hitechpathshala

Q. 1

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

Q. 2

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.

Q. 3

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.

Q. 4

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

Q. 5

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.

Q. 6

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.

Q. 7

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.

Q. 8

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.

Q. 9

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

Capital Budgeting

Risk Analysis

Business Cycles

Accounting Standards

Q. 10

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.

Q. 11

A movement along the demand curve for soft drinks is best described as

An increase in demand.

A decrease in demand.

A change in quantity demanded.

A change in demand.

Q. 12

If the price of Pepsi decreases relative to the price of Coke and 7-UP, the demand for:

Coke will decrease.

7-Up will decrease.

Coke and 7-UP will increase,

Coke and 7-Up will decrease.

Q. 13

If a good is a luxury, its income elasticity of demand is:

Positive and less than 1.

Negative but greater than -1.

Positive and greater than 1.

Zero.

Q. 14

Suppose a department store has a sale on its silverware. If the price of a plate-setting is reduced from ` 300 to ` 200 and the quantity demanded increases from 3,000 plate- settings to 5,000 plate-settings, what is the price elasticity of demand for silverware? (Use Arc Elasticity Method)

.8

1.0

1.25

1.50

Q. 15

When the numerical value of cross elasticity between two goods is very high, it means

The goods are perfect complements and therefore have to be used together

The goods are perfect substitutes and can be used with ease in place of one another

There is a high degree of substitutability between the two goods

The goods are neutral and therefore cannot be considered as substitutes

Q. 16

If the local pizzeria raises the price of a medium pizza from ₹ 60 to ₹ 100 and quantity demanded falls from 700 pizzas a night to 100 pizzas a night, the price elasticity of demand for pizzas is :(Use Arc Elasticity Method)

.67

1.5

2.0

3.0

Q. 17

If electricity demand is inelastic, and electricity charges increase, which of the following is likely to occur?

Quantity demanded will fall by a relatively large amount.

Quantity demanded will fall by a relatively small amount.

Quantity demanded will rise in the short run, but fall in the long run.

Quantity demanded will fall in the short run, but rise in the long run.

Q. 18

Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering raising prices, it can expect a relatively:

Large fall in quantity demanded.

Large fall in demand.

Small fall in quantity demanded.

Small fall in demand.

Q. 19

Point elasticity is useful for which of the following situations?

The bookstore is considering doubling the price of notebooks.

A restaurant is considering lowering the price of its most expensive dishes by 50 percent.

An auto producer is interested in determining the response of consumers to the price of cars being lowered by ₹ 100.

None of the above.

Q. 20

A decrease in price will result in an increase in total revenue if:

The percentage change in quantity demanded in less than the percentage change in price.

The percentage change in quantity demanded is greater than the percentage change in price.

Demand is inelastic.

The consumer is operating along a linear demand curve at a point at which the price is very low and the quantity demanded is very high.

Q. 21

Production of Cellphones by a Manufacturing Company is an example of Production Activity. This statement is —

T r u e

F a l s e

Partially True

None of the above

Q. 22

Change in demand due to change in price is known as________________

Change in demand

Change in quantity demanded

Income demand

Cross demand

Q. 23

Hawking of Fruits and Vegetables by a Street Vendor is an example of Production Activity. This statement is —

T r u e

F a l s e

Partially True

None of the above

Q. 24

Work of a Professional (like Chartered Accountant) does not result in any tangible output. Hence, it is not a Production Activity in Economics. This statement is —

T r u e

F a l s e

Partially True

None of the above

Q. 25

... ...shows the overall output generated at a given level of input.

Cost Function

Production Function

Marginal Rate of Substitution

Isocost and Isoquants

Q. 26

Cost Functions are Derived Functions. They are derived from —

Demand Function

Supply Function

Isoquant Function

Production Function

Q. 27

A Cost Function determines the behaviour of Costs with change in —

Output

Input

Technology

Wages

Q. 28

The Cost Function indicates the functional relationship between Total Cost and —

Total Input

Fixed Cost

Total Output

Variable Cost

Q. 29

Which of the following is not a determinant of the Firm's Cost Function?

Production Function

Price of Labour

Rent paid for use of Building

Price of the Firm's Output

Q. 30

The Functional Relationship between Output and the Short Run Cost of Production is known as —

Cost Function

Long Run Cost Function

Short Run Cost Function

Output Function

ECO1

Marks: 30