Business economics question bank for FYBBI/BFM

Choose the correct answer from the alternatives provided:

1) -----is the economics of business or managerial decision.

a) Micro economics
b) Macro economics
c) Indian economy
d) Business economics
2) Opportunity cost is the
a) All out-of -pocket costs
b) Value of the best alternative sacrificed
c) Price of good or service
d) Price that exceeds market price
3) Economics is concerned with
a) Physics and chemistry
b) Environment
c) Scarcity, efficiency and choice
d) Managerial decisions
4) Slope refers to
a) It is a magnitude of interest which can be defined and quantified
b) Value will remain the same in the particular problem but it will change its value of other
c) The change in one variable due to change in the other variable
d) The relationship between time and a set of data
5) Managerial economics studies
a) The economic behavior of individual decision making units
b) The functioning of an economy as a whole.
c) The application of economic principles in business decision making
d) Concerned with the management of the Environment .
6) Which of the following is not a feature of a variable?
a) They are quantifiable
b) Their values can vary
c) Use an ‘=' symbol
d) Can be exogenous or endogenous
7) --- is concerned with planning and control of capital expenditure.
a) Capital management
b) Profit management
c) Cost analysis
d) Market management
e) Growth of the economy
8) Incremental principle states that a investment decision is profitable if
a) Revenue increases more than cost
b) Both revenue and cost are equal
c) Total cost is less than average revenue
d) Average revenue is equal to average fixed cost
9) ——explains the dependent of one variable on the other variable
a) Equation
b) Function
 c) Curves
d) Marginal cost
10) An exogenous variable is
a) Out of the model
b) Within an economic model
c) Difference between cost and revenue
d) Different types of curves
11) The market clearing price is also called
a) Current price
b) Base price
c) Equilibrium pric e
d) Selling cost
12) Marginal concept indicates
a) The impact of a decision on investment, production and prices
b) Change in one variable due to change in the other variable
c) Relationship between dependent and the independent variable
d) The change in total revenue and total cost due to unit change
13) The law of demand refers to
a) Price -supply relationship price cost relationship
b) Price-cost relationship
c) Price- demand relationship
d) Price income relationship
14) A change in price of a commodity, with no change in other determinants, resulting in
a) Change in quantity demanded
b) A shift in the demand curve
c) An increase in demand
d) Contraction in demand
15) As the price of a commodity falls, it becomes relatively cheaper than other alternatives. This
effect is known as
a) Substitution effect
b) Income effect
c) Price effect
d) Demonstration effect.
16) The demand for a product is the amount that
a) Buyer purchase in the market
b) Buyer are willing to purchase at a given price
c) Buyer are willing and able to purchase at alternative price
d) Buyers are able to purchase at a specific price
17) When two or more goods are demanded at the same time to satisfy a particular want is
a) Composite demand
b) Joint demand
c) Direct demand
d) Derived demand
18) If the demand equation is given as D x= 150 -5px,then at 50 units quantity demanded, the price
will be
a) Rs 10
b) Rs 20
c) Rs 30
d) Rs 40
19) Extension and contraction of demand are result of
a) Change in consumer's income
b) Change in consumer's taste
c) Change in the utility of another commodity
d) Change in price
20) If the price of coffee suddenly shoots up, ceteris bus, the demand for Tea is expected to
a) Move the rightward along the original demand curve
b) Increase
c) Remain unaffected
d) Decrease
21) If the cost of computer components fall, then—
a) The demand curve for computers shifts to the right
b) The demand curve for computers shifts to the left
c) The supply curve for computers shifts to the right
d) The supply curve for computers shifts to the left
22) The market supply schedule shows ---relationship between price and quantity supplied
a) Inverse
b) Direct
c) Vertical
d) Horizontal
23) If we were to sum the quantity demanded by every consumer in the market at each price and
plot those sums against the relevant price, we would obtain the
a) Market supply curve
b) Summed demand curve
c) Vertical demand curve
d) Market demand curve
24) Linear demand function is depicted through
a) straight line demand curve
b) A downward sloping demand curve
c) Vertical demand curve
d) Kinked demand curve
25) The supply curve illustrates how
a) Quantity supplied increases as price decreases
b) Quantity supplied increases as price increases
c) Quantity supplied increases as technology improves
d) Quantity supplied increases as resource price decreases
26) Other things being equal as the price of a commodity rises, its supply
a) Increases
 b) Decrease
c) Extended
d) Contracted
27) The following are the factors influencing supply except
a) Natural conditions
b) Improvement in transport
c) Taste and habits of the consumers
d) Technological advancement
28) The market clearing price is also called the
a) Current price
b) Prevailing price
c) Equilibrium price
d) Reservation price
29) Which of the following is a case of linear demand function ?
a) D x= f(p)
b) D x= f( P x, P y)
c) D x= a +b P x+ L
d) D X= 100-5Px
30) Equilibrium price is the price at which-
a) Quantity demanded equals quantity supplied
b) Quantity demanded exceeds quantity supplied
c) Quantity supplied exceeds quantity demanded
d) Quantity supplied always more than quantity supplied
31) In a typical demand schedule quantity demanded——
a) varies directly with price
b) Varies inversely with price
c) Is independent of price
d) Various proportionately with price
32) Under oligopoly the firm faces a --- demand curve
a) Horizontal
b) Vertical
c) Upward sloping
d) Kinked( indeterminate)
33) Marginal revenue is
a) MR= e /( e -1)
b) Change in quantity / change in A multiply by A/Q
c) AR /AR -MR
d) AR = e -1/e
34) Given the demand and supply equations, Q dx= 200 -5px,and Qs x = --250 + 10px, the
equilibrium price is
a) Rs 45
b) Rs 30
c) Rs 40.40
d) Rs 30
35) The demand function for a commodity is Q d = 40 --0.1p and the supply function is Qs= --20+
0.2p .find the equilibrium price
a) Rs 200
 b) Rs 300
c) Rs 250
d) Rs 175
36) In a wholesale vegetable market the demand for tomatoes is given by Qd= 100 - 25p and the
supply of tomatoes is given by Qs =-- 300+ 15p what is equilibrium price?
a) Rs 12
b) Rs 25
c) Rs 15
d) Rs 10
37) When the price of a product is increased by 10% and the quantity demanded decreases by 15%
we say demand is
a) Relatively elastic
b) Relatively inelastic
c) Unitary elastic
d) Perfectly elastic
38) If cross-elasticity of one commodity for another turns out to be zero, it means they are
a) Close substitutes
b) Good complements
c) Completely unrelated
d) Normal goods
39) The arc elasticity formula is used to estimate elasticity when
a) The product is thought to be inelastic
b) The product is thought to be elastic
c) The demand function is known
d) The change in one variable is due to a large change in the other variable
40) When the price of a product is Rs 60 per unit, the quantity demand is 2000 units. When the
price of x increased to Rs 100 per unit, the market demand contracted to 1000 units. Then the
price elasticity of demand coefficient is:
a) -1.75
b) -0.75
c) 0.80
d) 0.75
41) A percentage change in quantity demanded by a percentage change in price is called---
a) Income elasticity of demand
b) Price elasticity of demand
c) Elasticity of substitution
d) Elasticity of supply
42) In case of inferior goods , the income elasticity of demand is
a) Positive
b) Negative
c) Unity
d) Infinitive
43) Unitary elastic demand is represented by
 a) Horizontal demand curve
b) Down ward sloping demand curve
c) Vertical demand curve
d) Hyperbola slope demand curve
44) The basic formula for the promotional elasticity of demand coefficient is
a) Ratio of rise in demand to rise in advertisement expenses
b) Percentage change in quantity demanded/ percentage change in advertisement expenditure
c) Absolute change in demand / absolute change in advertising expenditure
d) Change in demand to change in price
45) If cross elasticity of demand is positive, goods are
a) Complementary
b) Substitutes
c) Not related
d) Inferior
46) On the lower segments of a downward sloping straight line demand curve price elasticity of
demand
a >1
) <1
b
)c =1
)d Zero
47)) In case of perishable goods the stock
a) Equal to supply
b) Less than supply
c) Exceeds supply
d) Is always more than supply
48) Which of the following pairs of commodities is an example of substitutes
a) Coffee and milk
b) Diamond and cow
c) Pen and ink
d) Mustard oil and coconut oil
49) Followings are the subject matter of business economics except
a) Demand analysis
b) Cost and production analysis
c) Price output decisions under different market structures
d) Budgetary policy
50) Which of the following will not be a determinant of the price elasticity of demand for a
commodity?
a) Availability of substitute for the good
b) The range of price change
c) The cost of producing the commodity
d) The length of time period to which the demand curve pertains
51) If a small reduction in price leads to a fall in total outlay, elasticity of demand is
 a) Less than one
b) Greater than one
c) Equal to one
d) Zero
52) When the price of season ticket passes is Rs 400 per pass, the quantity demanded is 10000
passes. When the price is reduced to Rs 380 per pass the quantity demanded is 12000 passes
a) 4
b) 2
c) 1.5
d) -3
53) Passive demand forecasting is
a) Estimated by taking into account the impact of new policies and impact of its own plan
b) Demand for the product of an entire industry is estimated
c) The demand for the previous years is extrapolated and future demand is predicted.
d) Forecasting is done for a number of periods in future
54) Which of the following is not a limitation of consumer clinic method
a) Abnormal consumer behavior
b) Expensive
c) Artificial market situation
d) Cheaper and easy to handle
55) Which is not the significance of demand forecasting?
a) Production planning
b) Pricing policy
c) Financial planning
d) Pollution control
56) Which of the following is not a feature of the Sample Survey methods?
a) Errors may occur in large size samples
b) All potential consumers are included in the survey
c) Possibility of consumer bias
d) Useful to detect changes in consumer tastes and preferences
57) Which of the following methods are often used to make short -term forecasts when
quantitative data are not available?
a) Consumer surveys
b) Regression Analysis
c) Trend Method
d) Moving Averages
58) Trend refers to
a) Short-term variations
b) *Long-term movement of data
c) Perfection
d) Regression
59) An average of past observations used to predict future referred to:
a) Delphi method
 b) Moving average method
c) Sales
d) Managerial skill
60) Which of the following methods is used to bridge the opinions given by different experts?
a) Expert's opinion
b) Trend analysis
c) Sample survey
d) Delphi
61) Which is not a feature of market experiment method of demand forecast?
a) Use of consumer clinics
b) Actual market situations are created
c) *Forecast is based on past statistical data
d) Based on observed consumer behavior
62) Which of the following statements best describes the general form of a production
function?
a) It cannot be expressed as an equation.
b) It defines the technology used by the production unit.
c) It is a technological relationship between inputs and output.
d) It indicates the cost of producing a maximum quantity of output with given inputs
63) In short run
a) All factors are variable
b) Output varies with variable factors
c) There exists some fixed factors
d) There is short time for change
64) In Cobb- Douglas production function Q= ALaK1-a the share of labor in total production is
a) a
b) 1-a
c) A
d) a-L
65) which of the following is not true about Iso quants?
a) Iso-quant slopes downward to the origin
b) Iso-quants are concave to the origin
c) Iso-quants are convex to the origin
d) Iso-quants cannot intersect each other.
66) An Iso-cost line represents-
a) Combinations of two inputs which yield the same amount of output
b) Combinations of two inputs which cost the same amount to a firm
c) Combinations of two commodities which given equal satisfaction
67) Combinations of two inputs which yields varying amount of output The negative slope of the
isoquant is due to
a) Zero MRTS
b) Diminishing MRTS
c) MRTS is greater than one
 d) MRTS is lesser than one
68) In the short-run , the law of variable proportion is also known as the
a) law of increasing returns
b) Law of diminishing returns
c) Law of constant return
d) Law of returns to scale
69) ——Type of iso-quant assumes perfect substitute ability .
a) Leontief iso-quant
b) Kinked iso-quant
c) Linear iso-quant
d) Smooth convex iso-quant
70) The law of variable proportion comes into being when
a) There are only two variable factors
b) There is a fixed factor and variable factor
c) All factors are variable
d) Variable factors yield less
71) The area lying between the two ridge line is the --
a) Non- economic region
b) Economic region
c) Economic scope
d) Economies of scale
72) When TP is maximum, which of the following is true?
a) AP is equal to MP
b) AP is declining
c) MP is maximum
d) MP is zero
73) If a simultaneous and equal percentage increase in the use of all inputs leads to a smaller
percentage increase in output , a firm's production function is said to indicate
a) Decreasing returns to scale
b) Constant returns to scale
c) Diseconomies of scale
d) Increasing returns to scale
74) An important cause of internal diseconomies of scale is
a) Rising factor costs
b) Diminishing returns to management
c) Transport congestions
d) Pollution and health hazards
75) Increasing returns to scale can be explained in terms of
a) Fixed scale of plant
b) Optimum factor proportion
c) External and internal economies
d) Labor productivity
76) Returns to scale determine the behavior of
 a) Short-run average cost
b) Marginal cost
c) Average fixed cost
d) Long run average cost
77) A long run analysis of production is called
a) Economies of scale
b) Law of variable proportion
c) Law of returns to scale
d) Law of increasing returns
78) The expansion path identifies
a) The least cost combination of inputs required to produce various levels of output
b) The firm's demand curves for the inputs.
c) The various combinations of inputs that can be used to produce a given level of output
d) The least -cost combination of outputs.
79) Which of the following is not an example of internal economies of scale ?
a) Division of labor and specialization
b) Cheaper material and equipment
c) Use of specialized capital equipment
d) Smaller percentage of inventories to total output held.
80) External economies occurs when:
a) Size of firm expands
b) Size of industry expands
c) Economy grows
d) Economies of scope
81) Division of labor result into
a) Rising cost
b) Diminishing return
c) The end of economies of scale
d) Labor economy
82) Use of specialized capital equipment Increasing returns to scale can be explained in terms of
a) Fixed scale of plant
b) Optimum factor proportion
c) External and internal economies
d) Labor productivity
83) Of the followings which one corresponds to fixed cost
a) Labor cost
b) Payment for raw material
c) Transportation charges
d) Insurance premium on property
84) If the long run average cost curves are 'L' shaped rather than 'U' shaped rather than 'U' shaped.
Due to technological change take place and, people by doing long run curve will flatter in
a) Heavy industries only
b) Both heavy and agricultural industries
 c) Agricultural industries only
d) Iron and steel industries only
85) A set of all possible production combinations while producing two commodities is
a) Iso quant map
b) *Production possibility curve
c) Production function
d) Iso cost line
86) Which of the following would be an implicit cost for the firm?
a) Payment of wages and salaries of worker
b) Payment to the supplier of raw material
c) Salary that the business owner would have earned by working elsewhere
d) Interest to the bank for borrowed funds
87) Producers equilibrium refers
a) A situation when the producer maximize his production given total expenditure and price of
factors of production
b) The relationship between input and output
c) When total demand equal to total supply
d) Input output relationship
88) Break-even point is reached when a firm
a) Earns zero profit
b) Cover fixed cost
c) Cover variable cost
d) Earns loss
89) A firm ‘s equilibrium output is produced at a point
a) TC=MR
b) MC> MR
c) MC,MR
d) MC=MR
90) Implicit costs are -
a) Equal to total fixed costs
b) Equal to total variable costs
c) *Cost owned resources used
d) Always greater in the short run than in the long run
91) If average fixed cost is Rs 40 and average cost is Rs 80 for an output level of 10, then the total
cost is
a) Rs 1200
b) Rs 120
c) Rs40
d) Rs400
92) The LAC curve is tangent to the lowest point on the SAC curves when the LAC curve is
a) Falling
b) Rising
 c) At its minimum
d) Lie above the ATC curve
93) All of the following curves are U-shaped except-
a) The AVC curve
b) The AFC curve
c) The AC curve
d) The MC curve
94) The cost of producing 5 units is Rs 567 and 6 units is Rs 768. The MC of producing the sixth unit
is
a) Rs 128
b) Rs 113
c) Rs 201
d) Rs 768
95) Which one of the following is not the diseconomies of scale?
a) Huge administrative expenditure
b) Delays in decision making
c) Financial constraints
d) Localization economies
96) Indian railways is an example of
a) Public monopoly
b) Natural monopoly
c) Oligopoly
d) Perfect competition
97) Breakeven analysis identifies the -
a) Profit -maximization level of output
b) Level of output where economic profit is equal to zero
c) Level of output where marginal revenue is equal to marginal cost
d) Equal to total fixed cost
98) Demand curve of a perfect competition is -
a) Horizontal
b) Vertical
c) Upward sloping
d) Downward sloping
99) Long run average cost is used to determine
a) The lowest possible AC for producing various levels of output
b) The maximum levels of output at lowest variable cost
c) The output at which fixed cost is minimized
d) The optimum firm size
100) Break -even point is easily worked out in case of a
a) Joint product firm
b) Multiple -product firm
c) Single product firm
 d) Multi-national corporation
101) Economies of scope is concerned with-
a) The firms producing more than one product
b) The firm producing single product
c) The firm producing substitutes
d) The firm is a monopoly one
102) Health insurance premiums paid for employees by the firm are an example of
a) Variable cost
b) Fixed cost
c) Selling cost
d) Production cost
103) The learning curve slopes downward showing a------in the cost per unit of output .
a) Increase
b) Decline same
c) Envelope
d) Horizontal
104) The LAC curve is referred as
a) Marginal revenue curve
b) Average revenue curve
c) Planning curve
d) Envelope curve
105) A firm under perfect competition faces for its product
a) A horizontal demand curve
b) A downward sloping demand curve an upward rising demand curve
c) A vertical demand curve
106) In perfect competitive market
a) Firm is the price -giver and the industry the price -taker
b) Firm is the price -taker and industry the price -taker
c) Firm and industry are price - giver
d) Firm is price maker
107) The addition made to the total revenue by selling one more unit of the output is
a) Average revenue
b) Marginal revenue
c) Total cost
d) Total revenue
108) Which of the following is not a characteristic of a perfectly competitive market?
a) There are large number of buyers and sellers
b) Every seller is a price taker
c) Products are homogenous
d) Selling cost
109) In perfect competition, the actions of an individual buyer or seller will
a) Have no significant impact on market demand
b) Have some impact on production
 c) Have a significant impact on market supply
d) Have no impact on the market price
110)If a firm in perfect competition earns Rs 1000 in total revenue and has marginal revenue of Rs 10
.what is the average revenue per unit, and how many unit were sold
a) Rs 5 and 50
b) Rs 5 and 100
c) Rs 10 and 50
d) Rs 10 and 100
111) International economies of scale
a) Firm producing more than one product
b) Process of procuring input from other countries and operations from other nations
c) Benefit s while buying inputs and selling finished product
d) Accrue to a firm when its size expand
112) Using TR and TC , profit maximizing firm will be in equilibrium at a point
a) Where the gap between the two is the smallest
b) Where the two are equal
c) Where the gap between the two is the greatest
d) The firm producing at a cost higher than the minimum
113) For a firm in a perfectly competitive market, the price of a good is always
a) Equal to marginal revenue
b) Equal to total revenue
c) Greater than average revenue
d) Equal to the firm's efficient scale of output
114) Suppose a firm in a perfectly competitive market sells 2000 units and earns total revenue
Rs 50000, what is marginal revenue of the firm?
a) Rs 50
b) Rs 25
c) 10
d) 100
115) In monopoly , the relationship between average revenue and marginal revenue curve is
as follows
a) Average revenue curve lies above the MR curve
b) AR curve coincides with the MR curve
c) AR curve is parallel to the MR curve
d) AR curve lies below the MR curve
116) Monopoly is a
a) Price maker
b) Price taker
c) Single price
d) Control over production as well as price
117) Which of the statements is true of monopoly?
a) A monopolist can decide about both the price and output to be sold
b) A monopolist poses no barrier to entry of new firms
 c) A monopolist usually earns excess profit in the long run
d) A monopolist produces at minimum average cost
118) In the long run a monopolist usually earns
a) Excess profit
b) Normal profit
c) Loss
d) No loss no profit
119) Which of the following statements is not an example of source of monopoly power?
a) A key resources is owned by a single firm
b) Technology
c) Legal protection
d) Cartel
120) Following are the features of monopoly Except
a) Single seller
b) Firm and industry are same
c) Entry barrier
d) Single price
121) Excess profit is earned when
a) AR>MR
b) AR= AC
c) AR<AC
d) MR<MC
122) A monopolist faces
a) A downward sloping demand curve and sell as much output as he desires at the market
price
b) A downward sloping demand curve and can sell only a limted quantity of output at each
price
c) A horizontal demand curve and can sell s much output as he desires at the given market
price
d) A horizontal demand curve and they can sell only a limited quantity of output at each price.
123) Expenditure on advertisement and sales promotionship includes in
a) Production cost
b) Selling cost
c) alternative cost
d) total cost
124) Under monopolistic competition there can be freedom of entry to produce
a) Close substitutes
b) Perfect substitute
c) Complementary goods
d) Perfect complementary goods
125) Selling cotton at higher price in Delhi and lower price in London : means
a) Slumping
b) Dumping
 c) Dumping cotton market
d) Dumping refers to selling of cotton
126) A monopoly producer has
a) Control over production but not price
b) Control over production as well as price
c) Control neither on production nor on price
d) Control over production, price and consumers
127) A monopoly producer usually earns
a) Abnormal profits
b) Only normal profits
c) Neither profits nor losses
d) Profits and losses which are uncertain
128) The following are the merits of advertising except
a) It provides information about the product enabling the customer to make the right choice
b) Firms can widen their market
c) Competition gets a boost
d) By giving false information consumer making wrong choices
129) In long run competitive equilibrium
a) Every firm will earn economic profit
b) Every firm will incur losses
c) Every firm will earn only normal profit
d) The marginal firm will earn no profit
130) In monopoly, the relationship between average revenue curve and marginal revenue
curves is as follows
a) AC curve lies above the marginal revenue curve
b) AR curve coincides with the MR curve
c) AR curve lies below the MR curve
d) AR curve lies above the MR curve
131) The sale of branded articles is common in a situation of
a) Excess capacity
b) *Monopolistic competition
c) Monopoly
d) Pure competition
132) Price discrimination is possible
a) Only under monopoly situation
b) Under any market form
c) Only under monopolistic form
d) Only under perfect competition
133) Under monopoly supply curve is absent because
a) The monopolist always makes profit
b) There is no entry for others
c) Equilibrium involves MC=MR and MR<P
d) The monopolist controls the supply
134) Which of the following statements is correct regarding a firm's decision -making?
a) The decision to shut down and decision to exit are both short run decisions
b) The decision to shut down and decision to exit are both long run decision
c) The decision to shutdown is a short run decision, where the decision to exit is a long run
decision
d) The decision to exit is a long run decision, where the decision to shutdown is a long run
decision
135) Product sold under monopolistic competition is
a) Homogeneous
b) Differentiated
c) Inferior
d) Superior
136) Expenditure on advertisement constitutes
a) Production cost
b) Selling cost
c) Fixed cost
d) Total fixed cost
137) According , QB=break even quantity, TFC= total cost, P= price and AVC = average
variable cost, algebraically , break- even point formula is given as
a) QB=TFC/( P+ AVC )
b) QB= TFC/ (CP—AVC)
c) QB=TFC/P
d) QB= P/(TFC—AVC)
138) Under perfect competition commodities are ---in nature
a) Homogeneous
b) Classified
c) Heterogeneous
d) Supplementary
139) A kinked demand curve indicates
a) Price flexibility in non-collusive oligopoly
b) Price flexibility in collusive oligopoly
c) Price rigidity in collusive oligopoly
d) Price rigidity in non-collusive oligopoly
140) --- appears a monopoly market
a) Product differentiation
b) Price discrimination
c) Individual differentiation
d) Packing differentiation
141) The kinked demand curve model explained
a) Price flexibility
b) Price rigidity
c) Demand flexibility
d) Demand rigidity
 142) Monopolistic competition and oligopoly are alike in terms of
a) Non-price competition
b) Strong mutual interdependence among firms
c) Kinked demand analysis
d) The number of firm
143) Which of the following statements about the relationship between marginal cost and
average cost is correct?
a) When MC is rising , AC always rises

b) MC equals AC at MC's minimum points

c) When MC exceeds AC , AC will rise

d) When AC exceeds MC, MC will rise

144) In an oligopoly, a firm while deciding about its own price and output policy has

a) a firm with the highest cost of product to take account of the likely reactions of the other
firms
b) Has not to bother about other firms
c) Assume that others will not react
d) To act independently of the others
145) OPEC is an example of the type of producer's organization known as a
a) Marketing board
b) Producer's cooperative
c) Trust
d) Cartel
146) Dumping means selling at
a) A higher price in home market and a lower price in foreign market
b) A lower price in home market and a higher price in foreign market
c) The same price in the home and the foreign market
d) The imposition of lump sum tax price period
147) Price discrimination is profitable when
a) Elasticity of demand is the same in different markets
b) Elasticity differs in different market
c) When demand in different markets is perfectly elastic
d) When customers are ignorant about price differentials
148) Marginal cost pricing may be charged for which of the following reasons?
a) Maximizing profit
b) To control monopoly
c) Minimizing losses
d) Prevent shut down of the firm
149) Which pricing strategy uses various class distinctions?
a) Marginal cost pricing
b) Price discrimination
 c) Product line pricing
d) Mark-up pricing
150) The strength of a monopolist may be assessed by
a) The size of his total revenue
b) the gap between AR and MR
c) The size of consumer's surplus accruing to him
d) The long term price of his product
151)
151) Kinked demand curve model was given by
a) *Paul Sweezy
b) Paul Samuelson
c) Alfred Marshall
d) E.H. Chemberlin
152) which of the statements is true of monopoly?
a) A monopolist can decide about both the price and output to be sold
b) A monopolist poses no barrier to entry of new firms
c) A monopolist usually earns excess profit in the long run
d) A monopolist produces at minimum average cost
153) Under monopolistic competition there can be freedom of entry to produce
e) Close substitutes
f) Perfect substitute
g) Complementary goods
h) Perfect complementary goods
154) Selling cotton at higher price in Delhi and lower price in London : means
e) Slumping
f) Dumping
g) Dumping cotton market
h) Dumping refers to selling of cotton
155) Monopolistic competition differs from perfect competition because in monopolistically
competitive markets
a) There are barriers to entry
b) All firms can earn normal profit in the long run
c) Each of the sellers offers a somewhat different product
d) Firms are interdependent
156) The dominant firm price leader's market share
a) Is lower , the higher the follower's costs
b) Is higher, the lower the follower's cost
c) Is lower, the lower the follower's cost
d) Is invariant with the follower's cost
157) A kinked demand curve has
a) A lower elasticity above the point of kink and higher elasticity below it
b) A higher elasticity above the point of kink and lower elasticity below it
c) A uniform elasticity both and below the point of kink
 d) To act independently of others
158) An oligopolist is
a) Certain about his decision
b) Uncertain about his decision
c) Totally depends on others
d) Independent
159) The kinked demand curve model was given by
a) J.S.Mill
b) Alfred Marshall
c) Paul Sweezy
d) Paul Samuelson
160) First degree of price discrimination refers to
a) Each customer is charged different price for the same commodity
b) Each market segment is charged different price
c) Different prices are charged for same for same commodity in different market
d) Monopolist will divide the output into block of output and sell it at different prices
161) Which of the following is not a feature of full cost pricing method?
a) Avoids frequent price change
b) Most popular method
c) Based on marginal cost
d) An ideal which most firms aim at
162) Which is not the objective of price policy?
a) Ensuring the survival of the business firm
b) Sales maximization, optimum utilization of resources and diversification
c) Profit maximization and reasonable rate of return on investment
d) Not consider the demand side.
163) Mark -up pricing or cost plus pricing was developed by
a) Hall and Hitch
b) Prof. Stigler
c) Prof. chamberlin
d) ProfJ.M.Keynes
164) Price leadership avoids
a) New entrants to the market
b) Promotes product differentiation
c) Price war
d) Certain about his decision
165) Skimming pricing refers to
a) Setting the price at a higher level to attract the customers
b) Price is first fixed by the firm and then producing the product is planned
c) The practice of selling quality goods at a lower price than what it was sold earlier
d) Practice of setting a high price initially and then lowering it later on.
166) Which of the product has nearly perfectly inelastic demand?
a) Salt
 b) Electricity
c) Petrol
d) Higher education in management fields
167) Profit maximizing firm will shut down when
a) Price is less than AVC
b) Price is less than average fixed cost
c) Average revenue is greater than marginal cost
d) Average revenue is greater than average fixed cost
168) In perfect competition , there is
a) Free entry and free exit of the firm
b) Free entry but restricted exit of the firm
c) Restricted entry and exit of the firms
d) Semi-free exit but absolute free entry
169) In long run competitive equilibrium
a) Every firm will earn economic profit
b) Every firm will incur losses
c) Every firm will earn only earn normal profit
d) The marginal firm will earn no profit
170) Transfer pricing is regulated by
a) Private sector
b) Agricultural farmers
c) Government
d) Brokers
171) Under oligopoly the number of firms are --
a) Large
b) Few
c) Only one
d) Many
172) Demand curve under oligopoly is
a) Horizontal
b) Vertical
c) Kinked
d) Hyperbola
173) Third degree price discrimination
a) Price fixed by the government
b) Different prices in different market
c) Arises due to growth of large scale industries.
d) Type of price discrimination
174) Cartel formation helps the oligopoly firms
a) To avoid competition
b) High barriers to entry
c) Firms compete with each other
d) Social welfare.