KARPAGAM ACADEMY OF HIGHER EDUCATION

III BCom - FITH SEMESTER

BUSINESS ECONOMICS - 18CMU504A
UNIT - I
Multiple Choice Questions ( Each Questions carries ONE Mark)
S.No QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4 OPTION 5
To ensure To satisfy
The subject economic unlimited wants To mobilise
matter of progress of the with limited resources and to
1 economics is
In economics people To run business means use them
the central
2 problem is Money Production Consumption Scarcity
Modern Sales revenue Cost and Welfare Market share
approach of revenue
3 firms, prefer
maximization of
Trade-offs are
required because
wants are Scarce. Economical. Efficient. Marginal.
unlimited and
4 resources are
‘Utility’ in
economics
means the Provide Satisfy human Satisfy human
5 capacity to comforts Earn an income wants motives
Utility is
6 measured by Wealth Price Value or worth Income

The extra utility

from consuming
one more unit of
a commodity is Additional
7 called Marginal utility Surplus utility utility Bonus utility
attains
equilibrium, in
case of one
commodity,
8 when: MUx= Px MUx>Px MUx<Px MUx<Px

Consumer
equilibrium in
case of two
commodities(sa
y X and Y) is MUx/ MUx/px = MUx/
9 struck when: MUx/Px= MUm Px>MUy/Py muy/py = Mum Px<MUy/Py
 Additional
utility derived
from the
consumption of
an additional
unit of a
commodity is
10 called: Average utility Total utility Marginal utility Consumer utility
An additional
unit of
consumption Consumption
If marginal Total utility is will decrease will increase Total utility is
11 utility is zero zero total utility total utility maximised
The area which
lies under the
demand curve
for a good
measures Marginal cost of
12 _______ Marginal Utility Total utility Disutility production
The price which
a consumer
would be willing
to pay for a
commodity Does not have
equal to any relation to
13 his______ Total utility Marginal utility Average utility any one of these
Goods imported
from the Durable
Basic raw Cosmetic western consumption
14 White goods are materials articles countries goods
Help in the
Capital goods’ Serve as a further Directly go into
refer to goods source of raising production the satisfaction Find multiple
15 which further capital of goods of human wants uses

When the value

of commodity is
expressed in
terms of money
16 it is known as Value Cost Service Price
The change in Price demand Income demand Cross demand Advertising
the demand, for demand
a commodity as
a result of
change in the
price of related
goods is called
17
Demand means Consumers Consumers Consumer desire Consumer’s
willingness to ability to get a to get a willingness
get a commodity commodity commodity backed by
ability to get the
18
commodity
 Utility is Unit price of the Income of the Tastes of the Quality of the
19 measured by commodity consumer consumer product
Thegraphic
presentation of
atable showing
price and
relationship[ for
a commodity in
the market is Individual Producer’s Market demand Consumer’s
20 called: demand curve demand curve curve demand curve

Positive Inverse Constant

Downward relationship relationship No relationship relationship
slope of the between price between price between price between price
demand curve and quantity and quantity and quantity and quantity
21 shows: demanded demanded demanded demanded
In case of
Giffen’s
paradox, the
slope of demand parallel to X- Parallel to Y-
22 curve is: Negative Positive axis axis
There is
When income of There is upward downward
the consumer Demand curve movement along movement along
rises in case of a Demand curve shifts to the the demand the demand
23 normal good: shifts to the left right curve curve

When the value

of elasticity is
equal to one, the
demand is Substitution
24 known as Unitary elastic Positive elastic Negative elastic effect
The degree of
change in the
quantity
demanded of a
good as a result
of the change in
the income is Income Advertising
25 called Price elasticity elasticity Cross elasticity elasticity
Highly elasticity More than one Less than one Unity Infinity
26 of demand will
be Reciprocal
relationship is
Price of Quantity found between
commodity is an demanded is a price and
Law of demand independent dependent quantity
27 does not include variable variable demanded Cost of product
 For inferior
commodities
income effect is
28 -------- Zero Negative Infinite Positive
In relatively
elastic demand
29 ED is ------
A relative   E=1 E=0 E>1 E<1
change in
quantity
demanded is less
than the relative
change in
money income
is ------ income
30 elasticity High Zero Negative Low

People demand
more of product
X when the
price of product
Y decreases.
This means X Both
and increase
31 An Y are in Complements Substitutes Not related inexpensive
consumer
income will
increase demand
for a ------ but
decrease Substitute Normal goods,
demand for a goods, inferior Normal goods, Inferior goods, complementary
32 ----- goods inferior goods normal goods goods

The total outlay

method explains
the relationship
between price
33 and ------ Demand Supply Expenditure Income
The supply of a The number of
product does not sellers in the Consumers Existing
34 depend on ------- Labour costs market tastes technology
A positive cross
elasticity of
demand
coefficient Two products
indicates A product is an A product is a Two products are
35 that----- inferior good normal goods are substitutes complementary
Supply is a Convex to the
36 function of ----- A straight line A parabola A hyperbola origin
 economics
studies the
economic
actions and Economic Total General price
37 behavior of Individual units aggregates employment level
Who is regarded
as a father of
Business
38 Economics Joel Dean Adam Smith J M Keynes Ragnar Frisch
Decision
making and
‐‐‐‐‐‐‐‐are the
two important
functions of
executive of Forward
39 business firms planning Directing Supervising Administration

Allocation of
available
resources among
alternatives is
based on the Opportunity cost Discounting Equi‐marginal Cost-Benefit
40 principle principle principle principle Analysis

Which of the
following is not
a function of Advice on trade Economic
managerial and public analysis of Investment Supervision and
41 economists relations agriculture analysis control
The demand has
three essentials‐
Desire,
Purchasing
power and Willingness to
42 ……….. Quantity Cash Supply purchase

…………….me
ans relationship
between demand
and its various
determinants
expressed Demand Demand Demand Demand
43 mathematically extension contraction analysis function
 The change in
demand due to
change in price
only, where
other factors
remaining
constant, it is Extension of Contraction of Both extension
44 called………. Shift in demand demand demand and contraction

In the case of
……………
Consumer may
moves to higher
or lower demand Extension of Contraction of Slopes in
45 curve demand demand Shift in demand demand
  Exceptional
Demand Curve
(Perverse Moving upward Moving upward Moving Moving
46 demand curve) from left to right from right to left horizontally vertically
Quantity
remains the
same whatever
the change in
price, this is the   Perfectly Perfectly Relative elastic Relative
47 case of elastic demand inelastic demand demand inelastic demand
When the
change in
demand is
exactly equal to
the change in Perfectly elastic Perfectly Relative elastic Unitary elastic
48 price, it is called demand inelastic demand demand demand
  EP
=………….in
the case of
relatively elastic
49 demand    1    >1     <1    0
When income
increases,
quantity
demanded falls,   Positive   Zero income Negative Unitary income
50 it is income elasticity elasticity income elasticity elasticity
Outlay method
of measurement
of elasticity is Percentage Expenditure Geometric
51 also called as method method Point method method
.   …….method
measures
elasticity Proportional or
between two Percentage Geometric
52 points Method Outlay Method method Arc Method
 The
proportionate
change in the
quantity
demanded of a
commodity in
response to
change in the
price of another
related
commodity is Related Income
53 called Price elasticity elasticity Cross elasticity elasticity
A rightwards An increase in
shift in supply A decrease in quantity An increase in Remains
54 curve indicates supply supplied supply constant
Other things
being equal a
decrease in the
quantity A higher price A lower price
supplied to the and a A lower price A higher price and a
market at given contraction of and a expansion and a expansion contraction of
55 prices
curve ofleads
a to demand of demand of demand demand
commodity is
positively
sloped, a rise in
the price of the
commodity
remains A decrease in A decrease in
constant, results A decrease in quantity A decease in both demand
56 in supply supplied demand and supply
The market
period supply
curve for
perishable
commodities Relatively Perfectly Relatively
57 is_________ inelastic inelastic elastic Perfectly elastic
Any supply
curve which is a
straight line
passing through
the origin
whatever its
slopes will Unitary An elasticity An elasticity An elasticity
possess_______ elasticity of which is greater which is less which is greater
58 __ supply than one than one than zero
 sloped straight
line supply
curve that
intersects the
price axis
59 is_______ Equal to zero Equal to one Greater than one Constant
The short-run
supply curve of
market Slope upward Slope downward Slope
60 always_______ from left to right from left to right horizontally Slope vertically

Any straight line

supply curve
which cuts the Unitary
x-axis will An elasticity elasticity of An elasticity Zero elasticity
61 have_______ greater than one supply less than one of supply
ON

Mark)
OPTION 6 ANSWERS
To satisfy
unlimited wants
with limited
means

Scarcity
Sales revenue

Scarce.

Satisfy human
wants

Value or worth

Marginal utility

MUx= Px

MUx/px =
muy/py = MUm
Marginal utility

Total utility is
maximised

Total utility

Does not have

any relation to
any one of these
Durable
consumption
goods
Help in the
further
production
of goods

Price
Cross demand

Consumer’s
willingness
backed by
ability to get the
commodity
Unit price of the
commodity

Market demand
curve

Inverse
relationship
between price
and quantity
demanded

Positive

Demand curve
shifts to the
right

Unitary elastic

Income
elasticity
Infinity

Cost of product
Negative

E>1

Low

Substitutes

Normal goods,
inferior goods

Expenditure

Consumers
tastes

Two products
are substitutes

A hyperbola
Individual units

Joel Dean

Forward
planning

Equi‐marginal
principle

Supervision and
control

Willingness to
purchase

Demand
function
Both extension
and contraction

Shift in demand

Moving upward
from left to right

Perfectly
inelastic demand

Unitary elastic
demand

   >1

Negative
income elasticity

Expenditure
method

Arc Method
Cross elasticity
An increase in
quantity
supplied

A higher price
and a
contraction of
demand

A decrease in
supply

Perfectly
inelastic

An elasticity
which is greater
than zero
Greater than one

Slope upward
from left to right

Zero elasticity
of supply