Sample Questions: Section I: Subjective Questions 1. List the factors which influence market demand. 2. Name the factors which influence the elasticity of demand. 3. State the rights of a consumer as enunciated in the Consumer Protection Act, 1986. 4. Sometimes change in demand takes place even though there is no change in price. What are the factors which affect demand? 5. Which factors influence supply? 6. Distinguish between fixed costs and variable costs. 7. What is production function? 8. Differentiate between straight line method and diminishing balance method of depreciation. Section II: Objective Questions Multiple Choice Single Response 1. If the substitutes are relatively cheaper than a commodity, then the demand for that commodity will be 1] unaffected 2] Less 3] double 4] More 2. Supply is predominantly determined by 1] Income 2] Stock 3] Demand
4] Consumption 3. In case of perfectly elastic supply, the supply curve is 1] slopes upwards 2] horizontal 3] vertical 4] slopes downwards 4. Going rate policy cannot followed in the long run because 1] The price leader quotes price at a loss to drive out the competitors. 2] the costs are beyond the management's control 3] the price leader maintains secrecy 4] it is difficult to find going rate 5. Cost of Deposit of Bank of Maharashtra is 7%. Other cost is 3%. Profit margin expected is 1%. So, Bank fixes its rate of interest on loans at 11%. This is an example of 1] Marginal Cost pricing policy 2] Cost Plus pricing policy 3] Going Rate pricing policy 4] Imitative pricing policy 6. According to the Government, the build-up of inflationary pressure during the Nineties was attributed to 1] Higher GDP 2] Higher Fiscal deficit 3] Low Industrial output 4] Decrease in aggregate supply 7. The innovation theory of profit was developed by 1] Joseph Schumpeter 2] Joel Dean
3] Hawley 4] J B Clark 8. The law of increasing returns to scale is depicted by the marginal output curve which is 1] sloping upwards 2] horizontal 3] vertical 4] sloping downwards 9. Variable costs are those costs which vary with the level of 1] input 2] output 3] scale 4] size 10. Managerial economics involves forward planning by management is stated by; 1] Spencer Sieglemen 2] Prof. Hague 3] Prof. Mehboob-ul-Haque 4] Alfred Marshall Multiple Choice Multiple Response 11. The steps involved in Time Series Analysis are 1] data collection 2] trends analysis 3] establishing a functional relationship 4] sample survey 12. The drawbacks of "Marginal cost pricing policy" are 1] Create problems in credit sales
2] Practical difficulty in computing marginal cost 3] Frequent price changes 4] Profit per unit 13. According to Keynes, Aggregate supply function 1] refers to the minimum price of revenue which the entrepreneurs must get 2] Associated with different levels of employment 3] Explains that the level of output varies with the level of input 4] Explains that the level of output varies with the level of employment 14. Measures for price control include 1] fiscal policy 2] Monetary Policy 3] fixation of minimum prices 4] liberalization 15. The study of income elasticity of demand helps in 1] economic planning 2] family planning 3] demand forecasting 4] break even analysis 16. Under cost plus pricing 1] Actual costs are included 2] Certain percentage of profit included 3] Opportunity cost is included 4] Implicit cost is included 17. The typical objectives of a firm while fixing pricing policy are 1] Profitability 2] Stability of price
3] Market share 4] Target return on capital 18. Under the consumer protection Act, the rights of a consumer are 1] Right of Protection from hazardous commodities 2] Right to a competitive price 3] Right of returning the goods purchased 4] Right to information regarding protection Fill in the Blanks 19. "plough back " standard of profit is used to avoid 1] debt 2] tax 3] risk 4] investment 20. According to time element plays an important role in price determination 1] Adam Smith 2] Dr. Alfred Marshal 3] Samulson 4] Cournot 21. may put the producer in a tense situation to recover high funds. 1] Overproduction 2] Underproduction 3] Prices 4] Oligopoly 22. Economic problems do not recognise boundaries of 1] caste and creed 2] past and future
3] legal and illegal 4] efficient and inefficient 23. In perfect competition various factors of production are assumed to be 1] perfectly substitutable 2] perfectly mobile 3] cheap 4] interchangeable 24. By "profit", the means total revenue minus explicit costs 1] auditor 2] chief finance officer 3] economist 4] accountant 25. 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. 1] Pecuniary 2] indivisible 3] divisible 4] public 26. J M Keynes believed that is a rare occurrence. 1] unemployment 2] full employment 3] disguised employment 4] partial employment 27. The risk-taking theory of profit was developed by 1] American economist Hawley 2] Prof. F.H. Knight
3] J B Clark 4] J.M. Keynes 28. When the outputs increased from 4 units to 5 units, the total revenue went up from Rs.100 to Rs.120 and the total cost went up from Rs.80/- to Rs.95/-. In this case, marginal revenue the firm will be 1] Rs.19/- 2] Rs.25/- 3] Rs.15/- 4] Rs.20/- State True or False 29. Demand forecasting results in wastage of resources. 30. Under the decreasing returns to scale, the marginal output curve slopes upwards. 31. When the demand is constant, if there is increase in supply, there will be decrease in price 32. Wastage of resources is possible under market economy. 33. Cross elasticity of demand between two perfect substitutes will be infinity. 34. There could be intangible goods. 35. Demand forecasting helps in framing expansion plans. 36. The law of supply is hypothetical. 37. In every society, the number of people who do not get a share in the annual national income and wealth, constitute the majority of the population. 38. Wastage of resources is possible under market economy Match the Following 39. 1] Evolutionary Method 1] Ignores how the new product could be different from the existing product 2] Sample Survey Method 2] Assumes that the sample represents the population 3] Substitution Method 3] Producers of existing product react in different ways 4] Growth Pattern Method 4] Time consuming
5] Scientific 6] Unscientific 40. 1] Defence Service 1] indivisible goods/services 2] A cup of tea 2] divisible goods 3] A private clinic 3] impure public goods/services 4] A body massage 4] pure private goods/services 5] external goods 6] internal goods 41. 1] Change in demand due to change in price 2] Change in demand due to change in income 3] Change in demand of X commodity due to change in price of Y commodity 4] Change in supply due to change in price 1] Price elasticity of demand 2] Income elasticity of demand 3] Cross elasticity of demand 4] Price elasticity of Supply 5] Complementary elasticity of demand 6] Infinity price elasticity of demand 42. 1] Fixed Cost 1] Remains constant at different level of production 2] Variable cost 2] Varies according to different level of production 3] Average Variable Cost 3] Decreases as the level of production goes up 4] Total cost is equal to Total Revenue 4] This happens at the break-even level 5] Increases as the level of production goes up 6] This happens at the 50% capacity utilisation