Bus. Eco_Ch1: Nature & Scope of Business Economics (SM 11 to 20)

Ram: My corn harvest this year is poor.

Krishan: Don’t worry. Price increases will compensate for the fall in quantity supplied. Vinod: Climate affects crop yields. Some years are bad, others are good.

Madhu: The Government ought to guarantee that our income will not fall.

In this conversation,the normative statement is made by

• Ram

• Krishan

• Vinod

• Madhu

Consider the following and decide which, if any, economy is without scarcity

• The pre-independent Indian economy, where most people were farmers

• A mythical economy where everybody is a billionaire

• Any economy where income is distributed equally among its people

• None of the above

Which of the following is not a subject matter of Micro-economies?

• The price of mangoes

• The cost of producing a fire truck for the fire department of Delhi, India

• The quantity of mangoes produced for the mangoes market

• The national economy’s annual rate of growth.

The branch of economic theory that deals with the problem of allocation of resources is

• Micro-Economic theory.

• Macro-economic theory

• Econometrics

• none of the above

Which of the following is not the subject matter of Business Economics?

• Should our firm be in this business?

• How much should be produced and at price should be kept?

• How will the product be placed in the market?

• How should we decrease unemployment in the economy?

Which of the following is a normative economic statement?

• Unemployment rate decreases with industrialization

• Economics is a social science that studies human behaviour.

• The minimum wage should be raised to ` 200/- per day

• India spends a huge amount of money on national defence

Which of the following would be considered a topic of study in Macroeconomics?

• The effect of increase in wages on the profitability of cotton industry

• The effect on steel prices when more steel is imported

• The effect of an increasing inflation rate on living standards of people in India

• The effect of an increase in the price of coffee on the quantity of tea consumed

The difference between positive and normative Economics is

• Positive Economics explains the performance of the economy while normative Economics finds out the reasons for poor performance.

• Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people

• Normative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people

• Positive Economics prescribes while normative Economics describes

Which of the following is not within the scope of Business Economics?

• Capital Budgeting

• Risk Analysis

• Business Cycles

• Accounting Standards

Which of the following statements is incorrect?

• Business economics is normative in nature.

• Business Economics has a close connection with statistics

• Business Economist need not worry about macro variables

• Business Economics is also called Managerial Economics