MB0042

Managerial Economics
Q.1 _____ and ____ define managerial economics as this application of economic
theory and methodology to business Administration.
A-: Brighman & Pappas. B-Yoke,Dale C- Sagar,Padhi ,D-None
Q.2 Which of the followings include the features of managerial Economics?
a)
b)
c)
d)

It is more realistic
It is a science of decision making
It is both conceptual and metrical
It uses various macro-economics
A. abc

B. bcd

C. acd

D. abcd

Q.3 which of the followings include the scope of managerial economics?

I. Objectives of a firm
II. Demand analysis and forecasting
III. Production & cost analysis
IV. Pricing decision, policies & practices
V. Capital management
VI. Linear programming & theory of Games
VII. Profit management
A. I, II, III, IV, V, VI, VII

B. I, II, IV, V, VI, VII

C. IV, V, VI, VII

D. None

Q-4-Demand = Desire to buy +

1?

2?

Ans : a-Ability to Pay,

Willingness to pay
Q-5-Features of Demand? State True/False
I. It is backed up by adequate Purchasing power.
II. It is always of a price
III. It should always be expressed in terms of specific quantity.
IV. It is related to time
A. all are False B. only I, II False C. All are true D-None

Q-6-DX = f (Px, Ps, Pc, Ep, Y, 1?, 2?, 3?, 4?, 5? .. etc )
Ans:

Ey, T, W, A, U
1, 2, 3, 4, 5

Q-7 which of the followings are the factors that affecting of influencing the
Demand?
I. General price level existing in the country inflation
II. Level of income and living standards of the people
III. Level of income & living standards of the people
IV. Weather & climatic conditions
V. Publicity, propaganda & advertisement
VI. Tastes, preferences,
VII.
Size, rate of growth of population
A All b-I,ii,iii C-VI,VII D-None
Q-8- A consumer would buy more when price falls due to the following reasons.
They are _______
1.
2.
3.
4.

A Product becomes cheaper

Purchasing power of a consumer would go up
Consumers can save some amount of money
Cheaper products are substituted for costly products
A. 1 2 3

B. 2 3 4

C. 1 2 3 4

D. None

Q-9- which of the followings include the five kinds of elasticity of Demand?
i.
ii.
iii.
iv.
v.
vi.
A. all

Price elasticity
Income elasticity
Cross elasticity
Promotional elasticity
Substitution elasticity
Demand elasticity
B. only I, II, IV, V

C. only I, II, III, IV, V

D. None

Q-10- State True/False regarding the practical application of price elasticity of

Demand?
1.
2.
3.
4.

Production planning
Operation planning
Helps in fixing the prices of different goods
Helps infixing the rewards for factor inputs

5.
6.
7.
8.

Helps in determining the terms of trade

Helps in fixing the rate of taxes
Helps in declaration of public utilities
Poverty in the midst of plenty
A. 1 2 3 4 F, 5 6 7 8 - T

B. 1 2 3 4 5 6 7 8 T

C. 1 2 3 F, 4 5 6 7 8 T

D. None

Q-11- which of the followings are the Practical application of income elasticity of
Demand?
I. Helps in determining the rate of growth of the firm
II. Helps in production planning & marketing
III. Helps in ensuring stability in production
IV. Helps in estimating construction of houses
A. I, II, III
Q. 12- Ec =

Dx
Py x

B. II, III, IV

C. I, II, III, IV D. I, II, III, IV, V

Py
?

Ans: Dx
Q-13- which of the followings are the practical application of advertising elasticity
of Demand?
i. Helps in determining the level of prices
ii. Helps in formulating appropriate sales promotional strategy.
iii. Helps in manipulating the sales
Ans:A- All I, II, III B-II,III C-I,II D-None
Q.14- which of the following features are important in demand forecasting?
I. It is based on historical information
II. It is in terms of specific quantities
III. It is based on specific department
IV. It is based on specific commodities
Ans:A- All I, II, III B-II,III C-I,II D-None

Q-15- Long run forecasting of probable demand for a product of a company is

generally for a period of 3 to 5 or 10 years. They are ________?
I. Business planning.
II. Financial planning.
III.Manpower planning.
IV. Business control.
V. More successful in case of developed nations.
VI. Determination of the growth rate of the firm.
VII. Establishment of stability in the working of this firm.
VIII. Indicates interdependence of different industries.
A all B- Only I,ii c-only iii d-None
Q-16- A good method of demand forecasting should satisfy a few board economic
criteria, they are as follows __________.
a)
b)
c)
d)
e)
f)
g)
h)

Accuracy
Plausibility
Simplicity
Durability
Flexibility
Availability of data
Economy
Quickness
A. a b c d e B.a b c d e f

C. a b c d e f g h

D. a b c d

Q-17- State True/False regarding the success depends on many factors.

1.
2.
3.
4.
5.
6.
7.
8.

The nature of the question asked

The ability of the surveyed
The representative of the samples
Nature of the product
Characteristics of the market
Consumer-buyers behavior
Techniques of analysis
Conclusions drawn

A. 1234 F, 5678 - F

B. 1346 F, 2578 T

C. 12345678 - T

D. 1458 T, 2367 - F

Q-18-A statistician in order to find out the pattern of change in time series many
makes use of the following methods. They are __________?
a) The least squares method

b) The free hand method

c) The moving average method
d) The method of semi-averages
A. abc

B. bcd

C. abcd

D. None

Q.-19- y = a+bx fit to ________ method

Ans : the least square method.
Q-20-Professor Joel Dean, how ever has suggested a few guidelines to make
forecasting of demand for new products. They are ____.
I. Evolutionary approach
II. Substitute approach
III. Opinion poll approach
IV. Sales experience approach
V. Growth curve approach
VI. Vicarious approach
A. I, II, III

B. II, III, IV

C. I, II, III, IV, V, VI

D. I, II, III, IV, V

Q-21-Mathematically a supply function can be represented in the following

manner.
Sx=f(Pf,T,Cp,Gp,N,etc)

Q.22- Which of the followings are the Determinants of supply?

I. Natural factors
II. Change in techniques of production
III. Cost of production
IV. Prices of related Goods
V. Government policy
VI. Monopoly power
VII. Number of sellers or firms
VIII. Complementary goods
IX. Discovery of new source of inputs
X. Improvements in transport and communication
XI. Future rise in price
A. I, II, III

B. I, II, III, IV, V, VI, VII, IX, X, XI

C. I, II, III, IV, V, VI, XI

D. I, II, III, IV, V

Q23-The other things which should remain constant further law to operate are
_____
1.
2.
3.
4.

Techniques of production
Cost of production
Market prices of the related goods
Climate & weather conditions

A. 1 2 3

Q.24

Price
elasticity

B. 2 3 4

C. 1 2 3 4

D. 1 3 4

Which type of

Of supply

Q-25- Which of the following factors Determine Elastic Of supply C.D

exterminates)?
(a)Number of sellers
(b)Goals of the firm
(c)Political conditions
(d)Cost of Production
(e)Kinds and nature of markets
(a)abcd

(b) abcde

(c) abc

(d) bcde

Q-26. Which of the followings are the Causes for Diminishing Returns to scale?
1-Emergence of difficulties is Co. Ordinations Control
Q-27- Which of the followings are the Properties of ISO-quanta?
(a) Generally on 150-Quanta
(b)It will not touch either XOR-axis
(c) Always are 150-quart Curve rewrite be parallel to other
A- ab

B-abc

C-ca D-None

Q27.Which of the followings is some of the important aspects of Internal

Economics.
1-They arise With in or inside a firm.
2-They arise one to improvements is internal.
3-They arise one to specified efforts of one firm.
4- They are Particular to a firm and enjoyed by only one firm.
5. They arise one to increase in the scale of Production

A- 123 B-1234

C-12345

D-None

Q-28.state T/F regarding the Technical economic

1-Economies of superior techniques
2-Economies of increased dimension
3-Economies of lined Process
4-Economies arising out of research and by Products.
5-Inventory Economies
6-Delegation of Details
A- 123-T, 456-F

B- 1234-F, 56-T

C-12345-T, 6-F

D- None

Q-29. Which of the followings are the four ways risk- spreading advantages in a
Large Secure firm?
(a) Diversification of out put
(b) Diversification of market
(c) Diversification of the Sourly of supply
(d) Diversification of the Process of manufacture
(e) Diversification of resource of demand
A- abcd

B-bcde

C-abc

D-None

Q-30. Which of the followings are same of the important aspects of external
economies?
12345678-

They arise Outside the firm

They arise due to important In external factors
They arise due to Collective efforts of an industry
They are general , Common & enjoyed by all firms
They arise due to Over all developments
They are dependent on the size of industry
They are beyond the Control of management of a firm
They are Called as Open secrets of a firm

A- 12345678

B-2345678

C-1234

D- 345678

Q-31-Which of the followings are same of the main Diseconomies of scale?

123456-

Financial diseconomies
Managerial diseconomies
Marketing diseconomies
Technical diseconomies
Diseconomies of risk and Uncertainly bearing
Labour diseconomies

Q-32 which of the following factors deserve our alternation in the Determinants of
Cost?
I. Technology
II. Rate of output
III. Size of plant and scale
IV. Prices of factor inputs
V. Efficiency of factors of production and the management.
VI. Stability of out put
VII.
Law of returns
VIII. Time period
A- I,ii,iii

B- all C- I,ii,iii,iv D-None

Q-33. Types of cost Function

(a) Short run cost function
(b) Long run cost function
Q34.TFC=TC-TVC
Q-35.ALC=AFC+AVC
Q-36 AVC=AC-AVC
AVC=AC-AFC
MC-Tcn-tcn-1
TC=TFC+TVC
Q-37-The profit maximization model is based on Three important assumptions
.They are an follows(1) Profit maximization is the main goal of the firm
(2) Rational behavior on the Part of firm
(3) The firm is managed by owner-entrepreneurs
(4) The firm is managed by a Trust
A- 123 B-234 C-124 D-None
Q-38- Cyert & March are of the opinion that out of Several Objectives a firm has
five import ants goals They are(a) Production goal
(b) Inventory goal
(c) Sales goal
(d) Market- Share goal
(e) Profit goal
A- abcd

B- abcde

C- abc

D- bcde

Q-39- Which of the followings assumptions on which the static model based on?
(I) The model is applicable to a Particular time period.

(II) The firms aim at maximizing its sales revenue subject to minimum Profit
Constant
(III) The demand Curve of the firm slope downward from left to right.
(IV) The averages cost curve of the firm is U-shaped as
A-all B-II,III C-I,II D-None
Q-40-state T/F regarding the sales maximization (Dynamic Module)
(a) Market Price remains Constant
(b) Demand and Cost Curve of the firm ore conventional nature
(c) Higher advertisement expenditure would certainly increase sales revenue of a
firm.
A- a-F, b-F, c-T

B- a-t, b-T, c-f

C- abc-T,

D- None

Q-41. U=f [s,m,d]

Where U=Managers utility function
A= Additional expenditure to staff
M= Managerial Emoluments
Id=Discretionary investment
Q-42-Which of the followings are the three concepts of Revenue.
They are_____________
(I)
(II)
(III)
(IV)
A- I, ii, iii

Total Revenue
Average Revenue
Marginal Revenue
Grid Revenue
B- ii, iii C-I, ii

D-I, iii, iv

Q 43. Broadly speaking the various factors & farces that affect the price are
divided into______________categories
ANS- 2
Q-44.External of factors & forces that affect the price due________
i. Demand, Supply

ii. Size of the market

iii. Goal will, hand,
iv. Elasticity of demand & Supply
v. Social Consideration
vi. Buyers behavior in respect a particular product
vii. Competitors Pricing policy
viii. Availability of substitutes and complements
A-all, B-only ii, iii,

C-all vii, viii

D-None

Q-45- Which of the following include Objectives of the price policy?

(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

Profit Maximization in the short team

Capturing the markets
Entry to new market
Entry into new market
Deeper penetration on the market
Achieving a target return
Facing compete time situation

ANS- A-all,

B-I, ii

C-ii, iii

D-None

Q-46-Which of the followings is the Objectives of the Administered Price?

(a) To protect the interests of weak ere sections against wish prices.
(b) To curb or encourage the consumption of certain common ditties
(c) To contain inflation and ensure price stability
(d) To counter stagflation and consequent recession
(e) To mobilize revenue for the government
(f) To ensure efficient allocation of resources among diff user
Ans:-A- abc

B-bcde

C-abcdef

D-None

MB0042
ManagerialEconomics

Q2.Whichofthefollowingsarethetypesofinflation?
(a)
(b)
(c)
(d)
(e)

Creepinginflation
Walkinginflation
Runninginflation
Hyperinflation
Demandpullinflation

a allabcdeBabCdcDNone
Q3.Whichofthefollowingsarethepositivesidesofeffectsofinflation?

IItleadstoriseininvestment
IICreatesbetteropportunities

IIIEncourageentrepreneurship

IVInflationtax

VFullutilizationofresources

VILeadstoincreaseindemandformoney

VIIItisnecessarycostofdevelopment
a I,II,III,IV,V,VI,VIIBI,II,IIIciv,vdNone

Q4.Whichofthefollowingsaretheexternaleffectsofinflation?

1Reducesthevolumeofexports

2Createexchangeratedifficulties

3Discouragetheinflowofforeigncapital

4Declingininternationalcompetence
A 123,
B34,
C234,
D1231

Q5.Whichofthefollowingsaremeasurestowipeoutinflationarygap?StaleT/Fstatement

1Increaseinsavingstoaddaggregatedemand

2Increseinsavingstoreduceaggregatedemand

3Raisetheoutputtomatchthedisposableincome.

4Raisethefaxestomopuptheexcesspurchasingpower
A 123F,4T
B123T,4F
C1F,234T
DNone

Q6Environmentaldamagesmaybeinthefollowingcategoriestheyareonfollows_________.

(a)
(b)
(c)
(d)
(e)
(f)

Waterpollution
Airpollution
Sailpollution
Deforestation
Lossofbiodiversity
Solidandhazardouswastes

AAbcdef
Badbc
Cabc
DNone

Q7.Whichofthefollowingsaretheadverseeffectsofglobalwarning?

(I)Itcausesclimaticchanges

(II)Itresultsinmeetingice

(III)Itleadstoachangeoncroppatter

A I,II,III
BII,III
CI,II
DNone

Q8Whichofthefollowingsaretheadverseeffectsofacidrain?

(I)Haveilleffectsonvegetation

(II)Haveilleffectsonsoils

(III)Haveeffectsonmoments

(IV)Haveilleffectsonman

AI,II,III,IVBI,IICII,III,IVDNow
Q9StateT/Fregardingthecharacteristicsofmonopolisticcompetition?

1Existenceoflargenumberofforms

2Manietischaracterbyimperfections

3Freeentry&exitoffirms

4Moreelasticdemandcure

5Nonpricecompetition

6Productdifferentiation
Ans:1,2,3,4,5,6

Q10.WhichofthefollowingareT/Fregardingdumpingpolicyadoptedbythefollowing
reasons.
(I)Togetridofexcessproduction
(II)Tocrushrivalsinthedomesticmarkets
(III)Toreaptheadvantagesofincreasingreturnsintheindustry.
(IV)Totaketheadvantageofdifferencesindisticityofdemandindifferentmarkets
(V)Toexplorenewmanuts


(a)IF,IIF,IIIT,IVF,VF
(b)IT,IIF,IIIT,IVT,VT
(c)Allarefalse

(d)None

Q11Y

P SAC
AR

Q
Price

OutputM
X
Heretheshows(a)AR>AC

(b)AR=AC

(c)AR<AC

(d)Now

Q12whichofthefollowingsarethepriceoutputdeterminationundermonopoly?
(a) Themonopolyfirmaimsatmaximiningitstotalprofit
(b) ItiscompletelyfreefromGovtcontrols
(c) Itchargesasingle&uniformhighpricetoallcustomers

Aall
Bonlyb,c

Conlya,c

DNone

Q13.Whichofthefollowingsincludethefeaturesofmonopoly?

IAutithesisofcompetition

IIExistenceofasingleseller

IIIAbsenceofsubstitute

IVControloversupply

VPricemaker

VIEntrybarriers

VIIFirm&industryissame

VIIINatureoffirm

Aall,I,II,III,Ball

ConlyII,V,IV,VI,
DNone

Q14.Whichofthefollowingsarethecharacteristicsofoligopoly?

(I)Interdependence

(II)Indeterminatenessofthedemandcure

(III)Conflictingattitudeoffirms

(IV)Elementofmonopolyandcompetition

(V)pricerigidity


(VI)Aggressiveordefensivemarketingmethods

(VII)Constantstruggle

(VIII)Lockofuniformity

Aall
BonlyII,III,
ConlyII,IV
DNone

Q15Whichofthefollowingsaretheadventagesofpriceleadership?

(I)Itensuresthespritoflive

(II)Itisasimpleandeconomicalmethod

(III)Ithelpsthesmallfirmstoformulatetheirpricepolicy

(IV)Itensuresstabling

Aall

BonlyII,III
ConlyI,III
DNone

Q16. Y=C+_______?

Ans:S
Q17S=F(___)

Ans:Y
Q18__________refertothatportionoftotaldepositsofcommercialbankswhichhas
tobekeptwithRBI
ACRRBBVRCBJIDNONE
Q19.GNPDeflator=PINofthechosenyear

100
Q20RealGNP=
NominalGNP

PINcy/100

Q21.Keynespsychologicallawofconsumptionconsistsofthreeinterrelatedprepositionsthey
are_________?
(I)Whentheaggregateincomeincreases,expenditureonconsumptionwillalsoincrease
butbyalargerunit.
(II)Whentheaggregateincomeincreases,expenditureonconsumptionwillalso
increasebutbyasmalleramount.
(III)Theincreasedincomeisdistributedoverbothspendingandsaving.
(IV)Asincomeincreases,bothconsumptionspendingandsavinggoup.

aII,III,IVbI,iiconlyIdNone

Q22whichofthefollowingsarethetechnicalcharacteristicsofMPC.StateT/F?

(I)MPCgoesondownasincomedecreases.

(II)MPCofthepoorasincomedecreases.

(III)InshortrunMPCisstable.

(IV)MPC>0
(V)MPCmayrise,fallorremainconstant,dependingonmanyfactorsbothsubjective
andobjective.
A IF,IIF,IIIF,IVT,VF
B IF,IIT,IIIT,IVT,VT
Q23_________and________factorsintriguetheconsumptionfunction.


A Narrative&OperativeBSubjective&objectivecBasic&OperativeDNone
Q24.Whichofthefollowingsaretheimportantofconsumptionfunction?

(I)Itinvalidatessagslawofmarkets.

(II)Ithiswishlightstheimportanceofinvestmentintheemploymentmeanttheory.

(III)IthelpstoexplainthefumingpaintsofthebusinessCycle.

(IV)Ithelpstoexplaintheconceptofsecularstagnation.

(V)IthelpstoexplainthedecliningtendencyofMEC.

(VI)Itupholdsthestateintervention.

(VII)Ithelpstoexplaintheconceptunderemploymentequilibrium.

(VIII)Ithelpstofindoutthevalueofmultiplier.

Ans:Aall

BonlyII,III
ConlyI,II

DonlyI,IV,V

Q25 K= I______

IMPC

Q26.AccordingtoKeynesspeaksof5typesofinvestment,theyare__________.

(I)publicinvestment

(II)Privateinvestment

(III)Foreigninvestment

(IV)Inducedinvestment

(V)Autonomousinvestment

(VI)Complexinvestment

AI,II,III,IV,VI BII,III,IV,V,VI

CI,II,III,IV,V

DNone

Q27Theinvestmentcurveis_____________.

Ans:perfectlyelastic
Q28.Matchthefollowings
SetI

SetII

(a) Grossinvestment

(I)(grosscapital)investment
(b) Replacementinvestment

(II)anadditiontocapitalstockofcounting
(c) Netinvestment

(III)replacingtheoldcapitalequipments
(d) Exautoinvestment

(IV)theinvestmentthatisintended
(e) Expostinvestment

(V)actualorrealizedinvestment

A aV,bIII,cIV,dII,eICaV,bIII,cIV,dI,eII
B aII,bIII,cI,dIV,eVDaV,bI,cIV,dII,eIII

Q29WhichofthefollowingsarethedeterminantsofMEC.

IShortrunfactors

IICostandprice

IIIHigherpropensitytoconsume
IVChangesinincome
VCurrentstateofexpectations
VIStateofbusinessconfides
a all

bonlyII,III,

cI,II,III,V

DNone

Q30.StateT/Fregardingthelongtermexpectationwhichisinfluencedbythefollowing
factors.

IThestateofconfidence

IIStockexchangevaluation

IIIIrrevocabledecisions

IVElementsofinstability

VIBehaviorsofinvestors

aallarefalse

bIF,IIF,IIIT,IVT,VT,VIT

callaretrue

dNone

Q31Whichofthefollowingsaretheprerequisiteconditionstortheworkingofthe
multiplier?

IExistenceofinvoluntaryunemployment

IIExistenceofanindustrialeconomy

IIIExistenceofexcesscapacityinconsumergoodsindustries

IVExistenceofelasticsupplyofotherfactorinputsinthemarket

AallI,II,
Ball
ConlyII,III,
DNone

Q32.Whichofthefollowingsaretheleakagesinthemultiplier?
(a) Savings
(b) Accumulationofidlecashbalances
(c) Debtcorrelations
(d) Purchaseofoldsharesandstocks
(e) Imports
(f) Priceinflation
(g) Taxes
(h) Corporatesavings

Aabcd

Babcdefgh

Cabc

Dbcdefgh

Q33Accretionscoefficient

A= I/ C
Q34Thisisthroughtheseparameters,themonetarypolicyhastooperate.

ITotalmoneysupplyavailableinacountry
IICostofborrowings
IIIThenatureofcreditcontrolmeasures
AallII,III

BonlyI,

CallI,II,III

DNone

Q35.Whichofthefollowingsarethegeneralobjectivesofmonetarypolicy?

INeutralmoneypolicy

IIPricestabling

IIIExchangeratestabling

IVControloftradecycles

VFullemployment

VIEquilibriuminthebalanceofpayments

VIIRapideconomicgrowth

A allI,II,III,IV,V,VI,VII

Q36.Thefollowingsobjectivesofmonetarypolicybeconsidersinthecontextofdeveloping
countries.
(a) Developmentrole
(b) Effectivecentralbanking
(c) Inducementtosavings
(d) Investmentofsavings

Aabcd
Babc

Cbcd
DNone

Q37.Whichofthefollowingsaretheinstrumentsoffiscalpolicy?
(a) Publicrevenue
(b) Publicexpenditure
(c) Publicdebtorpublicborrowingpolicy
(d) Deficitfinancing
(e) Bwiltinstabilizersoraautomaticstabilizers

Aabcde
Babcd

Cbcde

DNone
Q38Whichofthefollowingsaretheobjectivesoffiscalpolicy?

ITohelpinoptimumallocationofscareresourcesanditsmaximumutilization

IIToacceleratetherateofcapitalformation

IIIToencourageinvestment

IVToensurepricestability

VTocontroltheoperationofbusinesscycles

VIToensurefullemploymentcondition

VIIToacceleratetherateofeconomicgrowth
VIIIToensureequitabledistributionofincomeandwealth
IXToreduceandminimizeregionalandsectoralinbalances
XTomobilizereal&financial,resourcesforpublicsectorinlargerquieting

AallI,II,III,

Ball
ConlyII,III,

DNone

Q39Whichofthefollowingarethethreeformsofdirectcontrol?
(a) Controloverconsumptionanddistributionthroughpricecontrol&rationing
(b) Controloverinvestmentthroughlicensing.
(c) Controloverforeigntrade.
AabcBabCacDNone
Q40.Whichofthefollowingaretheadvantagesofdirectcontrols?

(I)Directcontrolsuppressesindividualinitiating&espies.

(II)Theycanbeintroducedquicklyandeasily

(III)Directcontrolscanbemorediscriminatorythanmonetaryandfiscalcontrols

(IV)Therecanbevariationintheintenselyoftheoperation

Aall

Bonlyii,iii
cOnlyI,iii
Dnone
Q41.StateTruestatementsfromthefollowings.
1 Aperiodofupswingfollowedbyaperiodofdownswing
2 Aperiodofprosperityalternatingwithpoverty.
3 Aperiodofboomfollowedbyaperiodofslump.
4 Aperiodofexpansionfollowedbyaperiodofcontraction.

A123T,4F
B1234T

CNow
Donly1

Q42Whichofthefollowingsarethecharacteristicsofbusinesscycle?.

(I)Itisawarelikemovement

(II)Itissynchronicinnature

(III)Itoccursperiodically

(IV)Itisselfgenerating

(V)Itisinternationalincharacter

Aall
BonlyII,III,
ConlyI,II,
DNone

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