price above the prevailing price or lower the price below the
prevailing price.

3. Free entry and exit:

Under perfect competition, there will be no restriction on the entry and exit of both
buyers and sellers. If the existing sellers start making abnormal profits, new sellers
should be able to enter the market freely. This will bring down the abnormal profits
to the normal level. Similarly, when losses will occur existing sellers may leave the
market. However, such free entry or free exit is possible only in the long run, but not
in the short-run.

4. Perfect knowledge:
Perfect competition implies perfect knowledge on the part of buyers and sellers
regarding the market conditions. As a results, no buyer will be prepared to pay a
price higher than the prevailing price. Sellers will not charge a price higher or lower
than the prevailing price. In this market, advertisement has no scope.

5. Perfect mobility of factors of production:

The second perfection mobility of factors of production from one use to another use.
This feature ensures that all sellers or firms get equal advantages so far as services of
factors of production are concerned. This is essential to enable the firms and
industry to achieve equilibrium.

6. Absence of transport cost:

Under perfect competition transport, cost does not exist. Since commodities have,
the same price it logically follows that there will be no transport cost. In the event of
the presence of cost of transport, there will be no single price in the market.
Transport cost occurs when there is no perfect knowledge of the market conditions
on the part of buyers and sellers.

7. No attachment:
There is no attachment between the buyers and sellers under perfect competition.
Since products of all sellers are identical and their prices are the same a buyer is free
to buy the commodity from any seller he likes. He has no special inclination for the
product of any seller as in case of monopolistic competition or oligopoly.
Theoretically, perfect competition is irrelevant. In reality, it does not exist. So it is a
myth.

[PDF Notes] Here is your brief note on the Elasticity of

Demand
The law of demand establishes an inverse relationship between quantity demanded
and the price of the commodity. But this law does not state the degree of change in
demand due to change in price. There are commodities the demand of which is more
responsive and of others less responsive to change in price. The degree of
responsiveness of demand to change in price of the commodity is known as elasticity
of demand.

According to Prof Alfred Marshall, “The elasticity (or responsiveness) of demand in

market is great or small according as the amount demanded increases much or little
for a given fall in price and diminishes much or little for a given rise in price.”

In other words of Prof. Boulding, “Elasticity of demand measures the responsiveness

of demand to changes in price.”

A.K.C Cairncross states, “The elasticity of demand for a commodity is the rate at
which quantity bought changes as the price changes.”

According to Meyers, “Elasticity of demand is a measure of the relative change in the

amount purchased in response to any change in price on a given demand curve.”

Prof. Samuelson has considered elasticity of demand as a concept devised to indicate

the degree of responsiveness of quantity demanded to change in market price.

Generally, elasticity of demand refers to price elasticity of demand.

[PDF Notes] How to cleverly deal with resale buyers ?
Resale buyers are those who buy for resale purposes without commercial processing.
These are naturally wholesalers and retailers or their agents normally known as
‘professional buyers’ or ‘expert buyers’. Wholesalers sell back to retailers and
retailers back to consumers. These persons are interested in profit, economy and
wide choice. Their aim is to buy those which can be sold in minimum time at highest
margin possible. They expect likely market changes to capitalise on them. They need
timely and just advice on all matters after then economic interests. They are well
informed about product, market condition changing fashions, tastes. Their
purchases are bulk and at definite interval they have expert buyers.

The salesman is to appeal to their motives of profit, economy, suitability and price.
As these customers are well-informed about their products and general market
conditions, they expect the salesman to be efficient, effective and honest in their
dealings. These are regular customers and sense of loyalty must be maintained at
any rate. It should be remembered that the sales empire of a manufacturer is defend
on full cooperation of wholesalers and retailers who take the goods to the final users.

[PDF Notes] What are the important Merits and

Demerits of Monopolistic Competition?
Merits of Monopolistic Competition:
1. An important merit of monopolistic competition is that it is much closer to reality
than several other models of market structure. Firstly, it incorporates the facts of
product differentiation and selling costs. Secondly, it can be easily used for the
analysis of duopoly and oligopoly.

2. Under monopolistic competition it is possible to see that even when each

individual firm produces under conditions of increasing returns, not only the firm
under consideration but also the entire group of firms can be in equilibrium.

3. Moreover, monopolistic competition is able to show that even when each

individual firm is producing under increasing returns, it still earns only normal
profit in the long run.

4. The theory of monopolistic competition helps us in bringing in the concept of

market share of an individual firm. This opens up the possibility of considering those
situations in which a firm may be pursuing a goal other than profit maximization.

5. In monopolistic competition we are able to consider the interaction between

several interdependent variables on the basis of which a firm takes its decisions.

Demerits of Monopolistic Competition:

1. The biggest conceptual difficulty with monopolistic competition is the concept of
age group of firms. There is no standard theoretical foundation for deciding the
boundaries of a group.

2. Related with the concept of a group of firms, we face the difficulty of defining the
meaning of a ‘close substitute’. We are not told at what values of cross elasticity, two
products become close substitutes of each other.

3. The theory of monopolistic competition fails to take into account the fact that the
demand by final consumers is largely influenced by the retail dealers because the
consumers themselves are not fully aware of the technical qualities of the product.

4. Similarly, the theory fails to fully account for the determination of equilibrium
quantities and prices of goods like raw materials and other inputs. To a large extent,
their demand is governed by a combination of the technical quality, price and timely
availability rather than by brand name, etc. Given the technical quality of an input,
its demand is governed more by its price and availability than its brand name.

[PDF Notes] Write brief notes on Demand Function,

Schedule and Curve
Demand for a good by an individual market as a whole is conventionally expressed in
three alternative forms i.e. a demand function, a demand schedule and a demand
curve.

1. Demand Function:
A demand function of an individual buyer is an algebraic form of expressing his
demand behavior. In it, the quantity demanded period of time is expressed as a
function of (that is, determined by) several variables. A demand function may be in a
generalized form or a specific form. the latter case, the function describes the exact
manner in which quant demanded is supposed to vary in response to a change in one
or mo independent variables. Some typical examples of a demand function for good
X are:

(i) Dx = f(Px, Y, T); and

(ii) Dx = 2000-10Px.

Here, Dx denotes quantity of good demanded, Px denotes the price of good   Y

represents income level of the consumer and T is a measure of his taste: and
preferences.
2. Demand Schedule:
A demand schedule is a tabular form of describing the shifts in quantity demanded
of a good in response to shifts in its price per unit, while all non-price determining
variables are remains unchanged. A demand schedule has two columns, namely (i)
price per unit of the good (Px), and. (ii) quantity demanded per period (Dx). The
demand schedule is a set of pairs of values of values of Px and Dx. The first column
records the hypothetical values of Px, and the second column records the
corresponding quantity (Dx) which the consumer would decide to buy if faced by
that price.

3. Demand Curve:
A demand curve is a graphic representation of the demand schedule. It is a locus of
pairs of per unit prices (Px) and the corresponding demand-quantities (Dx). The
basic difference between a demand schedule and a demand curve in that in the
former, Px and Dx are discrete variables. Their values vary in discrete steps and not
continuously. In the case of a demand curve, however, both Px and Dx are assumed
to be continuous variables. As a result, the demand curve is continuous without
gaps.

Two approaches have been very popular in analyzing the demand behavior of a
typical individual consumer, namely those based upon the concepts of (a) utility, and
(b) indifference curves. We shall now study them.

[PDF Notes] What do you mean by the term

Salesmanship ?
Salesmanship is the art of winning the hearts of consumers to sell well the firm’s
products and services. It is the wit act of persuasion. It is the science of
understanding the human instincts and paving the way to their fulfillment. It is the
art of stressing the appropriate values of the firm’s products and services to fit the
individual and varying needs of different buyers called on. It is the ability of a person
to persuade the people to buy the goods and services for mutual gain namely,
satisfaction to the buyer and profit to the seller. It is the proven and science of
serving the class of customers.

Definition of Salesmanship

Prof. Stephenson:
“Salesmanship refers to the conscious efforts on the part of seller to induce a
prospective buyer to purchase something that he had not really decided to buy, even
if he had thought of it favorably; it consists of persuading the people to buy what you
have for sale in making them want it, in helping to made up their minds.”

Mr. Garfield Blake:

“Salesmanship consists of winning the buyer’s confidence for the seller’s house
goods, thereby winning regular and permanent customers.”

Mr. Russel and Beach:

“The ability to handle the people.”

Mr. William Carter:

“An attempt to induce the people to buy the goods.”

Mr. Gauss, Mr. Wightman and Mr. Bates:

“Salesmanship consists of persuading people to buy what you have for sale in ma
them to want it, in helping to make up their minds.”

American Marketing Association (AMA):

“Salesmanship is an oral presentation in conservation with one or more prospective
customers for the purpose of making sales.”

National Association of Marketing Teachers of America (NAMTA):

“It is the ability of persuade people to buy goods and services at a profit the seller
and benefit to the buyers.”

Above expressions help us to boil down them to the essence of salesmanship. The
salesmanship is the ability of sales person to handle the people to handle the
products. It i: science and art of understanding the human desires to pinpoint the
ways to their fulfillment. It is highly personalized service rendered by an individual
of a set of selling skills, acumen and creativity to the society in the realm of
distribution of goods and services. It is the oral presentation in a conversation with
one or more prospective purchasers for the purpose of making sales. That is,
personal selling is an interpersonal communication process during which a seller
uncovers and satisfies the needs of a buyer to the mutual, long-term benefit of both
the parties.

In a narrow sense, salesmanship is to art of selling the products and services by

convincing the prospects. In a broader sense, it is more than making a sales and
getting an order. The real objective is to build relationship—a partnership— by
providing long-term benefits to both the seller and the customer. Thus, selling
involves helping customers in identifying problems, offering information about
potential solutions, and providing after-sale services to ensure long-term
satisfaction. Influence and persuasion are the essential parts of selling.
[PDF Notes] 4 important forces that influences the
demand for factors
Firms demand for factors as they use them in the process of production. The demand
for factors is influenced by the following forces.

1. Demand for the final product:

It has been started earlier that demand for factors of production is a derived demand
or indirect demand. It is derived from the demand for the product that the factor
produces. For example, labor does not satisfy our wants directly. We want labor for
the sake of goods it produces. If the demand for goods increases, the demand for the
factors which help to produce these goods will also increase. Moreover, if the
demand for goods is elastic or inelastic.

2. Quantity of other factors:

The demand for a factor of production will also depend on the quantity of the others
factors required in the process of production. Generally, if the demand price for
given quantity of a factor of production will be higher, greater will be the quantities
of the cooperating productive services.

3. Pricing of other factors of production:

A change in the price of another factor of production that is used in combination
with the given factor may cause the demand for the factor to shift. If the related
factor is a substitute, an increase in its price will cause the demand curve for the
given factor to shift to the right. On the other hand, if the related factor is a
complement, an increase in its price will lead to the leftward shift in the demand
curve for the given factor.

4. Value of the finished product:

The demand price of a factor of production depends on the value of the finished
product in the production of which the factor is used. The demand price will
generally be greater, the more valuable is the finished product in which the factor is
used. Besides, the more productive the factor, the higher will be demand price of a
given quantity of a factor.

ECONOMICS Interview Questions for freshers

experienced :-
1. What is Economics?
Economics is the study of how goods and services produced and how they are
distributed.
2. Into how many branches the area of economic theory is divided into?
Two
3. What are they?
Micro economics and macro economics.
4. The word ‘micro’ derived from which language?
Greek; it means small
5. What does micro-economics deal with?
It deals with the analysis of small units of the economy, such as individual
consumers, firms, individual prices, individual industries etc..
6. What is called price theory?
The price mechanism as expressed through the market behavior of individual
households and firms is the central point of micro economic theory. Hence it is
called price theory
7. What is a discounting principle?
The discounting principle is a concept developed from the opportunity cost concept.
It is a common notion that the present value of money available after a few years is
less than the present value of money available today
8. Managerial economics has close connection with which subjects?
Statistics, mathematics and operations research
9. Statistical techniques are now widely used for what? It is used for
what?
It is used in dealing with managerial problems.
10. Which technique is mainly used in solving the business problems?
The operations research is a specialized approach to investigate into the particular
problem of the firm. It can be defined as the application of mathematical techniques
in solving the business problem.

ECONOMICS Interview Questions

11. What do you mean by price elasticity of demand?
The rate at which demand changes when price changes is known as elasticity of
demand
12. What do you mean by income elasticity of demand?
Income elasticity of demand measures the rate of change in demand in response to a
given rate of change in income.
13. What is advertisement elasticity of demand?
Advertisement elasticity also known as “Promotional elasticity” measures the
responsiveness of demand to changes in advertising or other promotional expenses.
Advertisement elasticity is always positive.
14. What is demand forcasting?
A forcast is a prediction or estimation of a future situation. Demand forecasting
enables a firm to avoid overproduction or underproduction. It is also helps the firm
to determine the price policy, promotional policy etc..
15. What is control economy?
This is a system in which government exercise extensive control
16. What is commodities of habit?
Commodities whose consumption has become a habit of convension have in elastic
demand. For example goods like cigarettes, pan etc. are consumed as a habit. In the
case of such goods demand does not contract very much even if the price rises
17. What is endowment?
The money given for a specific purpose; in insurance, fixed sum to be paid at the end
of certain period is called endowment.
18. Which are the Third world countries?
The developing countries in Asia, Africa and South America
19. Is India a Third World country?
Yes
20. How many members are there in the exclusive group of Third Workd
Countries?
122
21. Who is the father of Modern Economics?
Adam Smith
22. Which is the famous book on Economics written by Adam Smith?
A wealth of Nations
23. Adam Smith postulated which theory on Economics?
Theory of Laissez Faire
24. Which type is Indian Economy?
Mixed Economy
25. What is the name of Economy where imports and exports are
allowed?
Free Economy
26. What is the name of the Economy where imports and exports are not
allowed?
Closed Economy
27. Which is the famous book on Economics written by Dadabjao
Naoroji?
Poverty and un-British rule of India
28. Who wrote the famous book on Economics “Planned Economy of
India”
M. Visveswarayya.
29. When was the planning Commission of India set up?
1950
30. Who was the first chairman of the Planning Commission of India?
Jawaharlal Nehru
31. When was the National development Council (NDC)set up?
1959
32. Which body gives the final approval to planning in India?
The National Development Council
33. Who is the chairman of the National Development Council?
Prime Minister
34. Who are all the members of The National Development Council?
All Chief Ministers of State
35. Which was the period of the first five year plan of India?
1951-56
36. What was the priority given to the first five year plan?
Agricultural Development
37. Which was the period of the second five year plan of India?
1956-61
38. What was the priority given to the second five year plan?
Industrial development
39. Which was the period of the third five year plan of the India?
1961-66
40. Which period was considered as the plan holiday?
1966-69
41. Which was the period of the fourth five year plan of the India?
1969-74
42. What was the objective of the fourth five year plan?
Growth and stability
43. Which was the period of the fifth five year plan?
1974-79
44. What was the slogan adapted for the fifth five year plan?
“Garibi Hatato” – Remove poverty
45. Janata party government terminated the fifth five year plan in which
year?
1978.
46. What was the name given to the plan started by the Janata party?
Rolling Plan
47. Which was the period of the eighth five year plan?
1992-97
48. What was the top priority given in the eighth plan?
Plan allocation
49. On which basis the Planning Commission defined the poverty line?
Nutritional standards
50. Which type of people are coming under the poverty line?
Below daily calorie intake of 2400 calories/person/day in rural areas and 2100
calories in urban areas.
51. Which was the other way of fixing the poverty line?
Rs 11000/annul/family of 5 members at 1991-92 prices
52. How many export Processing Zones are there in India?
Eight
53. Which is the 8th Export Processing Zone of India?
Surat E.P.Z.
54. Which is the first E.P.Z. in private sector in India?
Surat E.P.Z.
55. Which is the only E.P.Z in Kerala?
Kochi E.P.Z.
56. When was the community Development Programme launched in
India?
1952
57. What is the main aim of the Community Development Programme?
All round uplift of rural people
58. When was the Family planning Programme started in India?
1952
59. When was the national extension service started in India?
1952
60. When was the Reserve Bank of India established in India?
1935
61. When was the Reserve Bank of India nationalized?
1949
62. Which body represents India in the International Monetary Fund
(I.M.F.)?
Reserve Bank of India
63. Which bank is known as the Banker’s Bank?
Reserve Bank of India
64. When was the present coinage system in India Introduced?
1957
65. Which is the largest public sector bank in India?
The State Bank of India
66. Which is the largest commercial bank in India in terms of branches?
The State Bank of India
67. What is zone pricing?
Under zone pricing, the seller divides the country into zones and regions and charges
the same delivered price within each zone, but different prices between different
zones.
68. When did the first nationalization of banks in India take place?
July 19, 1969.
69. Who was the Prime Minister of India when the first nationalization
of banks took place in India?
Smt. Indira Gandhi
70. How many banks were nationalized in 1969?
Fourteen banks
71. When did the second nationalization of banks take place?
1980
72. How many banks were nationalized in the second nationalization of
1980?
Six banks
73. When was the new bank of India merged with the Punjab National
Bank?
1993
74. What is the full form of NABARD?
National Bank of Agricultural and Rural Development
75. When was NABARD set up in India?
1982
76. Which is the apex bank for rural credit?
NABARD
77. What is the full form of EXIM?
Export Import Bank of India
78. When was EXIM started?
1982
79. What is the full form of IDBI?
Industrial Development Bank of India
80. When was IDBI started?
1964
81. Which is the apec bank for industrial finance in India?
IDBI
82. Which is the oldest industry in India?
Cotton textile Industry
83. In which industry the largest number of workers are employed in
India?
Cotton textile Industry
84. What is the name given to the trade by exchanging one commodity
for another?
Barter
85. What is the name given to the money accumulated by way of illegal
transactions without declaring it for tax purposes?
Black Money
86. What is the name given to the condition when talented men leaving
their own country for lack of opportunities and facilities and going to
other countries for better conditions?
Brain drain
87. What is the name given to the talk between rich countries and poor
countries?
North South Dialogue
88. Why the talk between rich countries and poor countries called
‘North-South Dialogue’?
Because, most of the rich countries are in the northern hemisphere and poor
countries in the southern hemisphere of the globe
89. What is the name given to the profit from shares?
Dividened
90. What is the name given to the profit from debenture?
Interest
91. What is the name given to the sale of product below the cost price to
get control of the market when there is strong competition?
Dumping.
92. What is the name given to the sudden increase of agriculture output?
Green Revolution
93. Who is the father of Indian agriculture?
Normen Borlang
94. To whom Borlang award is given in India?
Agricultural Scientist
95. What is the aim of the White Revolution?
Increase of Milk production
96. What is the popular name of White Revolution?
Operation flood
97. What is the aim of the Blue Revolution?
Increasing Fish Cultivation
98. What is the name given to the fish cultivation?
Pisciculture
99. What is the branch dealing with flower cultivation?
Horticulture
100. What is the branch dealing with silkworm production?
Sericulture
101. What is the branch dealing with honey production?
Apiculture
102. What is the branch dealing with the development of forests?
Silviculture
103. What is the branch dealing with the development of worms used for
disintegrating organic waste?
Vermiculture
104. Which are the two crop seasons of India?
Rabi and Kharif
105. When are the Rabi crops sown and reaped in India?
In October and April
106. When are Kharif crops sown and reaped in India?
June and January
107. What are the major rabi crops?
Wheat, gram linseed and mustard
108. What are the major Kharif crops?
Rice, millet, maiz and cotton
109. The terms bull, bear and blue ship are associated with which field?
Stock exchange
110. In the field of stock exchange what is the name given to one who
tries to increase the value of shares?
A Bull
111. In stock exchange what is the name given to the trader who tries to
lower the value of shares?
A Bear
112. What is the name given to a high valued share?
Blue Chip
113. What is the name given to the illegal way of bringing foreign
currency to India?
Hawala transaction
114. What is the full form of FERA?
Foreign Exchange Regulation Act
115. What is the full form of COFEPOSA?
Conservation of Foreign Exchange and Prevention of Smuggling Activities Act.
116. What is the full form of SEBO?
Securities and Exchange Board of India
117. Where is the National Stock Exchange of India located?
Dalal street, Mumbai
118. What is the full form of IRDP?
Integrated Rural Development Programme
119. When was IRDP launched in India?
In 1978.
120. What is the full form of TRYSEM?
Training of Rural Youth for Self Employment
121. When was TRYSEM launched in India?
In 1975
122. What is the full form of NRY?
Nehru Rozgar Yojana
123. When was Jawahar Rozgar Yojana launched?
In 1989.
124. What is the full form of DWCRA?
Development of Women and Children in Rural Areas
125. What is the full form of ICDS?
Integrated Child Development Service
126. What is the full form of RFLP?
Rural Functional Literacy Programme
127. What is the full form of CRSP?
Central Rural Sanitation Programme
128. What is the full form of IREP?
Integrated Rural Energy Programme
129. What is the full form of NLM?
National Literacy Mission
130. When was National Literacy Mission launched?
1988
131. Primary sector refers to which field in India?
Agriculture
132. Which is the most populous state in India?
Uttar Pradesh
133. Which is the least populated state in India?
Sikkim
134. In which year was the Consumer Protection Act Passed?
1986
135. Which is the biggest enterprise of the Govt. of India?
Railways
136. From where are National Savings Certificates issued?
Post offices
137. Which is the major sources of power in India?
Coal
138. ‘Black gold’ stands for what?
Coal
139. When was the oil and Natural Gas Commission set up in India?
1956
140. When was the Comprehensive Crop Insurance Scheme launched in
India?
1975
141. When was the National productivity Council started?
1958
142. In which year was the first Industrial Policy Resolution passed?
1948

143. Which is the important plantation crop produced in India?

Rubber
144. When was the New Industrial Policy announced?
July 24, 1991
145. Where in India are the largest deposits of Uranium found?
Bihar
146. In which state is ‘Mica’ abundantly found?
Bihar
147. Where are the diesel engines for Railways manufactured?
Varanasi
148. What is the name given to the statistical study of human
population?
Demography
149. Who headed the Tax reforms committee?
Dr. Raja .J. Chelliah
150. Four-fifths of the goods traffic in India is carried by which agency?
Railways
151. A depreciation of a naation’s currency usually causes what to the
internal/domestic prices?
Rise
152. When was the food corporation of India established?
January 1, 1965.
153. Where is the headquarters of the World Bank?
Washington
154. What is invisible imports and exports?
Generally, interest on overseas investment, commission on financial transactions,
payment for services, expenditure by tourists, government grants overseas, cost of
membership of international bodies etc. are called invisible imports and exports.
155. What is term demand?
Demand is desire for a commodity backed by necessary purchasing power.
156. What do you mean by demand analysis?
The relation of price to sales is known in economics as the demand. The demand for
a thing produced and its sales depend upon some factors. These factors includes
such diverse elements as price, buyers income, availability and price of substitutes or
competing products etc. The relation between demand and these factors is known as
demand analysis.
157. What are consumer goods?
Goods which directly satisfy human wants are called consumer goods. Eg., Food,
clothing etc.
158. What are Producers goods?
Goods which indirectly satisfy human wants by helping the production of consumer
goods are called producers goods. E.g. Tools, Machinery etc.
159. What are durable goods?
Durable goods are those goods which lasts for a longer period or durable goods are
those goods which are not exhausted in a single use. E.g. Television set, Refrigerator
160. What are perishable goods?
Goods which will not last long are called perishable goods. E.g. Vegetables, Flowers
etc.
161. What are derived demand?
Demand is said to be derived when it is tied to the demand for some ‘parent’
product.
162. What are autonomous demand?
When the demand for a commodity is entirely independent of demand for any other
commodities it is autonomous demand.
163. What are industry demand?
Industry demand means the demand for the product of a particular industry. E.g.
demand for tyres produced by all tyre companies in India is the Indian tyres industry
demand.
164. What are company demand?
Company demand denotes the demand for the product of a particular firm or
company. E.g. demand for tyres produced by MRF Tyres limited is a company
demand.
165. What are Giffens goods or inferior goods?
Cheap food stuffs are an example of Giffens goods. In the case of inferior goods,
people buy more of such good when their price rises. This an exception to the law of
demand.
166. What is elasticity demand?
The rate at which demand changes when price changes is known as elasticity of
demand.
167. What is cross elasticity?
Cross elasticity of demand is the degree of responsiveness of demand for a
commodity to the changes in the price off its substitutes and complements.
168. What is short term demand?
The short term demand may be referred to the demand for a product where
adjustment takes place in response to change in the short term factors like price
changes, income changes etc.
169. What is long term demand?
The long term demand for products is influenced by changes in long term factors
such as changes in technology, arrival of substitutions, influence in population etc.
170. What are superior goods?
Goods whose demand increases with increase in income are known as superior
goods or normal goods.
171. What are inferior goods?
Goods whose demand decrease when consumers income increases are known as
inferior goods.
172. What is income elasticity of demand?
Income elasticity of demand measure the rate of change in demand in response to
given rate of change in income.
173. What are perfectly elastic demand?
Demand for a commodity is said to be perfectly elastic when a slight change in price
cause infinite change in quantity demanded.
174. What is perfectly inelastic demand?
Demand for a commodity is said to be perfectly inelastic when quantity of the
commodity demanded remains the same irrespective of any rise or fall in price
175. What are the important purposes of long term forecasting?
1. To plan a new unit or expansion of a new unit
2. To plan a long term financial requirements
3. To plan man-power requirements
176. In methods of demand forecasting for new products, what is a sales
experience approach?
In this case the new product is offered in a sample market. Then by studying the
demand of the sample markets, the total demand is estimated.
177. In the criteria of a good forecasting method, what is durability?
This implies that the forecasting made should hold good over a period. Durability of
a forecast depends on the reasonableness and simplicity of functions filled.
178. What is mean by the expression marginal product?
The word marginal means additional. Marginal product is the extra output resulting
from the employment of one more unit of a factor of production land, labour or
capital.
179. What is an iso-quant?
Iso-quants are equal product curves. They show the combination of the factors of
production yielding the same level of output. Iso-quant shows the combination of
two variable inputs that given the same level output.
180. What is meant by historical costs?
Historical cost is the original cost of an asset. In other words it is the actual cost
incurred on acquiring a particular cost.
181. What is opportunity cost?
Opportunity cost is also known as transfer cost, displacement cost and alternative
cost. When the cost is measured by the value of the most valuable alternative
commodities that could have been produced by those resources, it is called
opportunity cost.
182. What is fixed cost or supplementary cost?
It means the cost for fixed factor units used in production. The fixed costs are those
costs which do not vary with output in the short period.
183. What is marginal cost?
Marginal cost is the net addition made to the total cost of production by producing
one more unit of the commodity.
184. What is Break-Even Point (BEP)?
Break-Even Point may be explained as that level of sales at which total revenues
equal total cost and the net income is equal to zero. It is known as non-profit no-loss
point.
Symbolically: Fixed cost/ Contribution margin per unit
185. What is pricing or price theory?
Pricing or price theory is that part of Economics which analysis the way in which
prices are determined in a free market economy and the role they play in solving the
problems of resource allocation.
186. What is perfect competition?
Perfect competition may be defined as a market situation in which there are large
number of buyers and sellers in close contact dealing in indentical commodity
without price discrimination.
187. What is product differentiation?
Product differentiation is the main feature of monopolistic competition. When there
are many firms dealing in a particular product, and when the product of each firm is
differentiated by means of brand names and trade marks, it is called product
differentiation.
188. What is equilibrium price?
The price at which demand and supply are equal is known as the equilibrium price
189. What is meant by Reserve price?
Reserve price is the price below which a seller is not prepared to sell.
190. What is normal price?
Normal value (price) is that prevails in the long run. In this period, a very long time
is available to adjust the supply to changes in demand.
191. What is Monopoly?
Monopoly exist when a firm or individual produces and sells the entire output of
some commodity.
192. What is Oligopoly?
Oligopoly is a market in which there are few firms selling a particular products
193. What is the term Cost-Plus pricing?
The method of pricing is the simplest and common method of determining the
selling prices of products.
194. What is skim pricing?
Price skimming is a method of pricing new products. When a new product is
introduced in the market, it is priced at a relatively high level with the intention of
skimming the cream from the market.
195. What is penetration price policy?
Penetration pricing refers to setting a low initial price on a product with a view to
conquer the market.
196. What is rate of return pricing?
Rate of return pricing is simply a refind extension of the full cost pricing. According
to this method the firm fixes a pre-determined target rate of return on capital
invested. The price fixed will cover total cost and a target rate of return after tax.
197. What is differential pricing?
This is price control device under which product is sold at two different prices. In
this two price system, a part of the output is sold at a fixed price and the remaining
part of the output is sold freely in the market.
198. What is going rate pricing?
According to this method, the firm adjusts its own price policy to the general pricing
structure in the industry. Going rate pricing in many cases results in “following the
leader” without anyone knowing the identity of the price leader.
199. Does Europe the USA or China have the largest economy?
1- Europe (remember Italy, French, UK and Germany are 4 world’s power) 2- USA 3-
China.
2006 GDP Figures from the CIA World Fact book, in Trillions of dollars, purchasing
power parity:

European Union: 13.080

United State: 13.060

China: 10.210

Prior to 2005, and probably back to 1942, the United State surpassed the EU.

200. How best to define economics?

Economics is usually defined as the problem of how best to distribute limited
resources, limited because wants are characterized as unlimited, but common sense
tells us that rather than limited resources, there is an abundance of resources. The
difference is one of perspective and this is core to any alternative understanding of
economics. If wants are the focus, then of course resources are limited by definition,
but if minimum needs or essentials are used as the foundation, then resources are
seen to be abundant. The difference is between a description and an explanation. A
focus on wants or desires describes a market situation, while a focus on essentials or
needs allows an explanation of choices to begin.