Select the bank 1.

Demand cure is also know as the __________ revenue curve Average Marginal Incremental Budget 2. An entrepreneur co-ordinates __________ Factors of supply Factors of production Scientists Marketing representatives 3. The commodity that is _________ is the opportunity cost of the commodity produced Sacrificed Produced Considered Consumed 4. Dr. Alfred Marshall also suggested another method called the _______ of measuring price elasticity at point on the demand cure. Point geometric method Arc elasticity method Percentage method Point elasticity method 5. Law of variable proportion occupies an important place in Economic theory Forms Labour Population 6. In the 3rd stage of operation of the law of variable proportions, the marginal product becomes negative Positive Zero Remains same 7. In real world perfect competition is seldom seen Imperfect Semi perfect real 8. Keynes defined Marginal efficiency of capital as the highest rate of return over expected cost on producing an additional unit of an asset. Marginal efficiency of Labour Marginal efficiency of land Marginal efficiency of entrepreneur 9. Keynes believed that, fluctuations in the Marginal efficiency of capital are the fundamental cause of trade cycle and income fluctuations in a capitalist economy. Marginal efficiency of Labour Marginal efficiency of land Marginal efficiency of entrepreneur 10. An upward sloping demand curve is called Exceptional demand curve Normal demand curve

 Expansionary demand curve Concretionary demand curve 11. A normal demand curve has Negative slope Positive slope Upward slope Horizontal slope 12. Under perfect competition each makes Normal profit in the long run. Abnormal Supernormal zero 13. The market price is determined by the interaction of the market demand curve and supply curve Cost curve Revenue curve Average cost curve 14. Keynes believed that with reduced consumption saving of people rise Demand Supply Price level 15. Keynes theory of consumption is a psychological theory Sociological Physiological political 16. Expansion or contraction in supply of capital may affect the fortunes of business Supplly Demand Consumption 17. Without Government intervention all goods would be only private Market mechanism Price mechanism Cost mechanism 18. Government can stabilize the working of the markets Improve Deteriorate Neutralize 19. MR and ____ are same in a perfectly competitive market AR TR AVC AFC 20. Joel dean suggested the methods of demand forecasting for new products Prof. clark Prof. pigou Marshall 21. A firm can stabilize its output where marginal cost is equal to MR AR AC AVC 22. When supply increases, demand remaining the same, the equilibrium price falls Rises

 Remains same Rises slightly 23. the intersection of market demand and supply curve determines __________ Market price Selling price Abnormal price Administered price 24. Demand for a commodity depends on the relative price of its _______ Substitute goods Necessary goods Luxury goods Complimentary goods 25. By _________ we mean no government intervention Laissez faire Ceteris paribus Regulated economy Organization 26. Elasticity of demand for salt can be represented e=0 e=1 e<1 e>0 27. In ___________ method the opinion of the experienced persons with the firm are collected and a committee or the general manager of the firm analysis this information and forecasts the demand for the firms product Composite management Collective opinion Sample survey Panel experts 28. To economist profits means total revenue minus all costs Explicit cost Implicit cost Sunk cost 29. Monopoly firm is a price Maker Taker Setter Avoider 30. The market economy believes in the survival of the _______ Fittest Richest Poorest Weakest 31. Government intervention is strongly felt when markets ________ Work Fail Improve Succeed 32. The AR curve faced by the firm under perfect competition is Horizontal to O X axis Perfectly inelastic demand Relatively inelastic demand

 Unitary elastic demand 33. To sustain the level of income and employment in the economy ________ should increased Investment demand Compulsion to invest Capacity to invest Inducement to save 34. One of the problems associated with capital attracting standard is Profit earned Share capital Capital structure of the firm Interest on capital 35. The index numbers which are compiled to measure the changes in retail prices of various commodities refers to ________ Wholesale prices index Commodity prices index Customer price indices Retail prices index

True / False 1. With the technological advances, the flow of output increases from given input (T) 2. Lack of professionalism calls for denationalization (T) 3. To the firm explicit costs are the money payment which the self owned and employed resources could earned in their next 4. Specific demand forecasts gives a total picture of the demand for the markets of a firms product 5. The supply of factory made goods of daily consumption in inelastic (T) 6. Under perfect competition, firms are free to enter and exit in the market (T) 7. Government expenditure makes up for the deficient aggregate demand (T) 8. Market forces are incapable of providing full employment (T) 9. The demand curve has a negative slope (T) 10. Cost is a function of prices of inputs, the rate of out put, the size of plant and technology (T) 11. Marginal cost (MC) is the rate of change of variable cost (F) 12. Elasticity of demand can be ascertained from the slope of the demand curve (F) 13. Firm under perfect competition should cover at least average variable cost to continue its business in the market (T) 14. Indian railways is an example of monopoly (T) 15. Costs that are actually incurred during process of production are actual costs (F) 16. Cost plus pricing is also known as full cost pricing (T) 17. Market mechanism contributes to emergence of monopolies (T) 18. Public goods are necessarily supplied by public sector (F) 19. In projection approach the past experience is projected into the future (T) 20. under perfect competition, firm can be adjusted its supply to the demand by changing some factors (T) 21. Pure public goods are know for their indivisibility (T) 22. Profit is taken as the basis of pricing under marginal costing method (F) 23. When a firms average revenue (A.R) is less than its average cost, it earns only abnormal profit (F) 24. Profit means different things to different people (T) 25. The word profit has the same meaning to businessmen, accounting, tax collectors, workers etc.(T) 26. Demand in economics also means demand per unit of time (F) 27. For consumption of private goods its purchase by paying the right price is essential (T)

28. Where there exists a close substitute in the relevant price range, its demand will tend to be inelastic (F) 29. imitative pricing involves following the pricing policy of other rival or competitive firm (T) 30. A mid term appraisal in respect of short term project is desirable 31. Products produced by different firms under competitive market are homogenous 32. Total outlay is total quantity demanded multiplied by price per unit of the product 33. Open market operations involve purchase of goods and services from open market 34. The total number of consumers for a firms product is called the population. 35. Planned expenditure of the government of india for year 2003-04 was greater than its non plan expenditure (F) 36. In a competitive world every company tires to attain competitive monopoly (T)

Multiple Choice Single Response 1. Benefit cost ratio is used as the criterion for Production Project appraisal Investment Distribution 2. The opinion polling method tries to collect information directly or indirectly from The general people The prospective people Selected section of people Producers of commodities 3. A good source of public revenue is Taxes collected Salary Payment of wages Payment of bouns 4. Theory of production and cost is called Supply side Demand side Labour side Producer side 5. A place where buyers and sellers meet each other to effect a business transaction is know as Market Plant Industry Trust 6. A commodity like milk that is used on a daily by consumers, enjoys a highly Inelastic demand Highly elastic Infinity Elastic 7. After charging skimming price a firm may subsequently Increase price Decrease price Stabilize price Keep changing the price

8. Industries, other than those needing compulsory licensing, will need no approval of government in such cities where population is More than one million Less than one million 1 crore Less than one crore nut more than 50 lakhs 9. The risk which cannot be passed on to an insurance company is Fire Competition Theft Accident 10. In the long run firm under perfectly competitive market earns Normal profit Abnormal profit Supernormal profit losses 11. With improvement in technology, with the given inputs, in level output Increases Decreases Remains constant None of the above 12. Accounting costs are called as Explicit cost Implicit cost All costs Internal costs 13. Black money can also be called An unaccounted money Stolen money Not hared earned money Social change 14. Black money can be accumulated By paying regular taxes By evading tax payment By way of salary By way of printing money 15. In a monopolistically competitive industry, industry, price is Above marginal cost since each firm is a price setter Equal to marginal cost since each firm is a price taker Below marginal coat since each firm is a price setter Always a fraction of marginal cost since each firm is a price setter 16. The extent of variation in demand is technically expressed as Elasticity of demand Desire backed by purchasing power Want Changes in demand 17. Jevons, the economists who defined the term market different from that the traditional sense is an English economics French economics

 German economics Indian economics 18. Abnormal profits attract rivals and Wipe out profits Wipe out losses Increase competition Crate scarcity of raw materials 19. Basic objective of administered prices are Ensures regional balance Ensures that every unit makes exorbitant profit To fix and maintain prices of essential eaw material avoid cost escalation To ensure economic prices to uneconomic units so that the letter too can earn profit 20. According to Alfred Marshall market has been classified in to 4 3 5 2 21. Superstar Amitabh Bachcan was roped in to strengthen the sales of Cadbury Amul Wafers Nutrine 22. Market economy is also involved in Overproduction Underproduction No production Low production 23. Macro economics is the study of Consumer behaviour Economy as a whole Individual demand Individual supply 24. Government through the industrial policy of a nation could Prevent the entry of private entrepreneurs to certain business Create income equalities Create regional imbalance Encourage credit flow 25. By public expenditure, we mean Expenditure incurred by government Expenditure incurred by firms Expenditure incurred by households Income of general public 26. Participation in market economy is guided motive of Maximum private profit Maximum social benefit Maximum social cost Maximum social profit 27. The total fixed cost curve is

 Horizontal curve Vertical curve Sloping from left to right Sloping from right to left 28. In case of such quasi private or quasi goods when element of public ness is dominant, they are termed as Public goods Private goods Joint goods Composite goods 29. Labour payment is covered under Fixed cost Total costs Variable cost Cost on wages 30. Enough demand is essential to sustain Full employment Cost of production Profit revenue 31. Uncertainty and risk arises mainly due to uncertain behaviour of the Market forces Factors Change in technology Mangers 32. Dalal street in Bombay is known as Bombay stock Exchange Bombay money market Mangaldas market Mulji Jetha market 33. Replacement cost is highest for Capital goods Durable goods Consumer goods Perishable goods 34. The concept of effective demand is Aggregate expenditure in the economy Aggregate income of the economy Availability of goods per unit of time Demand with out consumption gap 35. In general demand for luxurious and comforts is Relatively inelastic Relatively elastic Infinity elastic Perfectly inelastic 36. Marginal cost is also taken as a change in TVC TFC AVC

 AFC 37. Cost benefit analysis in broader sense refers to Evaluation of any project Evaluation of its employees Evaluation of a quality of production Evaluation of only cost 38. Total fixed cost divided by total unit output Average fixed cost Marginal cost Variable cost Average cost 39. A firm initiating changes in price is called Price taker Price initiator Price follower Price leader 40. The demand curve has a Negative slope Positive slope Horizontal line Vertical line 41. When the proportion of change in the quantity demanded is greater than that of price the demand is said to be Elasticity or demand is infinity Relatively elastic Perfectly inelastic demand Relatively inelastic demand 42. Administered prices are often inadequate to meet the Rise in cost Fall in cost Stability in cost Profit expectations 43. The number of total firms under pure competition always remains Optimum Minimum Very less Very large 44. The slope of supply curve of Labour is always Upward Downward Backward Rightward 45. Pure profit is considered to be a Long term phenomenon Short term phenomenon Medium term profit Long term profit 46. Income elasticity refers to degree of responsiveness of demand for a commodity to given change in the consumers Expenditure

 Income Behaviour Expectations 47. In economics, supply is considered to be a Relative term Absolute term Subjective term Objective term 48. For financing economic development of India, one of the measures resorted to is Deficit financing Zero base budgeting Surplus budget Denationalization 49. Total fixed cost of a firm includes Depreciation Payment of wages to Labourers Rent paid Running expenses on fuel 50. Public expenditure is incurred by government through Public revenue Private income Past savings Deficits 51. Keynes believed that full employment was Difficult to attain Easy to attain Normal phenomenon Gods gift 52. The classical economics analysis of market is based assumption of Monophony Perfect competition Monopolistic competition Duopoly 53. Cost is less than revenue indicates Output and employment will decrease Output and employment will increase Output and employment will remain constant Output cannot be determined 54. In sample survey method Demand forecasts of new goods is based on the information about established goods Some new goods are substitutes of already established goods It is possible to estimate the demand for the new good by studying how the established goods have grown The new product is first introduced in some sample markets 55. Paradox of thrift is also known as Paradox of savings Paradox of income Paradox of consumption Paradox of employment 56. Large number of buyers and sellers is one of the features of

 Monopoly Pure competition Duopoly Oligopoly 57. The law demand is usually referred to the Individual demand Market demand A firms demand Industry demand 58. The commercial value of relatively elastic demand lies between One and infinity One and ten One and fifty six Zero and one 59. An inventory refers to the stock of Factors of production Raw materials Machines Distribution 60. Expansion of supply is shown by the movement in the supply curve which is Downward Upward Higher Lower 61. PDS stands for Public distribution system Public development system Private development system Private distribution system 62. Government intervention, according to Keynes, is essential to ensure Full employment High level production Low cost unemployment 63. NTC stands for National textile corporation National thermal company National transport corporation National tourist company 64. Issue of new currency could be controlled if Treasury bills are not issued Treasury bills are issued Commercial bills are issued Commercial bills are not issued

Multiple Choice Multiple Response 1. The subject matter of macroeconomics indicates Theory of income and expenditure

2.

3.

4.

5.

6.

7.

8.

Theory of money and banking Theory of trade Markets structures Various methods of appraising investments include Pay back period Internal rate of return Net present value Interest coverage ratio According to critics in this dynamic world The government policy may suddenly change Change in minatory policy takes place Contraction of supply of money takes place There may be change in consumers income According to cost-input relationship C- denotes the cost, which is a function of L-Labour and K- Quantity of capital K- Interest rate of capital A market becomes competitive when Share of each buyer is small compared to the size of the market Share of each seller is small compared to the market Firms set their own price of the product Firms produce differentiated products Demand forecasts may be based on Judgment of the experienced staff On scientific analysis (statistics) On individual opinion On public opinion The production function can be explained by Law of variable proportions Law of returns to scale Optimum combinations of inputs Total revenue and cost curve The study of cost function involves Prices of inputs Rate of out put, size of plant State of technology Education of workers

9. The law of variable proportion Examines the production function With one factor variable Keeping the quantities of other fixed Examines the supply function 10. Prof. J M Keynes write a book on Employment Interest Money Consumer surplus

11. Features of monopoly are Single producer Barriers to entry No close substitutes to the product Perfectly elastic demand curve 12. Under perfect competition The number of firms in the industry is very large Each firm is very small in size Action of firm does not affect the market supply It is encouraged with a view to promote the exports 13. Causes of inflationary pressures in India during 90s were High fiscal deficit Supply and demand imbalances Decrease in procurement High unemployment 14. Forecasts can be made at the level of The firm The industry The nation The individual 15. The concept of opportunity cost is used for Measuring profits Policy decision of the firms Forming capital budget Measuring total cost 16. Explicit costs are Out of pocket costs These are firms accounting expenses Expenditure costs Expenses made on self owned resources 17. Demand forecasts are useful to firm for Long term investment decisions Budgeting polices Warehousing and inventory control Calculating profits 18. The demand for a product is influenced by The distribution of income Prices of related products Tastes of the consumer supply 19. Income earned by factors of production is called Wages Rent Interest capital 20. Economic profits means, total revenue minus Explicit cost Implicit costs Normal profits Only explicit costs

21. Public goods carry features such as principle of Non exclusion Indivisibility Exclusion Divisibility 22. The law of supply reflects The general tendency of the sellers In offering their stock of a commodity For sale in relation to the varying prices For sale in relation to the fixed prices 23. Demand is determined by Price of the product Relative prices of other goods Tastes and habits Slope of the curve 24. The exception to law of supply explained by Backward bending supply curve Or regressive supply curve Labour and savings Straight line supply curve 25. The basic assumption of Keynesian theory Short run equilibrium analysis Capitalist Technology and stock of capital are constant Long run analysis 26. Certain cost elements that are not firms control are: Transport cost Fuel costs Taxes Building construction 27. e = ? Q/? P x P/Q The original demand The original price Change in demand Price of giffen goods 28. Among various institutions associated with supplies to PDS are FCI Kirloskar Brothers STC IO C 29. Supply of kerosene to the PDS is handled by IOC Hindustan petroleum Bharat petroleum NTPC 30. Defects of market mechanism are Inequalities in income and wealth Emergence of monopolies Equal distribution of income Existence of perfect competition

31. Conditions for price discrimination are Markets should be segmented Markets should be imperfect Elasticities in different markets would be different Resale of goods is possible 32. Two most important and widely accepted economic policies are Fiscal Monetary Inventory Innovative 33. The total fixed cost is constant But total variable cost increases As production So total cost also increases So total cost also constant 34. Economic feasibility includes Prospects of employment generation Development of backward area Availability of management personnel Availability of finance 35. The cross elasticity of demand explains Percentage change in quantity demand of one good Percentage change in price of another good Ratio of changes in demand of one good and price of another good Change in income 36. The production function can be studied in three ways Law of variable proportion Laws to return to scale Optimum combination of inputs Studying cost function 37. A demand curve explains Price quantity relation Slope of curve Tabular statement Complementary goods demand only 38. The profit standards may be determined in terms of Aggregate money terms Percentage of sales Percentage return on investment Percentage of demand 39. Gross profit is used for payment for Remuneration to factors of production Depreciation Maintenance charges Capital expenditure 40. Pure profit makes provision also for Insurable risks Depreciation Necessary minimum payment of shareholders External costs

41. The world profit has different meanings to Businessmen Accountant Tax collectors Movie stars 42. Impure public goods are also called Quasi public goods Quasi private goods Merit goods Cooperative goods 43. Public goods carry features such as principle of Non exclusion Indivisibility Exclusion Divisibility 44. Study of macroeconomics is important as It helps one to understand the working of the economic system It si based in empirical evidences It is policy oriented It studies individual objects

Match the following 1. Experimental pricing 2. Imitative pricing 3. Skimming pricing

Involves fixing of prices by trials Price decided on the basis of change high price initially and Change low price initially and increase it subsequently Involves fixing of prices arbitrarily Inverse relation between price Changes in factors other than Due to change in price Luxurious goods

1. 2. 3. 4.

Law of demand Shift demand curve Expansion of demand Snob appeal goods

1. 2. 3. 4.

explicit costs Implicit cost Nominal cost Accounting costs

Labour wages Opportunity cost Money cost Production cost Marginal cost Gross cost

1. 2. 3. 4.

Perfectly elastic Perfectly inelastic Relatively elastic demand Relatively inelastic demand

When e = infinity When e = 0 When e > 1 When e < 1 When e = 1 When e = 2

1. 2. 3. 4.

Limitation of the law of diminishing returns - New methods of cultivation Total product increases up to a point at an increasing rate M P is Zero when marginal product is zero - Total product is maximum When average product is decreasing - M. P is less than A.P TP falls Increasing returns Cost plus pricing Going cost pricing Marginal cost pricing Intuitive pricing Ignores demand Emphasizes market conditions Different from incremental cast Psychological and subjective Objective approach to pricing Ignores supply MR Marginal revenue Profit maximization Firms aim Super normal profit Short-run IF AR< AFC Stop production Continue production Maximization of revenue Expansion of demand Movement on same demand Increase in demand Shift in demand curve Relationship between price and Relationship between price and Market demand curve Summation of individual demand Inverse relation between price and demand An individuals demand curve Elasticity of income = 30/20 Elasticity of income = 11/6 Elasticity of demand=15/5 Elasticity of demand = 15/5 1.5 1.8 0.6 0.7 1.5 1.6

1. 2. 3. 4.

1. 2. 3. 4.

1. 2. 3. 4.

1. 2. 3. 4.