MANAGERIAL ECONOMICS/BUSINESS ECONOMICS MULTIPLE CHOICE QUESTIONS AND ANSWERS (MCQS)
1. Business Economics is micro/macro economics in nature.
Ans: micro
2. Business Economics is also known as Managerial Economics.
3. Give an example of Joint Demand.
Ans: Ink and pen
4. If marginal product is zero, how much will be the total product?
Ans: TP becomes maximum
5. Total revenue = Price x Quantity.
6. Mention the type of market where a particular commodity is sold at uniform price.
Ans: perfect competition
7. Give an example if selling cost.
Ans: advertisement
8. Defining the problems is one of the steps of business decision making process.(true/false)
Ans: TRUE
9. Business Economics is specially associated with the business firms. (true/false)
Ans: True
10. Demand for commodity means
a) Desire for a commodity
b) Need for a commodity
c) Desire for a commodity backed by ability to pay for it
d) Ability to pay for a commodity
11. ‘Income of people’ is one of the factors determining market demand. (true/false)
Ans: TRUE
12. If all factors of production would have been perfectly divisible, increasing return to scale would not have occurred. (true/false)
Ans: FALSE
13. Isoquants, like indifference curves does not slop downwards from left to right. (true/false)
Ans: FALSE
14. The price at which quantity demanded equals quantity supplied is called EQUILIBRIUM price.
15. Which rule of revenue and cost is followed by the monopolist to earn maximum profit?
ANS: Monopolist can earn maximum profits when difference between TR and TC is maximum.
16. Making successful forecast is one of the responsibilities of a Managerial Economist. (Write True / False)
Ans: TRUE
17. Price mechanism is based on two strong opposite forces. (Write True / False)
Ans: TRUE
18. Perfect elasticity of demand curve is parallel / vertical to the base.(Choose the correct answer)
19. ‘Nature of the commodity’ is not a factor which determines elasticity of supply. (Write True / False)
Ans: FALSE
20. Iso-product curve should never be horizontal or vertical along base or OX-axis. (Write True / False)
Ans: True
21. What is production function?
ANS: IT SHOWS FUNCTIONAL RELATIONSHIP BETWEEN FACTORS OF PRODUCTION AND OUTPUT
22. How many production firms are there in a monopoly market?
Ans: ONE
23. Under which market form a firm is a price taker?
Ans: PERFECT COMPETITION
24. Elasticity of demand at the midpoint of a straight line demand curve is >1 / 1 / <1 span="">. (Choose the correct answer.)
25. Perfectly inelastic demand curve is parallel / vertical to the vertical axis. (Choose the correct answer.)
26. An assumption to the law of supply is ‘there will be no change in input prices’. (State True or False)
27. Production function shows the physical relationship between FACTOR INPUTS and THE QUANTITY OF OUTPUT. (Fill in the blanks)
28. Internal economies are enjoyed by a business firm due to a decrease / increase in its scale of operation.
29. Under perfectly competitive market AR is not equal MR. (State True or False)
30. The short-run supply curve of a firm under perfect competition always slopes downward / upward.
31. Market price in a long-run / short-run / very short-run price. (Choose the correct answer)
32. Business Economics is micro / macro economics in nature. (Choose the correct answer)
33. The mechanism of price determination by the free play of forces of demand and supply is knows as PRICE mechanism. ( Fill in the blank )
34. The marginal rate of technical substitution increases as more and more of one input is substituted for the other input. ( State True or False ) DECREASES
35. A firm under perfect competition can / cannot determine the price. (Choose the correct answer)
36. Very short-run price is knows as normal price. (State True or False) MARKET PRICE
37. A firm under perfect competition in the long-run earns only NORMAL profit. (Fill in the blank)
38. Price discrimination will be profitable only when the monopolist funds that the price elasticity of demand for his product is different in the different markets. ( State True or False )
39. When the firms under oligopoly reach and understanding in price and output determination, it is knows as pure oligopoly / collusive oligopoly. ( Choose the correct answer )
40. The main problems faced by the Business Managers can be divided into two parts (i) decision making and (ii) future planning. (Fill in the blank)
41. Making successful business forecast is the responsibility of a managerial economist. (State True or False)
42. ‘The price of the commodity’ is a factor of demand function. (State True or False)
43. If tea and coffee are substitute goods, then the cross-price elasticity of demand will be
a) Equal to zero.
b) Negative.
c) Positive.
d) None of the above.
44. Other things remaining the same, the supply of a commodity increases with rise in its price and fall with a fall in its price. (Fill in the blanks)
45. Define production function.
Ans: ANS: IT SHOWS FUNCTIONAL RELATIONSHIP BETWEEN FACTORS OF PRODUCTION AND OUTPUT
46. In a perfectly competitive market, equilibrium production and profit maximisation are determined where marginal cost curve cuts marginal revenue curve from below. (Fill in the blank)
47. A firm makes maximum profit when it is in equilibrium. (State True or False)
48. Making successful business forecast is one of the responsibilities of a managerial economist. (State True or False)
49. Price mechanism is based on two strong opposite forces. (State True or False) forces are demand and supply.
50. A perfectly elastic demand curve is parallel/perpendicular to the base. (Choose the correct answer)
51. Cross-elasticity of demand is applicable in case of two categories of goods (i) substitute goods and (ii) Complementary Goods. (Fill in the blank)
52. Internal economies are enjoyed by a business firm due to a decrease/increase in its scale of operation. (Choose the correct answer)
53. An iso-product curve can never be horizontal or vertical to the base. (State True or False)
54. How many firms are there in a monopoly market? ONE
55. Under which market form, a firm is a price taker? PERFECT COMPETITION
56. Mention one difference between business economics and traditional economics.
Ans: Managerial economics is micro-economic in character; however, Economics is both macro-economic and micro-economic.
57. In a planned economy, all the economic decisions are made by:
a) The Government.
b) The individuals.
c) The elders of the society.
d) The labours. (Choose the correct answer)
58. Price of the substitute goods is one of the determinants of the demand. (Write True or False)
Ans: True
59. No change of income of the consumer is an assumption of law of demand explanation. (Write True or False)
Ans: True
60. Higher iso-product curve represents ____ level of production. (Fill in the blank)
Ans: Higher
61. The rate of change in production is same with the rate of change in inputs is known as ____ returns to scale. (Fill in the blank)
Ans: Constant
62. Mention one difference between market price and normal price.
Ans: Market price is the price prevailing on a particular day or a particular time. It is the result of market demand and supply. Normal price, on the other hand, is the result of long period demand and long period supply.
63. The classification of market depends upon the nature of the produced goods. (Write True or False)
Ans: True, it is one of the basis for classification
64. Business economics is microeconomics/macroeconomics in nature. (Choose the correct answer)
65. Business economics specially associated with the business firms. (Write True or False)
66. Give an example of joint demand. Ans: Ink and Pen
67. Income of the people is one of the factors determining market demand. (Write True or False)
68. When marginal product is zero, what will be the total product? Ans: Reaches Maximum
69. Isoquant curves do not slope downward from left to right like indifference curves. (Write True or False)
70. What rules of revenue and cost follow by the monopolist to earn maximum profit?
Ans: MR=MC
71. Which feature of monopolistic competition is monopolistic in nature?
Ans: Control over price
72. Business economics is best defined as the economic study of
a) How maximum profit can be made in a business.
b) How business can make maximum use of resources.
c) How the problems of business can be solved.
d) How most of the products can be sold.
73. Price mechanism is based on supply and Demand. (Fill in the blank)
74. Demand is called perfectly elastic where demand elasticity is infinity. (Fill in the blank)
75. Give an example of joint demand. Ans: Ink and Pen
76. “Isoproduct curve can never be a horizontal or vertical line along OX-axis.” (Write True or False)
77. “When scale of production decreases with the expansion of scale of production cost, it is known as economies.” (Write True or False)
78. The classification of market depends mainly on two factors (1) number of firms and (2) Nature of goods manufactured. (Fill in the blank)
79. In long-run equilibrium, the price in perfectly competitive market is equal to
a) Short-rum marginal cost.
b) Short-run average total cost.
c) Marginal revenue.
d) None of the above.
80. Mention one characteristic of business economics. Ans: It is micro economic in nature.
81. A perfectly elastic demand curve is parallel / perpendicular to the base. (Choose the correct answer)
82. Higher Iso-product curve represents higher level of production. (Write True or False)
83. Mention one objective of a firm. Ans: Profit Maximisation
84. Price of the substitute good is one of determinants of demand. (Write True or False)
85. Mention one basic problem of an economy. Ans: What to Produce?
86. Free entry and Exit is one of the important characteristics of perfect competition. (Fill in the blank)
87. Very short-run price is known as normal price. (Write True or False) Ans: False, Market Price
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