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WorksheetsCHP 1 (FULL CHP) Nature & Scope of Business Economics
Total questions: 84
Worksheet time: 3hrs 48mins
Economists regard decision making as important because:
The resources required to satisfy our unlimited wants and needs are finite, or scarce
It is crucial to understand how we can best allocate our scarce resources to satisfy society’s unlimited wants and needs.
Resources have alternative uses.
All the above.
Business Economics is
Abstract and applies the tools of Microeconomics.
Involves practical application of economic theory in business decision making
Incorporates tools from multiple disciplines.
(b) and (c) above.
In Economics, we use the term scarcity to mean
Absolute scarcity and lack of resources in less developed countries.
Relative scarcity i.e. scarcity in relation to the wants of the society
Scarcity during times of business failure and natural calamities.
Scarcity caused on account of excessive consumption by the rich.
What implication(s) does resource scarcity have for the satisfaction of wants?
Not all wants can be satisfied.
We will never be faced with the need to make choices
We must develop ways to decrease our individual wants.
The discovery of new natural resources is necessary to increase our ability to satisfy wants.
Which of the following is a normative statement?
Planned economies allocate resources via government departments.
Most transitional economies have experienced problems of falling output and rising prices over the past decade.
There is a greater degree of consumer sovereignty in market economies than planned economies
Reducing inequality should be a major priority for mixed economies.
In every economic system, scarcity imposes limitations on
households, business firms, governments, and the nation as a whole
households and business firms, but not the governments.
local and state governments, but not the federal government.
households and governments, but not business firms.
Macroeconomics is also called——— economics.
Applied
Aggregate
Experimental
none of the above
An example of ‘positive’ economic analysis would be:
an analysis of the relationship between the price of food and the quantity purchased.
determining how much income each person should be guaranteed.
determining the ‘fair’ price for food
deciding how to distribute the output of the economy.
A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of
Macro-Economics
Descriptive Economics.
Micro-economics.
Normative economics.
Which of the following does not suggest a macro approach for India?
Determining the GNP of India.
Finding the causes of failure of ABC Ltd.
Identifying the causes of inflation in India
Analyze the causes of failure of industry in providing large scale employment
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 Rs. 200/- per day
India spends a huge amount of money on national defense.
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.
Economic goods are considered scarce resources because they
cannot be increased in quantity.
do not exist in adequate quantity to satisfy the requirements of the society.
are of primary importance in satisfying social requirements.
are limited to man made goods
In a free market economy, the allocation of resources is determined by
voting done by consumers
a central planning authority.
consumer preferences.
the level of profits of firms.
A capitalist economy uses ______________ as the principal means of allocating resources.
Demand
Supply
Efficiency
Prices
Which of the following is considered as a disadvantage of allocating resources using the market system?
Income will tend to be unevenly distributed.
People do not get goods of their choice
Men of Initiative and enterprise are not rewarded
Profits will tend to be low
Which of the following statements does not apply to a market economy?
Firms decide whom to hire and what to produce
Firms aim at maximizing profits.
Households decide which firms to work for and what to buy with their incomes.
Government policies are the primary forces that guide the decisions of firms and households
In a mixed economy
all economic decisions are taken by the central authority.
all economic decisions are taken by private entrepreneurs.
economic decisions are partly taken by the state and partly by the private entrepreneurs.
none of the above
The central problem in economics is that of
comparing the success of command versus market economies.
guaranteeing that production occurs in the most efficient manner
guaranteeing a minimum level of income for every citizen
allocating scarce resources in such a manner that society’s unlimited needs or wants are satisfied in the best possible manner.
Capital intensive technique would get chosen in a
labour surplus economy where the relative price of capital is lower.
capital surplus economy where the relative price of capital is lower.
developed economy where technology is better.
developing economy where technology is poor.
Which of the following is not one of the four central questions that the study of economics is supposed to answer?
Who produces what?
When are goods produced?
Who consumes what?
How are goods produced?
Larger production of ___ goods would lead to higher production in future.
consumer goods
capital goods
agricultural goods
public good
The economic system in which all the means of production are owned and controlled by private individuals for profit.
Socialism
Capitalism
Mixed economy
Communism
Macro Economics is the study of _____________.
all aspects of scarcity
the national economy and the global economy as a whole.
big businesses
the decisions of individual businesses and people.
Freedom of choice is the advantage of
Socialism
Capitalism
Communism
None of the above
Exploitation and inequality are minimal under:
Socialism
Capitalism
Mixed economy
None of the above
Administered prices refer to:
Prices determined by forces of demand and supply
Prices determined by sellers in the market
Prices determined by an external authority which is usually the government
None of the above
In Economics, the central economic problem means:
Output is restricted to the limited availability of resources
Consumer do not have as much money as they would wish
There will always be certain level of unemployment
Resources are not always allocated in an optimum way
Scarcity definition of Economics is given by
Alfred Marshall
Samuelson
Robinson
Adam Smith
The definition “Science which deals with wealth of Nation” was given by:
Alfred Marshal
A C Pigou
Adam Smith
J B Say
Which of the following is not one of the features of capitalist economy?
Right of private property
Freedom of choice by the consumers
No profit, No Loss motive
Competition
There is need of economic study, because –
The resources are limited
The wants are unlimited
The resources are unlimited
Both a and b
The benefit of economic study is –
It ensures that all problems will be appropriately tackled
It helps in identifying problems
It enables to examine a problem in its right perspective
It gives exact solutions to every problem
The managerial economics –
Is Applied Economics that fills the gap between economic theory and business practice
is just a theory concept
Trains managers how to behave in recession
Provides the tools which explain various concepts
Which of the following statements is correct?
Micro economics is important for study of a particular household and a particular firm
Macro economics is important for study of economic conditions of a country
None of the above
Both a and b
Mr. Satish hired a business consultant to guide him for growth of his business. The consultant visited his factory and suggested some changes with respect to staff appointment, loan availability and so on. Which approach is that consultant using?
Micro economics
Macro economics
None of the above
Both a and b
_____ is also called as command economy
Socialist
Capitalist
Mixed economy
None of the above
Which of the following is/are limitation(s) of the wealth definitions of economics given by classical economists?
By considering the problem of production distribution & exchange of wealth, they focused attention on important issues with which economics is concerned.
By restricting the definition of wealth to material wealth & the neglect of immaterial services, they narrowed down the scope of economics.
Both (A) and (B)
None of these
According to which of the following definitions, economics studies human behavior regarding how he satisfied his wants with scare resources?
Robbin’s definition
Marshall’s definition
J.B. Say’s definition
Adam Smith’s definition
______________ is concerned with welfare proposition.
Normative Economics
Positive Economics
Both (A) and (B)
None of these
Which of the following is/are correct about micro economics?
Micro economics studies the economy in its totality.
In micro economics we make a microscopic study of the economy
Micro economics deals with the division of total output among industries and firms & the allocation of resources among competing uses.
Both (B) and (C)
“If Americans today, for example were to content to live at the level of the Indian middle class people, all their wants would be fully satisfied with their available resources and capacity to produce.” On the basis of the above statement, which of the following conclusion can be made?
The possession of goods and services by USA has enormously increased to exceed their wants.
The affluent and developed countries of USA and Western Europe face the problem of scarcity even today as their present wants remain ahead of their increased resources and capacity to produce.
The affluent and developed countries are not facing the problem of scarcity.
None of these
If there is no central planning authority to make the fundamental economic decisions and thus to allocate productive resources, how can then free enterprise or capitalist economy solve its central problems?
Through the power of God
On the basis of decision taken by industrial groups.
The free market economy uses the impersonal forces of the market to solve its central problems
None of these
The industrialization and economic development of the USA, Great Britain and other Western European countries have taken place under the condition of _________________
Socialism and planned structure
Capitalism and laissez faire
Mixed economic structure
None of these
The greater the inequalities in the distribution of money incomes, the (a) the inequalities in the distribution of national output.
Greater
Lesser
(A) or (B)
None of these
53) “A wise individual or a society likes to provide for its growth of productive capacity.” This requires that a part of its resources should be devoted to the production of (a) .
Consumer goods
Capital goods
Defense goods
None of these
In the beginning the name of economics was (a) .
Economics of wealth
Political economy
Welfare economics
None of these
The word economics has been derived from a (a) word.
French
Latin
Greek
German
Economics is mainly concerned with
the achievement of economic development
the achievement and use of material requirements to satisfy human wants
the exploring more resources to satisfy human wants
the limiting human wants with respect to given resources
Business economics is a field in (a) which uses economic theory and quantitative methods to analyze business enterprises
Welfare Economics
Development Economics
Applied economics
None of these
Economics is a branch of (a) focused on the production, distribution and consumption of goods and services
Natural science
Physical science
Social science
None of these
“Generally a business manager is concerned with problems of his own business units. He does not study the economic problems of an economy as a whole.” State whether the above statement is________
True
False
Partly True
Partly False
Business economics is (a) in its approach.
Idealistic
Pragmatic
Both (A) and (B)
None of these
A business manager must know the external forces working over his business environment.
True
False
Partly True
Partly False
The scope of business economics includes (a)
Demand analysis
Cost analysis
Inventory management
All of these
A socialist economy is a system of production where goods and services are produced (a)
to generate profit
directly for use
Both (A) and (B)
None of these
Which one of the following statements is correct regarding socialist economy?
Production is planned or coordinated and suffers from the business cycle
Production suffers from the business cycle
Production is planned and does not suffers from business cycle
None of these
Which of the following is not a merit of socialist economy?
It provides equal access to health care and education
Workers are no longer exploited because they own the means of production
Profits are not spread equitably among all workers according to their individual contributions.
Natural resources are preserved for the good of the whole.
Which of the following is/are the merit(s) of mixed economic system?
Entrepreneurs able to make profit
Progressive taxes to reduce inequality
Government’s provision of public goods
All of the above
Which of the following falls under Micro Economics?
National Income
General Price level
Factor Pricing
National Saving and Investment
Which of the following statements is correct?
Employment and economic growth are studied in micro-economics.
Micro economics deals with balance of trade
Economic condition of a section of the people is studied in micro-economics
External value of money is dealt with in micro-economics
Which of the following is not an economic activity?
A son looking after his ailing mother
A chartered accountant doing his own practice
A soldier serving at the border
A farmer growing millets
'A government deficit will reduce unemployment and cause and increase in prices' This statement is:
Positive
Normative
Both
None of the above
Normative economics is __________ in nature
Modern
Descriptive
Prescriptive
None of the above
The term economics is derived from Greek work “Oikonomia” which means
Household management
Art of Living
Science of good governance
Law of rational behavior
The famous book “Wealth of Nations” was published in
1776
1750
1850
1886
______ guide a capitalist economy to decide what to produce
Market survey
Economic models
Intensity of consumer demand
Cost of Production
Which of the following is not a characteristics of capitalist economy?
Right to Private property
Freedom of Enterprise
Consumer sovereignty
Planned Production
____ economics explains cause and effect relationship between economic phenomena
Positive
Normative
Negative
Applied
______ refers to the sum total of arrangements for the production and distribution of goods and services in a society
Business Economics
Micro Economics
Economic System
Economics
_____ is the mainstay in the capitalism
Profit motive
Private property
Consumers
Competition
Which of the following is not an example of Capitalist economy?
USA
Germany
North Korea
South Korea
The word ‘Economics’ originates from the word
Oikonomicos
Oyekonomic
Oikonomia
Oiconomia
.............refers to the process of selecting an appropriate alternative that will provide the most efficient means of attaining a desired end, from two or more alternative courses of action?
Problem solving
Problem analyzing
Managerial expertise
Decision making
Which of the following is not the feature of capitalist economy?
Right to private property
Freedom of economic choice.
Collective ownership
Consumer Sovereignty
The concept of socialist economy was propounded by.......
Karl Marx and Frederic Engels.
Marshall
Adam Smith
Joel Dean
Which economic system is the predominant in the modern global economy?
Socialism
Capitalism
Mixed
All of the above
