MCQ’s

1. Micro economics is a concerned with ___________________

Interactions within economy

The economy as a whole

The sunrise industry

The study of individual economic behavior

2. According to the law of ___________________ customers buy a high quantity of products at lower
prices and vice versa.

Demand

Supply

Production

Cost

3. ___________________ is known as highest peak of Economy.

Boom

Trough

Recession

Growth

4. In the demand curve, price is always plotted on the ___________________ axis.

B
5. Which of the following factors would not cause a shift in the demand curve?

Price

Income

Consumer tastes and preferences

All of t he given options

6. Population composition refers to the structure of t he population based on following characteristic:

Age

Sex

Race

All of t he given options

7. Schedule representing the quantities of a product supplied by an individual firm at different prices
during a specific period of time, while other factors constant

Individual supply schedule

Market supply schedule

Personal supply schedule

Industry supply schedule

8. In case of Supply Curve, ___________________ is taken on y Axis

Quantity

Income

Price

Goods
9. Which of the following does NOT shift the supply curve?

An increase in the price of the good

A fall in the price of a substitute in production

A decrease in the wages of labour used in production of the good

A technical advance

10. In case of supply Curve, ___________________ is taken on X Axis

Quantity

Income

Price

Goods

11. The graphical representation of the supply schedule is known as ___________________

Supply line

Supply tangent

Supply curve

Supply chain

12. Income effect on Consumers equilibrium is the effect caused by changes in consumer’s income on
his purchase while the price of commodities ___________________.

Changes

Decrease

Remains constant

Increases
13. A Budget Line is also called ___________________ Line

Utility

Demand

Supply

Price

14. Ignorance towards ___________________ behavior is one of the Criticism’s on indifference curve

Individual

Price

Market

Income

15. The overall understanding of Elasticity help firms in ___________________

Grant of subsides

Determining direct Tax rate

Pricing of a product and growth of a market

FDI funding from overseas countries

16. When the demand curve is a rectangular hyperbola, its represents ___________________

Utility elastic demand

Perfectly elastic demand

Perfectly inelastic demand

Relatively elastic demand

17. What is the coefficient of price-elasticity demand when the percentage increase in the quantity
demanded is smaller than the percentage fall in its price?

Equal to one (EP=1)

Greater than one (EP>1)

Smaller than one (EP<1)

Zero (EP=0)

18. The goods are that meant for final consumption by end users are called ___________________
goods.

Capital

Consumer

Industry

None of t he given options

19. The ___________________ is most applicable when the trend is related with the present scenario
and the older data is less significant.

Simple moving average method

Weighted moving average method

None of t he given options

All of t he given options

20. Which of the following is not a benefit of demand forecasting?

Forecasting price estimates

Forecasting sales figures

Assessing the probable demand

Controlling inventory
21. Which of the following statement explains ‘demand forecasting’ in true sense?

Demand forecasting is an estimate of sales during a specified future period based on proposed
marketing plan and a set of particular uncontrollable and competitive farces

Demand forecasting is an estimate of sales during a specified future period based on proposed
marketing plan and a set of particular controllable and competitive farces

Demand forecasting is an estimate of sales during a specified future period based on past marketing
plan and a set of particular uncontrollable and competitive farces

Demand forecasting is an estimate of sales during a specified past period based on propose marketing
plan and a set of particular uncontrollable and competitive farces

22. Apart from Timeliness, Following is one is the Criteria for better Demand Forecasting
___________________

Accuracy

Budget adherence

Proper cost spending

Meeting Customer expectations

23. In case of Law of production, the Average product reaches its maximum at ___________________

Stage 1

Stage2

Stage3

Both Stage2 and Stage3

24. ___________________ Returns is very basic & primary stage of Returns-To-Scale in Production.

Increasing

Constant

Decreasing

Stagnant

25. ___________________ is the ultimate reward/price for total output of Enterprise

Rent

Wages

Interest

Profit

26. The shape of the long-run total cost curve is ___________________.

L-shaped

S- shaped

U- shaped

W- shaped

27. ___________________ is the expenditure, measure in monetary terms, incurred or to be incurred

in order to achieve a specific objective.

Cost

Revenue

Production

None of t he given options

28. Which of the following statement is Not Correct?

In Short run no costs are variable

Ion Long run, all costs are variable

Fixed cost changes after a period of time

Total cost and variable cost differ by a fixed

29. Fruit market is the typical example of ___________________ area

Monopoly

Monopolistic Competition

Perfect Competition

Oligopoly

30. ___________________ number of buyers and seller is the prime feature of perfect competition\

Selected

Few

Small

Large

31. There is ___________________ substitute in Monopoly

No

One

Group of

Two
32. Which of the following result can’t be treated as an outcome of Market Failure?

Social cost incurred in the production of goods are not minimized

Wastage of resources take place

Equilibrium between supply and demand of the product is not reached

Effective allocation of resources

33. Which of the following is not considered to be a Cause of market failure?

Existence of externalities

Public goods

Incomplete information

Perfect information among buyers and sellers

34. In case of Market failure, the demand is ___________________ to supply into market.

Over proportionate

Under proportionate

Not equal

Exactly equal

35. ___________________ formulates objectives for an economy by explaining do’s and don’ts for
residents.

Negative economics

Positive economics

Normative economics

None of t he given options

36. Which of the following is not included in the calculation of Gross Domestic product (GDP)?

Consumer goods and services

Gross private domestic income

Net factor income from abroad

Goods and services produced by the government

37. Which one of the following is not a concept of macroeconomics?

Inflation

Interest rate

Firm cycle

Business cycle

38. ___________________ commodities satisfy the desires of the upper class people in the society.

Normal goods

Veblen goods

Inferior goods

Giffen goods

39. ___________________ goods demand falls with an increase in consumer’s income.

Luxury

Inferior

Normal

Necessity
40. Which one of the following is not an assumption of t he law of demand?

Consumer tastes and preferences changes

The income of the consumer remains constant

Price of remains goods remains unchanged

Consumer expectations do not change

41. Which of the following change occurs when smaller quantities of goods are supplied even at
reduced price?

Increase in supply

Contraction of supply

Expansion of supply

Decrease in demand

42. Which of the following would cause a shift to the right of the supply curve for gasoline?

A large increase in the price of public transportation

A large reduction in the costs of producing gasoline

A large increase in the costs of producing gasoline

No change in pricing / production of Gasoline

43. Total MU=TUn-

TUn+1

TUn-1

TU

TUn/TUn-1
44. Marginal utility curve is always ___________________

Falling

Rising

Parallel to x axis

Parallel to y axis

45. In case of utility goods such as salt, kerosene, elasticity the income elasticity of demand is
___________________.

Less than (<) 1

Greater than (>) 1

Equal to zero
Equal to one

46. If percentage change in quantity demanded is 9 and percentage change in price is 5, price elasticity
of demand is ___________________.

1.2

1.4

1.8

47. ___________________ indicators will move simultaneously with the current event in the case of
demand forecasting.

Coincident indicator

Leading indicator

Lagging indicator

All of t he given options

48. A forecast that projects a company’s sales is ___________________

Economic forecast

Technological forecast

Demand forecast

Associative model

49. The ___________________ indicator is one of the crucial technique in BAROMETRIC Forecasting
Methods of Demand.

Leveraging

Limiting

Coincident

Subsequent

50. With the help of isoquant and iso-cost lines, a producer can determine the point at which inputs
yield maximum profit by incurring minimum cost. Such a point is termed as ___________________
equilibrium.

Consumers

Producers

Customers

All of t he given options

51. ___________________ refers to the stage of production in which the total output increases, but
the marginal product starts declining with the increase in the number of workers.

Stage 1

Stage2

Stage3

All of t he given options

52. ___________________ implies the behavior of output when all the factor inputs are changed in
the same proportion given the same technology.

Production function

Returns to scale

Budget line

Expansion path

53. The larger the diameter of a natural gas pipeline, the lower is the average total cost of
transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

Economies of scale

Normative economies

Diminishing marginal returns

An increasing marginal product of labour

54. The LRAC Curve comprises of many ___________________ curves in long run of costs.

STC

SRAC

SFC

SVC

55. ___________________ occurs for a firm selling an output in a perfectly competitive market, where
there are several sellers and several buyers of a given product.

Marginal revenue > Average revenue

Marginal revenue < Average revenue

Marginal revenue = Average revenue

None of t he given options

56. According to ___________________ a monopolist charges different prices from different users or
buyers.

Geographical price discrimination

Personal price discrimination

Utility price discrimination

First degree price discrimination

57. Which of the following is not a feature of monopolistic competition?

Larger number of sellers

No single seller has control over the market

Horizontal demand curve for the firm

Differentiated products

58. Harberger’s triangle usually results from the intersection of ___________________

Demand curve

Supply curve

Demand curve and supply curve

Utility curve

59. A ___________________ encourages firms to increase their output beyond the consumer’s
demand.

Price selling

Price floor

Mergers and acquisition

None of t he given options

60. From the graph of the market for pizzas in a larger town, what are the equilibrium price and
quantity?

P=8, Q=60

P=60, Q=8

P=14, Q=140

P=5, Q=60

61. Suppose the monthly income of an individual increases from Rs 15,000 to Rs 25,000. Now, his
demand for clothes increases from 15 units to 20 units. Calculate the income elasticity of demand.

0.5

0.75

1.15

62. If total product is 20000 and the average product is 5000, the number of workers in the firm is
___________________

63. With fixed costs of $400, firm has average total cost of $3 and average variable costs of $2.50.Its
output is ___________________ .

800 units

600 units

200 units

100 units
THEORY QUESTIONS:
1. What are the assumptions of the law of demand?

2. What is income elasticity of demand? What are the factors influencing income elasticity of
demand?

3. Write short notes on positive and negative externality.