SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Managerial Economics

Sample Questions:
Section I: Subjective Questions

1. List the factors which influence market demand.

2. Name the factors which influence the elasticity of demand.

3. State the rights of a consumer as enunciated in the Consumer Protection Act, 1986.

4. Sometimes change in demand takes place even though there is no change in price. What
are the factors which affect demand?

5. Which factors influence supply?

6. Distinguish between fixed costs and variable costs.

7. What is production function?

8. Differentiate between straight line method and diminishing balance method of

depreciation.

Section II: Objective Questions

Multiple Choice Single Response

1. If the substitutes are relatively cheaper than a commodity, then the demand for that
commodity will be

1] unaffected

2] Less

3] double

4] More

2. Supply is predominantly determined by

1] Income

2] Stock

3] Demand
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

4] Consumption

3. In case of perfectly elastic supply, the supply curve is

1] slopes upwards

2] horizontal

3] vertical

4] slopes downwards

4. Going rate policy cannot followed in the long run because

1] The price leader quotes price at a loss to drive out the competitors.

2] the costs are beyond the management's control

3] the price leader maintains secrecy

4] it is difficult to find going rate

5. Cost of Deposit of Bank of Maharashtra is 7%. Other cost is 3%. Profit margin
expected is 1%. So, Bank fixes its rate of interest on loans at 11%. This is an
example of

1] Marginal Cost pricing policy

2] Cost Plus pricing policy

3] Going Rate pricing policy

4] Imitative pricing policy

6. According to the Government, the build-up of inflationary pressure during the

Nineties was attributed to

1] Higher GDP

2] Higher Fiscal deficit

3] Low Industrial output

4] Decrease in aggregate supply

7. The innovation theory of profit was developed by

1] Joseph Schumpeter

2] Joel Dean
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

3] Hawley

4] J B Clark

8. The law of increasing returns to scale is depicted by the marginal output curve
which is

1] sloping upwards

2] horizontal

3] vertical

4] sloping downwards

9. Variable costs are those costs which vary with the level of

1] input

2] output

3] scale

4] size

10. Managerial economics involves forward planning by management is stated by;

1] Spencer Sieglemen

2] Prof. Hague

3] Prof. Mehboob-ul-Haque

4] Alfred Marshall

Multiple Choice Multiple Response

11. The steps involved in Time Series Analysis are

1] data collection

2] trends analysis

3] establishing a functional relationship

4] sample survey

12. The drawbacks of "Marginal cost pricing policy" are

1] Create problems in credit sales

 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

2] Practical difficulty in computing marginal cost

3] Frequent price changes

4] Profit per unit

13. According to Keynes, Aggregate supply function

1] refers to the minimum price of revenue which the entrepreneurs must get

2] Associated with different levels of employment

3] Explains that the level of output varies with the level of input

4] Explains that the level of output varies with the level of employment

14. Measures for price control include

1] fiscal policy

2] Monetary Policy

3] fixation of minimum prices

4] liberalization

15. The study of income elasticity of demand helps in

1] economic planning

2] family planning

3] demand forecasting

4] break even analysis

16. Under cost plus pricing

1] Actual costs are included

2] Certain percentage of profit included

3] Opportunity cost is included

4] Implicit cost is included

17. The typical objectives of a firm while fixing pricing policy are

1] Profitability

2] Stability of price
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

3] Market share

4] Target return on capital

18. Under the consumer protection Act, the rights of a consumer are

1] Right of Protection from hazardous commodities

2] Right to a competitive price

3] Right of returning the goods purchased

4] Right to information regarding protection

Fill in the Blanks

19. "plough back " standard of profit is used to avoid _________

1] debt

2] tax

3] risk

4] investment

20. According to ______ time element plays an important role in price determination

1] Adam Smith

2] Dr. Alfred Marshal

3] Samulson

4] Cournot

21. _________may put the producer in a tense situation to recover high funds.

1] Overproduction

2] Underproduction

3] Prices

4] Oligopoly

22. Economic problems do not recognise boundaries of ________

1] caste and creed

2] past and future

 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

3] legal and illegal

4] efficient and inefficient

23. In perfect competition various factors of production are assumed to be_________

1] perfectly substitutable

2] perfectly mobile

3] cheap

4] interchangeable

24. By "profit", the _____ means total revenue minus explicit costs

1] auditor

2] chief finance officer

3] economist

4] accountant

25. The good becomes ________ so far as its use is concerned only when it is priced in
the market and the principle of exclusion is applied to it.

1] Pecuniary

2] indivisible

3] divisible

4] public

26. J M Keynes believed that _________ is a rare occurrence.

1] unemployment

2] full employment

3] disguised employment

4] partial employment

27. The risk-taking theory of profit was developed by ______

1] American economist Hawley

2] Prof. F.H. Knight

 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

3] J B Clark

4] J.M. Keynes

28. When the outputs increased from 4 units to 5 units, the total revenue went up from
Rs.100 to Rs.120 and the total cost went up from Rs.80/- to Rs.95/-. In this case,
marginal revenue the firm will be ________

1] Rs.19/-

2] Rs.25/-

3] Rs.15/-

4] Rs.20/-

State True or False

29. Demand forecasting results in wastage of resources.

30. Under the decreasing returns to scale, the marginal output curve slopes upwards.

31. When the demand is constant, if there is increase in supply, there will be decrease
in price

32. Wastage of resources is possible under market economy.

33. Cross elasticity of demand between two perfect substitutes will be infinity.

34. There could be intangible goods.

35. Demand forecasting helps in framing expansion plans.

36. The law of supply is hypothetical.

37. In every society, the number of people who do not get a share in the annual national
income and wealth, constitute the majority of the population.

38. Wastage of resources is possible under market economy

Match the Following

39. 1] Evolutionary Method 1] Ignores how the new product could be

2] Sample Survey Method
3] Substitution Method
4] Growth Pattern Method
different from the existing product
2] Assumes that the sample represents
the population
3] Producers of existing product react in
different ways
4] Time consuming
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Managerial Economics

5] Scientific

6] Unscientific

40. 1] Defence Service 1] indivisible goods/services

2] A cup of tea 2] divisible goods
3] A private clinic 3] impure public goods/services
4] A body massage 4] pure private goods/services

5] external goods
6] internal goods

41. 1] Change in demand due to change in 1] Price elasticity of demand

price
2] Change in demand due to change in 2] Income elasticity of demand
income
3] Change in demand of X commodity 3] Cross elasticity of demand
due to change in price of Y commodity
4] Change in supply due to change in 4] Price elasticity of Supply
price
5] Complementary elasticity of demand

6] Infinity price elasticity of

demand
42. 1] Fixed Cost 1] Remains constant at different level of
production
2] Variable cost 2] Varies according to different level of
production
3] Average Variable Cost 3] Decreases as the level of production
goes up
4] Total cost is equal to Total Revenue 4] This happens at the break-even level

5] Increases as the level of production

goes up
6] This happens at the 50% capacity
utilisation