ASSIGNMENT

MANAGERIAL ECONOMICS
UNIT- 1

1. A utility function shows the relation between …...

a. The amount of goods consumed and a consumer utility.
b. Income and a consumer utility.
c. Prices and consumers utility.
d. Maximum utility and the price and income facing a consumer.
ANS – A

2. _______ is known as father of economics

a. Marshal
b. Robins
c. Adam smith
d. A C Pigou
ANS - C

3. The income elasticity of demand is negative for a

a. Positive good
b. Normal good
c. Elastic good
d. Inferior good
ANS – D
4. What effect is working when the price of a good falls and consumers tend to buy it
instead of other goods
a. Income effect
b. Substitution effect
c. Price effect
d. None of these
ANS – B

5. “A rupee tomorrow is worth less than a rupee today” relates to

a. Opportunity cost principle
b. Discounting principle
c. Equi-marginal principle
d. None of these
ANS - B

6. ……... principle is closely related to the marginal costs and marginal revenue of
economic theory a. Principle of time perspective
b. Equi-marginal principle
c. Incremental principle
d. None of these
ANS - C

7. Two goods that are used jointly to provide satisfaction are called
a. Inferior goods
b. Normal goods
c. Complementary goods
d. Substitute good
ANS - C

8. Micro economics is also known as—

(a) Price theory
(b) Slicing method
(c) Product theory
(d) Both (a) and (b)
ANS - D

9. Which one is not a property of isoquant

a. Downward sloping
b. Convex
c. Negative slope
d. Positive slope
ANS- D

10. Which of the following is not a variable input?

a. Raw material
b. Power
c. Equipment
d. None of these
ANS - C

11. Which cost is more useful for decision making?

a. Opportunity cost
b. Sunk cost
c. Historical cost
d. None of these
ANS – A
12. Which cost are recorded in books of accounts?
a. Opportunity cost
b. Implicit cost
c. social cost
d. Explicit cost
ANS- D

13. Fixed cost per unit increases when

a. Volume of production decreases
b. Volume of production increases
c. Variable cost per unit decreases
d. None of these
ANS - A

14. Firms in an oligopoly

a. Are independent of each other’s action
b. Can each influence the market price
c. Charge a price equal to marginal revenue
d. All of these
ANS - B

15. Business Economics is also known as………….

a. Managerial Economics
b. Economics for Executives
c. Economic analysis for business decisions
d. All the above
ANS- D
16. An input should be so allocated that the value added by the last unit is the same in all
cases.
a. Opportunity Cost Principle
b. Equi-Marginal Principle
c. Incremental Principle
d. Discounting Principle
ANS - B

17. The principle reasons behind economic problems

a. Unlimited wants
b. Limited or Scarce of Means
c. Alternatives Uses of Means
d. All of the above
ANS - D

18. Managerial utility function is expressed as:

a. U = S (S, M, I)
b. U = S (S, M)
c. U = f (S, M, I)
d. U = F (S, M, I)
ANS - C

19. Inflation is:

a. A decrease in the overall level of economic activity.
b. An increase in the overall level of economic activity.
c. An increase in the overall price level.
d. A decrease in the overall price level.
ANS - C
20. ______ is economic theory used in business whereas ______ is economics theory used
in business and non-business organization
a. Micro economics, macro economics
b. Business economics, managerial economics
c. Positive economics and normative economics
d. None of these
ANS- B

21. Managerial economics is also called

a. Micro economics
b. Theory of the firm
c. Economics of the firm
d. All of the above.
ANS - B

22. Micro economics covers the study of—

(i) Consumer’s behaviour
(ii) Producer’s equilibrium
(iii) Fiscal system of an economy
(iv) Factor pricing
(a) i and iii (b) ii and iv
(c) i, ii and iii (d) i, ii and iv
ANS -D

23. Positive statements concern what is; normative statements concern-

a. What was
b. What is the normal situation
c. What will be
d. What ought to be
ANS- D
24. ………... a schedule that depicts the supply by an individual firm or producer of a
commodity in relation to its price
a. Market price schedule
b. Market Supply Schedule
c. Individual Supply Schedule
d. None of them
ANS – C

25. The objective of macro-economics is to study about—

(a) Problems, principles and policies relating to full employment of available resources
(b) Problems, Principles and policies relating to optimum allocation of resources
(c) Growth of resources
(d) Both a and c
ANS - D
 UNIT -2

1. The demand has three essentials? Desire, purchasing power and ______
a) Quantity
b) Cash
c) Supply
d) Willingness to purchase
Ans-D

2. Desire backed up by purchasing power is known as ______

a) Utility
b) Demand
c) Consumption
d) Scarcity
Ans- B

3. Relationship between price and quantity demanded is ______

a) Direct
b) Inverse
c) Linear
d) Non-linear
ANS – B

4. Basic assumptions of law of demand does not include_______

a) There is no change in consumers taste and preferences
b) Income should remain constant
c) Prices of other goods should change
d) There should be no substitute for commodity
Ans – C
5.) Generally, demand curve has _____
a) Negative slope
b) Positive slope
c) Horizontal line
d) Vertical line
Ans – A

6.) Law of demand is a _____ statement.

a) Qualitative
b) Quantitative
Ans – A

7.) Demand is determined by

a) Price of the product
b) Relative prices of other goods
c) Tastes and habits
d) All of the above
Ans- D

8.) Which is/are determinants of Supply…….

a) price of the commodity
b) state of technology
c) cost of production
d) all the above
Ans – C
9.) The Giffen goods are _____
a) Inferior goods
b) Superior goods
c) Related goods
d) Same goods
Ans – A

10. D= f(P , Y, T, PS, U ),where letter U stands for ______

a) Utility
b) Units of consumption
c) Usage
d) Consumer expectations and others
Ans – D

11. In above function letter T stands for ______

a) Target price
b) Total supply
c) Total consumption
d) Taste and preference of consumers
Ans – D

12. The effect on sales of an increase in price is a decrease in ______

a) Quantity demanded
b) Demand
c) Supply
d) Quantity supplied
Ans – B
13. Firms in perfectly competitive industries may be characterized as _____
a) Price takers
b) Price creators
c) Price makers
d) Price negotiators
Ans- C

14.) In the case of perfect elasticity, the demand curve is_______

a) Vertical
b) Horizontal
c) Flat
d) Steep
Ans- B

15. ___________ demand forecasting is related to the business conditions prevailing in the
economy as a whole
a) Macro level
b) Industry level
c) Firm level
d) None of above
Ans- A

16._________ is the base of marketing planning

a) Demand estimation
b) Demand analysis
c) Demand function
d) Demand forecasting
Ans – D
17. Car and petrol are_______
a) Complimentary goods
b) Substitute goods
c) Supplementary goods
d) Reserve goods
Ans – A

18. Higher the price of certain luxurious articles, higher will be the demand, this concept
is_______
a) Giffen effect
b) Veblen effect
c) Demonstration effect
d) Both b and c
Ans – B

19. Demand for milk, sugar, tea for making tea, is an example of
a) Composite demand
b) Derivative demand
c) Joint demand
d) Direct demand
Ans – C

20. The change in demand due to change in price only, where other factors remaining
constant, it is called……….
a. Shift in demand
b. Extension of demand
c. Contraction of demand
d. Both extension and contraction
ANS - D
21. When the quantity demanded of a commodity rises due to a fall in price, it is called
_______
a) Extension
b) Upward shift
c) Downward shift
d) Contraction
Ans- A

22. Cross elasticity of demand between tea and sugar is_______

a) Positive
b) Zero
c) Infinity
d) Negative
Ans – D

23. The utility may be defined as______

a) The desire for a commodity
b) The usefulness of a commodity
c) The necessity of a commodity
d) The power of a commodity to satisfy wants.
Ans – D

24. The utility of a commodity is_____

a) Its expected social value
b) The extent of its practical use
c) Its relative scarcity
d) The degree of its fashion
Ans – C
25. A fall in the price of a commodity leads to _______
a) A shift in demand
b) A fall in demand
c) A rise in the consumer’s real income
d) A fall in the consumer’s real income
Ans- C