WorksheetsCAF-ECO-MT(Micro Eco)
Total questions: 100
Worksheet time: 2hrs 40mins
Who defined Business economics in terms of the use of economic analysis in the formulation of business policies?
Adam Smith
Robbins
Joel Dean
Alfred Marshall
Which of the following is true of an imperfect market structure?
Participants in the market have little or no control over outcome in the market.
Consumer surplus is maximized.
The maximization of producer surplus may lead to a loss of net benefit for society.
Imperfect market structures include monopolies but not cartels.
Marshallian theory of consumer’s behaviour is based on
Hypothesis of additive utilities
Hypothesis of independent utilities
Both (A) and (B)
Weak ordering
Which of the following are the features of a mixed economy?
Planned economy
Dual system of pricing exists
Balance regional development
All of the above
Peak is the __________ stage of expansion.
Later
Earlier
Either (A) or (B)
None of the above
The Book “The Wealth of Nations“ is written by:
Adam Smith
Arthur Pigou
Robinson
Ragnar Nurske
The demand for labour in response to the wage rate is ________ whereas the demand for same labour in response to the price of electronic goods where labour enters as an input is_____.
Derived Demand, Direct Demand
Direct Demand, Derived Demand
Individual Demand, Market Demand
Company Demand, Industry Demand
Marginal revenue of a firm is constant throughout under:
Perfect Competition
Monopolistic Competition
Oligopoly
All the above
Given TC = 2000+15Q−6Q2+Q3 . How much is TFC at Q = 2000?
2000
975
30,000
Can’t be determined
Exception to the law of demand:
Conspicuous goods
Giffen goods
Future expectations about prices
All of the above
Which is not the External Causes of business cycle:
Technology shock
Population Growth
Money Supply
Technology Shock
Monopolistic competition constitutes:
Single firm producing close substitutes
Many firms producing close substitutes
Many firms producing differentiated substitutes
Few firms producing differentiated substitutes
The Relationship between AR, MR and Price Elasticity –
MR = AR × (e − 1) ÷ e
AR = MR × (e − 1) ÷ e
AR − MR = (e − 1) ÷ e
None of these
Successful business firms spend considerable time, energy, and efforts in analyzing the _________ for their products.
Supply
Price
Demand
None of these
‘Interdependence Between Firms’ is a feature of which type of market form:
Oligopoly
Monopolistic Competition
Monopoly
Perfect Competition
Which of the following matters is/are fundamentally connected to economic analysis?
Economic prosperity
Higher standard of living
Changes in price of a commodity
All of the above
Agricultural goods markets depict characteristics close to:
Perfect competition
Oligopoly
Monopoly
Monopolistic competition
If marginal product of labour is below average product of labour, then
average product of labour is flat.
average product of labour is increasing.
average product of labour is decreasing.
may be increasing, decreasing or flat.
If the price of a commodity raised by 12% and Ed is (−) 0.63, the expenditure made on the commodity by a consumer will ___
Decrease
Increase
Remain same
Can’t Say
Price Rigidity explained by Sweezy’s model is related to which market form:
Monopoly
Oligopoly
Monopolistic competition
Perfect Competition
Which of the following is a function of an entrepreneur?
Initiating a business enterprise
Risk bearing
Innovating
All of the above
Which of the following curve cannot be u-shaped?
Average total cost
Average variable cost
Average fixed cost
Marginal cost
Innovation theory is propounded by:
Schumpeter
Nicholas Kaldor
Keynes
None of these
In economics, generally the classification of the markets is made on the basis of:
Time
Geographic area
Volume of business
All of these
In a capitalist economy, profit is socially desirable because it:
signals efficient allocation of resources and guides investment.
creates monopoly power that reduces consumer welfare.
discourages innovation and technological progress.
always increases deadweight loss in competitive markets.
Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is:
uniform
different
less
zero
Decrease in input demand _____.
Doesn’t affect inputs prices
Pushes inputs prices up
Pulls inputs prices down
Either (B) or (C)
If a firm has a downward-sloping long-run average cost curve, then
it is experiencing increasing returns
it is experiencing decreasing returns
it is a natural monopoly
marginal cost is greater than average cost
The Producer is in equilibrium at a point where the cost line is
above the isoquant
cutting the isoquant
tangent to the isoquant
none of these
Selling cost are essential in:
Monopoly
Monopolistic competition
Perfect competition
All of the above
During lockdown due to COVID-19, a consumer finds the vegetable vendors selling vegetables in the street have raised the prices of vegetables than usual prices. She will buy ____________ vegetables than/as her usual demand showing the demand of vegetable_____
more, inelastic demand
less, elastic demand
same, inelastic demand
same, elastic demand
Mr Amit, a stock market trader through inside information, comes to know that share price of X Ltd is likely to go up in future, so he purchases the shares to make a gain by selling them later at higher price. It is a case of:
Moral Hazard
Asymmetric Information
Free Riding
None of the above
A consumer who is below the personal budget line (rather than on it):
is not spending all personal income
is spending all personal income
may or may not be spending all personal income
is in equilibrium
What is ‘price ceiling’?
Minimum price that can be charged for a good
Maximum price that can be charged for a good
Minimum support price
Both (a) and (b)
The kinked demand curve theory explains that even when the demand conditions __________ the price ____________:
change, change
change, remains stable
remain stable, changes
remain stable, falls
During depression, it is advisable to:
Lower Bank Rate and purchase securities in the market
Increase Bank Rate and purchase securities in the open market
Decrease Bank Rate and sell securities in the open market
Increase Bank Rate and sell securities in the open market
If the firm’s total costs are INR 2,200,000 and total variable costs are INR 1,300,000, what are the total fixed costs?
900,000
1,200,000
4,500,000
None of the above
When rent control is imposed above the current market price it will:
increase the quantity of rental housing demanded
reduce the quality of rental housing
create a shortage of rental housing
create no impact on the market
The regulatory mechanism of the market system is
Self interest
Private property
Competition
Specialization
“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 is correct?
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 supply increases while demand decreases:
the equilibrium price will definitely increase
the equilibrium quantity will definitely increase
the equilibrium price will definitely decrease
the equilibrium quantity will definitely decrease
If the price of apples rises from ₹30 per kg to ₹40 per kg and the supply increases from 240 kg to 300 kg. Elasticity of supply is
0.77
0.67
−0.67
−0.77
In a market economy, resource allocation is primarily determined by:
Central planning by the government
Consumer demand and supply in the marketplace
The decisions of a few large corporations
International trade agreements
If the income elasticity of demand is greater than 1, the commodity is:
a necessity
a luxury
an inferior good
a nonrelated good
In the Cobb–Douglas production function given as: Q=ALaK1−a the share of labour in total production is:
a
1 − a
A
a·L
Which of the following is incorrect formula?
TC = AC × Q
∑MC = TC
∑MC = TVC
∑MC + TFC = TC
In a mixed economy resources are used as a result of
The decisions of consumers
The decisions of firms only
The decisions of consumers and firms
The decisions of consumers and firms and government
Which of the following describe a Typical Business Cycle?
Economic expansions are followed by contractions
Inflation is followed by rising income and unemployment
Economic expansion is followed by economic growth and development
Stagflation is followed by inflationary growth
If we notice that an increase in the price of product X causes reductions in the demand for product Y, then we can conclude that these two products are
complements in consumption
substitutes in consumption
complements in production
substitutes in production
Cost function is a concept of which kind?
Economical
Functional
Financial
Technical
Which of the following statements is correct regarding business cycles?
Business cycles are contagious and international in character
Business cycles begin in one country and spread to other countries through trade relations
Business cycles have serious consequences on well-being of the societies
All of the above
Which of the following is NOT dealt with in microeconomics?
the effect of agricultural subsidies on the price of milk
differences between the market for skilled labour versus the market for unskilled labour
issues related to the structure and performance of the health care sector
policies that affect the level of aggregate consumption
The price elasticity of demand for a good will tend to be more elastic if
the good is broadly defined (for example, demand for food as opposed to demand for carrots)
the good has relatively few substitutes
a long period of time is required to fully adjust to a price change in the good
None of the above is true
When the output increases from 20 to 30 units and total revenue increases from Rs 400 to Rs 500, what is marginal revenue (MR)?
20
10
15
None of these
Price in capitalist economy is determined by
Small private firms
Big corporates
Market forces of demand and supply
Government
The point at which the total product curve begins to flatten out indicates
The onset of diminishing marginal returns
Maximum efficiency in production
A decrease in fixed costs
The end of increasing returns to scale
During an expansion phase of the business cycle, which of the following is likely to occur?
Decrease in consumer spending
Increase in business bankruptcies
Increase in job opportunities
Decrease in government spending
Which of the following is not a variable in the index of leading indicators?
Prime rate
New building permits
Delayed deliveries
None of these
Let QX = PX1500 , the elasticity of demand of the good X when its price falls from 8 to \ 2 per unit will be
greater than one
less than one
equal to one
can’t say
The stages in law of variable proportion is
1
2
3
4
A seller cannot influence the market price under
Perfect Competition
Monopoly
Monopolistic Competition
All of the above
Business Economics is basically concerned with
Applied Economics
Managerial Economics
Micro Economics
Macro Economics
Collectively peaks and troughs together is known as
Turning Points
Contraction
Expansion
A trough
The most important function of an entrepreneur is to
Innovate
Bear the sense of responsibility
Finance
None of these
Consider the following statements and select the correct answer from the given options. Assertion (A): Demand curve is vertical when elasticity of demand is zero. Reason (R): Marginal utility of a product is increasing.
Both (A) and (R) are true and (R) is the correct explanation of (A)
Both (A) and (R) are true and (R) is not the correct explanation of (A)
(A) is true but (R) is false
(A) is false but (R) is true
Negative return sets in at the stage when
MP is negative
MP is diminishing
MP is rising
None of these
In the long run, all production costs are
Fixed
Sun
Variable
Marginal
Sarah runs a lemonade stall; her decision-making process involves assessing the demand for her lemonade, pricing strategies, and maximizing her profit within the limited scope of her small business. Which level of the economy does Sarah's lemonade stall belong to?
Macro Economy
Global Economy
Micro Economy
National Economy
What are the internal causes of business cycle?
Fluctuations in effective demand
Macroeconomic policies
Money supply
All the above
The level of consumption at which marginal utility of a commodity reaches zero is called
Point of satiety
Point of equilibrium
Point of breakeven
None of these
In describing a given production technology, the short run is best described as lasting
Up to six months from now
Up to five years from now
As long as all inputs are fixed
As long as at least one input is fixed
On all points of rectangular hyperbola demand curve, elasticity of demand is
Equal to unity
Zero
Less than unity
Greater than unity
Cost incurred which has no relevance to future planning is called
Marginal cost
Sunk cost
Average cost
None of these
Which of the following phases of the business cycle is characterized by increasing economic activity, rising employment, and growing consumer spending?
Expansion
Recession
Trough
Recovery
Price elasticity of demand of a good is (-) 3. It shows that
When price falls by 1%, demand rises by 3%
When price rises by 1%, demand falls by 3%
Either (a) or (b)
Neither (a) nor (b)
Assertion (A): In the short run, a producer operates in only Stage II of the Law of Diminishing Returns where average product of the variable factor is declining. Reason (R): In Stage I and Stage III the marginal product of the fixed and the variable factors differs. Choose the correct option:
(A) is true and (R) is false
Both (A) and (R) are true and (R) is the correct explanation of (A)
Both (A) and (R) are true and (R) is not the correct explanation of (A)
(A) is false and (R) is true
Some economists have suggested that oligopolists tend to maintain stable prices when there are changes in the demand for their products or in their costs of production. Which of the following models provides an explanation for this type of behavior?
Price leadership
Centralized cartel
Prisoners' dilemma
Kinked demand curve
In a commodity market, excess demand exists when
Market price is greater than equilibrium price
Equilibrium price is greater than market price
Equilibrium price is not equal to market price
Government fixes the price
The interest on own capital is
Implicit cost
Future cost
Explicit cost
Past cost
Which of the following industries is most likely to be monopolistically competitive?
The automobile industry
The steel industry
The car repair industry
The electrical generating industry
What term is used to describe costs that remain fixed over a certain range of output but suddenly jump to a new higher level when output goes beyond a given limit?
Variable cost
Semi-variable cost
Stair-step variable cost
Sunk cost
Which of the following groups of goods have inelastic demand?
Salt, smart phone
School uniform, branded goggles and smart phone
Salt, school uniform and medicine
Medicine, branded sports shoes and diamond ring
If increasing air fares increases revenues and decreasing them decreases revenues, then the demand for air travel has a price elasticity of
0
> 0 but < 1
1
> 1
Which of the following markets comes close to satisfying the assumptions of a perfectly competitive market structure?
The stock market
The market for agricultural commodities such as wheat or corn
The market for petroleum and natural gas
All of the above come close to satisfying the assumptions of perfect competition
______ is the exception to law of demand.
Income
Price
Giffen good
Fashions
For Giffen good the angle curve is
Vertical
Horizontal
Negatively sloped
Positively sloped
How is production in the economic sense distinguished from non-market activities performed within a household?
Involvement of love and affection
Exchange in the market
Exchange in the income
Intangible outputs
While drawing the budget line of a consumer consuming Nachos chips and Pepsi, if the quantity of Nachos is on the Y-axis and the quantity of Pepsi is on the X-axis, the slope of the budget line will be
- price of Pepsi divided by price of Nachos
- price of Nachos divided by price of Pepsi
price of Pepsi divided by price of Nachos
- income divided by price of Nachos
Price discrimination is a situation when a producer:
Charge same price
Charges may prices
Charges different prices in different market
None of these
Different business cycles ______ in duration and intensity.
differ
similar
consistent
Can’t say
Which type of market structure does not typically have a negatively sloped market demand curve?
Monopoly
Perfect competition
Oligopoly
All of the above typically have negatively sloped market demand curves
The distributive function of the budget is related to the basic function of __________ an economy produces goods and services:
what
for whom
how
All of the above
The restaurant industry has a market structure that comes closest to:
monopolistic competition
oligopoly
perfect competition
monopoly
When some people start investing money in share market then many people start following the same without considering its advantage and disadvantages is called:
Demonstration effect
Snob effect
Veblen effect
None of these
Law of Production does not include
least Cost Combination of factors
Law of variable proportion
Law of diminishing returns to a factor
Return to scale
A recession is a decline in:
The unemployment rate that lasts six months or longer
Real GDP that lasts six months or longer
Potential GDP that lasts six months or longer
The inflation rate that lasts six months or longer
Break even point indicate which of the following?
TR=TC
TR>TC
TR=TVC
None of these
Which of the following is a lagging economic indicator?
Consumer confidence index
Stock market performance
Unemployment rate
New housing starts
The price of a commodity is 10 per unit. At this price quantity supplied is 500 units. Price elasticity of supply of the commodity is 1.25. At what price the quantity to be supplied would be 20% more?
₹ 8.40
₹ 11.60
₹ 12.50
₹ 7.50
In the context of price elasticity, if demand is elastic, a decrease in price will result in:
A decrease in total revenue
An increase in total revenue
No change in total revenue
None of the above
