WorksheetsFinal Model Test - Economics
Total questions: 123
Worksheet time: 2hrs 3mins
Name
Class
Date
1.
The meaning of the word ''Economic'' is most clearly connected with the word
a)
Extravagant
b)
Scarce
c)
Unlimited
d)
Restricte
2.
Monopoly of state on production and investment is a feature of
a)
Mixed economy
b)
Capitalist economy
c)
Socialist economy
d)
None of the above
3.
Economics not just deals with how a nation allocates its scarce resources but deals with ______ by which productive capacity of resources can be in-creased:
a)
Principles
b)
Laws
c)
Decisions
d)
Processes
4.
Business Economics is:
a)
Branch of general economics
b)
Comprising pure economics
c)
Combination of “consumption & production units
d)
Both b & c
5.
The Law of scarcity-
a)
Does not apply to rich/developed countries
b)
Applies only to the less developed countries
c)
Implies that Consumer’s wants will be satisfied in a socialistic system
d)
Implies that consumer; wants will never be completely satisfied
6.
Scarcity of resources means?
a)
Non –existence of resources
b)
Limited resources
c)
Both a and b
d)
None of the above
7.
The central problem in economics is that of –
a)
Comparing the success of command versus market economies
b)
Guaranteeing that production occurs in the most efficient manner
c)
Guaranteeing a minimum level of income for every citizen
d)
Allocating scarce resources in such a manner that a society’s unlimited Needs or wants are satisfied as well possible.
8.
Which of the following refer to the micro economic aspects from a national angle-
a)
Per capita income of the country
b)
Capital-output ratio in steel industry
c)
Income from the railways
d)
Both b & c
9.
When we study why saving rates are high or low, we are studying
a)
Macro Economics
b)
Micro economics
c)
Econometrics
d)
Both a and b
10.
An example of positive Economic analysis would be-
a)
An analysis of the relationship between the price of good and the quantity
b)
Determining how much income each person should be guaranteed
c)
Determining the fair price for good
d)
Deciding how to distribute the output of the Economy
11.
Bearing in mind the assertion that economics is a “positive” and not a “normative” science , with which of the following problems would an economist as economist be concerned? I. The unfairness of the distribution of wealth II. The effect on prices due to speculation in raw materials III. The results of union pressure for increased wages IV. The rights and wrongs of exaggerated advertising claims
a)
I only
b)
II , III
c)
I, III
d)
I , II , III , IV
12.
What implication(s) does resource scarcity have for the satisfaction of wants ?
a)
Not all wants can be satisfied.
b)
We will never be faced will the need to make choices
c)
We must develop ways to decrease our individual wants
d)
The discovery of new natural resources is necessary to increase our ability to satisfy wants.
13.
Which of the following is a cause of an economic problem?
a)
Scarcity of resources
b)
Unlimited wants
c)
Alternative uses
d)
All the above
14.
Economic goods are goods which:
a)
Cannot be increased in quantity
b)
Obey the law of Micro Economics
c)
Are limited in supply and are scarce
d)
Are limited to man-made goods.
15.
Which of the following means an Economic activity?
a)
Production of Goods
b)
Production of services
c)
Consumption of goods and services
d)
All of the above
16.
Which economy is now a myth only, as no country in the world is having that type of economy?
a)
Capitalist economy
b)
Socialistic economy
c)
Mixed economy
d)
None of the above
17.
In Economics, the central economic problem means:
a)
Output is restricted to the limited availability of resources
b)
Consumers do not have as much money as they would wish
c)
There will always be certain level of unemployment
d)
Resources are not always allocated in an optimum way
18.
Capital is a :
a)
Stock concept
b)
Flow concept
c)
Both a and b
d)
None of the above
19.
Which of the following statements is correct?
a)
As normative science, Economics involves value judgments
b)
Robbins has made economics as a form of welfare economics
c)
The law of demand is always true
d)
None of the above
20.
We mainly study the following in Micro Economics:
a)
Location of industry
b)
Study of firms
c)
Factor pricing
d)
All the above
21.
If demand for a good is price elastic, a fall in price will lead to
a)
a rise in total expenditure on the good
b)
a fall in sales
c)
fall in the price expenditure on the good
d)
no change
22.
The things remaining same,when a consumer's income increases his equilibrium point moves to
a)
a higher indifference curve
b)
a lower indifference curve
c)
remains unchanged on the same indifference curve
d)
moves to left hand side on the same indiffernce curve
23.
A consumer is in equilibrium at the point of tangency of his indifference and price line because
a)
he does not want to go beyond it
b)
he cannot go beyond it
c)
he cannot go below it
d)
he is confused
24.
Given the consumer's indifference map and money's income the equilibrium positin of the consumer will be on the indifference curve,which is
a)
highest in indifference map
b)
lowest in the difference map
c)
highest at cut the price line
d)
highest but tangent to price line
25.
Consumer surplus is the area of
a)
below demand cure and above price
b)
above supply cure and below the price
c)
above the demand curve and below the price
d)
below the supply curve and above the price
26.
An income demand cure for inferior commodity always slopes
a)
upward to the right
b)
backward to left
c)
donwards to right
d)
horizontal
27.
While analysing marshalls measure of consumers surplus one assumes
a)
imperfect competition
b)
monopoly
c)
perfect competion
d)
monopsony
28.
The slopes of indifference curve indicates
a)
price ratio between two commodities
b)
marginal rate of substitution
c)
factors substitution
d)
level of indifference
29.
Consumer has low consumer surplus on ---------unit of the commodity consume
a)
first
b)
second
c)
all
d)
last
30.
Indifference map is drawn only when
a)
prices of the commodities are given
b)
income of the consumer is given
c)
Taste and preference of the consumer is gien
d)
none of the above
31.
Consumer surplus is best described as
a)
extra utility
b)
price paid
c)
sacrifice of commodities
d)
all of the aboe
32.
If the price of air – conditioner increases from Rs. 30,000 to Rs. 30,010 and resultant change in demand is negligible, we use the measure of _______ to measure elasticity.
a)
Point elasticity
b)
Perfect elasticity
c)
Perfect inelasticity
d)
Price elasticity
33.
Given the following four possibilities, which one results in an increase in total consumer expenditure ?
a)
demand is unitary elastic and price falls
b)
demand is elastic and price rises
c)
demand is inelastic and price falls
d)
demand is inelastic and prices rises
34.
Which one is not an assumption of the theory of demand based on analysis of indifference curves ?
a)
Given scale of preferences as between different combinations of two goods
b)
Diminishing marginal rate of substitution
c)
Constant marginal utility of money
d)
) Consumers would always prefer more of a particular good to less of it,others things remaining the same
35.
When economists speak of the utility of a certain good, they are referring to
a)
the demand for the good
b)
the usefulness of the good in consumption
c)
the expected satisfaction derived from consuming the good
d)
the rate at which consumers are willing to exchange one good for another
36.
When total demand for a commodity whose price has fallen increases, it is due to :
a)
income effect
b)
substitution effect
c)
complementary effect
d)
price effect
37.
Long term demand forecasting is generally useful in ______ decisions
a)
significant (
b)
strategic
c)
operational (
d)
tactical
38.
Replacement demand is as important component of total demand for which type of goods ?
a)
producer’s non – durable goods
b)
consumer’s non – durable goods
c)
consumer’s durable goods
d)
none of these
39.
Delphi technique was developed by
a)
Schumpeter
b)
Nichols Kaldor
c)
Olaf Hamler
d)
Hawtrey
40.
Indifference Curve analysis is based on
a)
Ordinal utility
b)
Cardinal utility
c)
Marginal utility
d)
None of the above
41.
When two goods are perfect substitutes of each other then
a)
MRS is faling
b)
MRS is rising
c)
MRS is constant
d)
None of the above
42.
The consumer surplus concept is derived from:
a)
Law of demand
b)
Indifference curve analysis
c)
Law of diminishing marginal utility
d)
All of the above
43.
______ depicts complete picture of consumer tastes and preferences
a)
Budget line
b)
Average cost curve
c)
Indifference map
d)
Marginal revenue curve
44.
If the goods are perfect substitutes for each other then cross elasticity is
a)
Infinite
b)
One
c)
Zero
d)
None of the above
45.
Consumer Surplus is:
a)
What a consumer is ready to pay + what he actually pays
b)
What a consumer is ready to pay – what he actually pays
c)
What he actually pays – what a consumer is ready to pay
d)
None of the above
46.
. Effective Demand depends on:
a)
Desire
b)
Means of purchase
c)
Willingness to those means
d)
All of the above
47.
If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per dozen and the supply increases from 240 dozen to 300 dozens elasticity of supply is:
a)
0.77
b)
-0.67
c)
0.65
d)
0.79
48.
If a good is priced at Rs. 180 p.u. and its price is increased to Rs. 240 p.u. Now suppose quantity demanded previously was 100 units and as a result of price increase, the quantity demanded fell to 80 units. What is the price elasticity?
a)
o.777
b)
1.4
c)
1
d)
0.8
49.
A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is:
a)
Infinite
b)
Zero
c)
Equal to one
d)
Greater than zero but less than one
50.
If the price of petrol rises by 25% and demand for car falls by 40% then, cross elasticity between petrol and car is:
a)
-1.6
b)
1.6
c)
-2.6
d)
2.6
51.
Supply of a good and its price have
a)
Negative relationship
b)
Inverse relationship
c)
No relationship
d)
Positive relationship
52.
An expansion in the supply of a good is caused by a:
a)
Rise in the price of good
b)
Fall in the prices of other goods
c)
Fall in the prices of other goods
d)
All of the above
53.
Which of the following has the lowest price elasticity of supply?
a)
Luxury
b)
Necessities
c)
Salt
d)
Perishable goods
54.
Which is not the assumption of Indifference curve Analysis?
a)
The consumer is rational and possesses full information about all the aspects of economic environment
b)
The consumer is not capable of ranking all combinations
c)
If consumer prefers combination A to B, and B to C, then he must prefer combination A to C
d)
If combination A has more commodities than combination B, then A must be preferred to B
55.
The consumer is in equilibrium when:
a)
When marginal utility is constant
b)
When marginal utility is greater than price of the good
c)
When marginal utility is greater than price of the good
d)
When marginal utility is greater than price of the good
56.
A higher indifference curve shows:
a)
A higher level of satisfaction
b)
A higher of production
c)
A higher level of income
d)
None of the above
57.
When quantity demanded changes by larger percentage than does price, elasticity is termed as:
a)
Inelastic
b)
Elastic
c)
Perfectly elastic
d)
Perfectly inelatic
58.
If the proportion of income spent on a goods decrease as income rises then income elasticity is:
a)
Greater than one
b)
Less than one
c)
One
d)
Zero
59.
. Cardinal Measurability of utility means:
a)
Utility can be measured
b)
Utility cannot be measured
c)
Utility can be ranked
d)
Utility can be measured in some case
60.
When the price of commodity increases by 40% and its quantity demanded falls from 150 to 120 units , then the price elasticity of demand for a commodity is-
a)
-0.008
b)
0.008
c)
0.005
d)
-0.005
61.
f the consumer consumes only one commodity X , he will be in equilibrium when-
a)
Mux>Px
b)
Mux<Px
c)
Mux=Px
d)
None of the above
62.
Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a good demanded is smaller than the percentage fall in its price-
a)
Equal to one
b)
Greater than one
c)
Smaller than one
d)
Zero
63.
. A consumer demands 5 units of a commodity at the price of Rs. 4 per unit. He demands 10 units when the price falls to Rs 3 per unit. Price elasticity of demand is equal to-
a)
3
b)
2
c)
1.5
d)
4
64.
The slope of consumer’s budget line is –
a)
Positive and constant
b)
Negative and decreasing
c)
Negative and constant
d)
Positive and increasing
65.
Demand for water is –
a)
Elastic
b)
Inelastic
c)
Perfectly elastic
d)
Relatively elastic
66.
Demand for pepsi is elastic because-
a)
) Its falls under luxuries
b)
Its consumption can be postponed
c)
Its substitutes are available in the market
d)
It is a multiple use product
67.
A consumer of two goods X and Y is in equilibrium. The price of good X is Rs. 10 and price of the good Y is Rs. 20 respectively. If the MUX is 60 utils , then the MUy is-
a)
130 utils
b)
120 utils
c)
160 utils
d)
6 utils
68.
The slope of indifference curve is given by-
a)
Budget line
b)
Marginal rate of transformation
c)
Marginal rate of substitution
d)
None of the above
69.
If current consumption is reduced for the purpose of Capital Formation, that represents a
a)
Uneconomic activity
b)
Current sacrifice for future growth
c)
Decrease in demand
d)
Decrease in resources
70.
At a price of Rs. 300 per month, there are 30,000 subscribers to Cable TV in a Small Town. If the Cable Company raises its price to Rs. 400 per month, the number of subscribers will fall to 20,000. Using the mid – point method for calculating the elasticity, what is the Price Elasticity of Demand for Cable T.V. ?
a)
1.4
b)
0.66
c)
0.5
d)
2
71.
Which of the following has the lowest Price Elasticity of Supply ?
a)
Luxury Items
b)
Necessities
c)
Perishable Goods
d)
Items that have least budgetary allocation
72.
A Product can be produced using two input combinations A and B. Combination A takes 2 units of Labour and 8 units of Capital. Combination B takes 3 units of Labour and 5 units of Capital, what is the Marginal Rate of Technical Substitution of Labour for Capital ?
a)
0
b)
2
c)
3
d)
5
73.
The superior method of forecasting is
a)
Expert Opinion method
b)
Survey method
c)
Statistical method
d)
Barometric method
74.
Which of the following statements best describes the Income Effect ?
a)
It is the change in quantity demanded as a result of the changes in the income, keeping other things constant
b)
It is the change in quantity demanded of substitute goods, as a result of change in the price of a product, keeping the income constant
c)
It is the change in quantity demanded of a product, as a result of change in the real income because of change the price of the product
d)
It is the change in the price of a good because of a rise or fail in the real income of the consumer
75.
Concerned about the poor state of the economy, a Car Dealer estimates that if income decreases by 4%, Car Sales will fall from 352 to 335. Consequently, the Income Elasticity of Demand for cars is approximately
a)
-1.2
b)
0.01
c)
0.4
d)
1.2
76.
What are internal issues that a firm has to face
a)
demand analysis
b)
profit analysis
c)
economic system
d)
both a and b
77.
Masks and sanitizers are ______________ goods
a)
substitute
b)
complementary
c)
unrelated goods
d)
none of these
78.
In case of rare paintings and diamonds, consumer surplus
a)
infinite
b)
cannot be calculated
c)
zero
d)
all of these
79.
What is true about profits?
a)
profits may be zero
b)
profits may be negative
c)
profits cannot be determined
d)
all of these
80.
According to Baumol what is the ultimate goal of a firm?
a)
profit maximization
b)
loss minimization
c)
salesmaximization
d)
cost minimization
81.
For first unit of output sold,
a)
TR = AR > MR
b)
TR = AR = MR
c)
TR > AR= MR
d)
TR < AR =MR
82.
In Bertrand’s model, the control variable is
a)
output
b)
price
c)
selling cost
d)
product differenciation
83.
Ramesh inherited 1 acre of land from his grandfather who paid Rs.10000 cash for the land back in 1961.Today,land in the area sells for Rs.200000 per acre.What is the opportunity cost to ramesh for keepimg the land?
a)
Nothing , since the land was inherited
b)
Nothing , since the grandfather paid cash
c)
Rs.190000 since this is what is the difference
d)
Rs.200000 since this what ramesh is giving up keeping the land
84.
Which of the following statements describes increasing returns to scale ?
a)
Doubling of all inputs used leads to doubling of the output
b)
Increasing the inputs by 50% leads to a 25% increase in output
c)
Increasing inputs by 1/4 leads to an increase in output of 1/3
d)
None of the above
85.
Which of the following statements is incorrect ?
a)
The LAC curve is also called the planning curve of a firm
b)
Total revenue = price per unit number of units sold
c)
Opportunity cost is also called alternative cost
d)
If total revenue is divided by the number of units sold we get marginal revenue
86.
. Who has suggested four possible functional goals – production, inventory, sales & market share – in addition to profit goal ?
a)
H.A. Simon
b)
Baumol
c)
Williamson
d)
Cyert & March
87.
Problems relating to marketing include _____
a)
Price
b)
Place
c)
Promotion
d)
All the above
88.
In principal –agent problem , the word principal refers to _______ and the word agent refers to _________
a)
managers, shareholders (owners)
b)
shareholders (owners), managers
c)
CEO, brokers
d)
chairman, board of directors
89.
Diminishing marginal returns to a factor arise essentially because
a)
The quantity (or quantities) of some other factor (or factors) is (or are) relatively fixed
b)
The quantity of that factor is fixed
c)
Quantities of all factors are fixed
d)
There is government control on production
90.
accounting profit is equal to
a)
total revenue-total variable cost
b)
total revenue-total direct cost
c)
total revenue-total explicit &implicit cost
d)
total revenue-total explicit &implicit cost
91.
which of the following statements is incorrect?
a)
the services of doctors lawyers teachers are termed as production
b)
man cannot create matter
c)
none of the above
d)
none of the above
92.
the cost the firm incurs in hiring or purchasing any factor of production is referred to as
a)
explicit cost
b)
implicit cost
c)
fixed cost
d)
fixed cost
93.
lesser production of ---------would lead to more production in future
a)
public goods
b)
consumer goods
c)
capital goods
d)
capital goods
94.
variable cost includes cost of
a)
buying land and building
b)
hire charges of machinery
c)
material bought
d)
material bought
95.
an economy achieves productive efficiency when
a)
the best quality goods are produced
b)
the highly skillful resources in the country are fully employed
c)
none of the above
d)
none of the above
96.
which of the following is considered as production in economics?
a)
teaching CA students in institute by teacher
b)
singing song before friends
c)
teaching friends in library concept of economics
d)
teaching friends in library concept of economics
97.
the LACcurve
a)
falls when LMC curve falls
b)
rises when LMC curve rises
c)
falls when LMC<LAC AND RISES WHEN LMC>LAC
d)
falls when LMC<LAC AND RISES WHEN LMC>LAC
98.
long run production function is related to
a)
returns to factor
b)
returns to scale
c)
none of the above
d)
none of the above
99.
diminishing returns occur
a)
when units of variable input are added to a fixed input and total product falls
b)
when units of variable input are added to fixed input and marginal product falls
c)
when the quantity of fixed input is increased and returns to the variable input falls
d)
when the quantity of fixed input is increased and returns to the variable input falls
100.
in the production of wheat, the following are the variable factors used by the farmer except:
a)
the seed and fertilizer when crop is planted
b)
the field that has been cleared of trees and in which crop is planted
c)
the number of hours that the farmer spends in cultivating the wheat fields
d)
the number of hours that the farmer spends in cultivating the wheat fields
101.
when total product is 200 units and units of variable factor are 8 average product will be
a)
25
b)
1600
c)
60
d)
60
102.
which of the following curve is termed as rectangular hyperbola
a)
TVC
b)
AVC
c)
AFC
d)
AFC
103.
in the production of wheat, the following are the variable factors used by the farmer except:
a)
electricity bill
b)
interest on loans
c)
wages of daily workers
d)
wages of daily workers
104.
economies of scale exist because as a firm increases its size in the long run
a)
labour and management can specialize their activities more
b)
as a large input buyer, the firm can get finance at lower cost and purchase inputs at a lower per unit cost
c)
all of these
d)
all of these
105.
example of variable costs
a)
salary of permanent staff
b)
rent of premises
c)
wages
d)
wages
106.
Assume that when price is Rs. 20, the quantity demanded is 9 units, and when price is Rs. 19, the quantity demanded is 10 units. Based on this information, what is the marginal revenue resulting from an increase in output from 9 units to 10 units.
a)
20
b)
19
c)
10
d)
1
107.
Monopoly may arise in a product market because
a)
A significantly important resource for the production of the commodity is owned by a single firm.
b)
The government has given the firm patent right to produce the commodity.
c)
The costs of production and economies of scale makes production by a single producer more efficient.
d)
All the above.
108.
The kinked demand curve model of oligopoly assumes that
a)
the response (of consumers) to price increase is less than the response to price decrease
b)
the response (of consumers) to price increase is more than the response to a price decrease
c)
the elasticity of demand is constant regardless of whether price increases or decreases
d)
the elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases.
109.
Suppose, that, at the profit – maximizing level of output, a firm finds that market price is less than average total cost, but greater than average variable cost. Which of the following statements is correct ?
a)
The firm should shutdown in order to minimise its losses.
b)
The firm should raise its price enough to cover its losses.
c)
The firm should move its resources to another industry.
d)
The firm should continue to operate in the short run in order to minimize its losses.
110.
In monopolistic competition in the long run when the firm is in equilibrium I. MC = MR II. AC = AR III. MC > AC IV. AR = MC
a)
I alone is correct
b)
I and II are correct
c)
I , II and III are correct
d)
All are correct
111.
The major objections of economists to monopolies is
a)
The lack of technological progress in such industries
b)
The dangerous impact on quality of products
c)
The instability in an industry where there is a single producer
d)
The tendency to restrict output and charges a higher price
112.
MR curve under Monopoly lies between AR and Y – axis because, the rate of decline of the MR is
a)
Just half of the rate of decline of AR
b)
Just equal to the rate of decline of AR
c)
Just triple the rate of decline of the average revenue
d)
Just double the rate of decline of the average revenue
113.
In the long run, normal profits are included in the ------ curve
a)
LAC
b)
LMC
c)
AFC
d)
SAC
114.
A condition needed for a perfectly competitive industry to exist is that:
a)
Buyers are able to influence the price of the commodity
b)
Any units of commodity are considered by buyers to be different
c)
Buyer discriminates in their purchases based on non-price factors.
d)
There are no obstacles to the free mobility of resources
115.
For the prices- taking firm:
a)
Marginal revenue is less than price
b)
Marginal revenue is equal to price
c)
Marginal revenue is greater than price
d)
The relationship between marginal revenue and price is indeterminate
116.
In Imperfect competition:
a)
Excess capacity always exists
b)
Excess capacity never exists
c)
Excess capacity may or may not exists
d)
None of the above
117.
When average revenue is Rs.30 and output is equal to 50 units total revenue
a)
2500
b)
1500
c)
1800
d)
2000
118.
. If total revenue of a firm increases by Rs 65025 due to an increase in sale of good X from 60 units to 75 units , then marginal revenue will be –
a)
3000
b)
4335
c)
4000
d)
3335
119.
A combination of monopoly market and a monopsony market is known as-
a)
Duopoly
b)
Monopsony
c)
Oligopsony
d)
Bilateral monopoly
120.
A combination of monopoly market and a monopsony market is known as-
a)
New consumer goods order
b)
Delayed deliveries
c)
New building permits
d)
Prime rate
121.
Example of Lagging indicator is-
a)
corporate profits
b)
interest rates
c)
consumer price index
d)
All of the above
122.
The productive capacity of modern economics has
a)
grown tremendously
b)
remained stagnant
c)
declined
d)
none of these
123.
Wars generally cause ___________ in economic activity
a)
expansion
b)
contraction
c)
stagnacy
d)
recovery
100 %
