2YR PGDM
Semester 1
Economic Environment Of Business
ECOC514 SET 1 DEC 2018
Assignment Test -1
1.Demand curve slopes downward due to
-income effect
-substitution effect
-diminishing marginal utility
-all of the above
2.An increase in the price of a good normally increases the
-demand for its substitutes
-supply of compliments
-purchasing power of consumer incomes
-purchasing power of consumer divide incomes
3.An isoquant is
-least cost combination
-a locus of input combination that give the same level of output
-a locus of input combination that give different level of output
-a locus of product combination that give the same level of satisfaction
4.If planned spending exceeds planned output, the result is
-a reduction in GDP
-unintended inventory increases
-unintended inventory reduction
-an increase in government purchases
5.Production of an additional unit of output by the firm gives rise to
-Explicit cost
-implicit cost
-incremental cost
-marginal cost
6.If future price changes were perfectly anticipated by both borrowers and lenders ,what would happen to the real interest rate in the future if the price level changed?
-it would increase
-it would decrease
-it would not change
-it would decrease by the amount of the price increase
7.Negative cross-price elasticity of demand indicates that
-the product is an inferior good
-the product is a necessity
-the product is a luxury
-the two products are compliments
8.when the first stage of law of variable proportions begins to operate the TVC curve
-falls at an increasing rate
-rises at an increasing rate
-falls at a decreasing rate
-rises at a decreasing rate
9.In determining comparative advantage, cost is measured in terms of
-foreign currency
-opportunities forgone
-domestic currency
-gold only
10.in actability
-each country consumption possibilities are the same as its production possibilities
-equilibrium is attained with the maximum gains from specialization and trade
-equilibrium is attained with the maximum amount of international trade
-a nation is governed by an individual with absolute authority
11.if an imperfectly competitive firm is selling its 100th unit of output for $35,its marginal revenue
-will be greater than $35
-will be less than $35
-will also be $35
-may be either greater or less than $35
12.the equation for calculation of gross domestic product through expenditure approach is
-Y=C+I+G+(X-M)
-Y=C+I+G+(X+M)
-Y=C+I+G(X-M)
-Y=C+I+(X-M)
13.price discrimination refers to
-the differences between the prices a purely competitive seller and a purely monopolistic seller would charge
-the selling of a given product at different prices that do not reflect cost differences
-any price above that which is equal to minimum average total cost
-selling a given product for different prices at two different points in time
14.As a result of an increased deficit associated with discretionary fiscal policy
-both the interest rate and real output fall
-both the interest rate and nominal output rise
-the interest rate falls and real output rises
-the interest rate rises and real output falls
15.A consumer maximizes utility when the marginal utilities of all goods
-having positive money prices that are equal to zero
-are equal
-are maximized
-are exactly proportional to their market prices
16.when prices increases at a such speed that the value of money falls drastically is called as
-headline inflation
-core inflation
-hyperinflation
-stagflation
17.If the supply of a product increases, then
-more will be purchased at the same price
-the price of a product must have declined
-demand for the good must have increased
-producers offer less for sale at each possible price
18.The money demand curve describes how the quantity of money demanded varies with
-nominal GDP
-the interest rate
-real GDP
-the price level
19.A purely competitive firm is in short run equilibrium and its MC exceeds its AC.it can be conclude that
-firms will leave the industry in the long run
-the firm is realizing an economic profit
-the firm is realizing a loss
-this is an increasing cost industry
20.Which of the following will not increase when net taxes decrease ?
-saving
-disposable income
-consumption
-government expenditure
21.GDP price index is calculated by the formula
-Nominal GDP/Real GDP*100
-Real GDP /nominal GDP*100
-Nominal GDP/real GDP
-Real GDP /Nominal GDP
22.Cross elasticity between a battery and a car will be
-positive
-negative
-Unitary
-Zero
23.The firm is a price taker under
-perfect competition
-oligopoly
-monopolistic competition
-All of the above
24.Gross domestic product is
-the sum of money value of all intermediate goods and services produced with in the domestic territories of a country during an accounting year
-the aggregate final goods and services produced during an accounting year
The aggregate intermediate goods and services produced during an accounting year
-the sum of money value of all final goods and services produced with in the domestic territories of a country during an accounting year
25.Short run cost curves behaviour is explained by
-laws of returns
-economies of scale
-law of variable proportion
-law of increasing returns
26.If total revenue falls ,when price falls ,the demand of the product will be
-elastic
-unitary elastic
-inelastic
-perfectly elastic
27.For a perfectly competitive firm the average revenue
-coincides with total revenue
-is lower than total revenue
-is equal to marginal revenue
-is higher than marginal revenue
28.In the long run, a monopolistic competitor
-incurs losses
-makes economic profit
-reaps normal profit
-any of the above
29.The percentage change in the demand for film divided by the percentage change in the price of cameras indicates
-the cross -price elasticity of demand between film and cameras
-the cross-price elasticity of demand for photographs
-the price elasticity of demand for film
-the price elasticity of demand for cameras
30.Marginal utility is defined as the
-average amount of satisfaction gained from consuming a product
-total amount of satisfaction gained from consuming a product
-additional satisfaction gained from consuming one more unit of a product
-total amount of satisfaction gained from consuming a product divided by the number of units consumed.
Assignmnet Test – 2
IMT
ECOC514 DECEMBER 2018
1.A government -imposed price above floor above the market price of milk would increase consumer expenditure on milk only if
-demand is elastic
-supply is inelastic
-demand falls
-demand is inelastic
2.the equilibrium interest rate is determined by
-both the supply of and demand for money
-demand for money
-supply of money
-reserve bank of india
3.Gross domestic product can be calculated by adding---------- in an accounting year
-adding income earned by all factor inputs
-expenditure approach
-adding output produced by all sectors
-any of these method
4.which of the following is true concerning the relationship between the marginal propensity to consume and the consumption function?
-the larger the MPC the higher the level of autonomous consumption
-the larger the MPC the steeper the consumption function
-the larger the MPC the larger the MPS
-the smaller the MPC the steeper the consumption function
5.If a pure monopolist is producing a level of output in excess of the MR=MC output
-it will be the interest of the firm and the society to reduce output
-it will be the interest of the firm and society to increase output
-it will be in the interest of the firm but not necessarily of society to reduce output
-the firm may or may not be maximizing profits
6.An arbitrageur in foreign exchange is a person who
-buys foreign currency, hopping to profit by selling it at a higher exchange rate of some later date
-earns illegal profit by manipulating foreign exchange
-causes differences in exchange rates in different geographic market
-simultaneously buys large amount of currency in one market and sells it in another market
7.If future price changes were perfectly anticipated by both borrowers and lenders, what would happen to the real interest rate in the future if the price level changed?
-it would increase
-it would decrease
-it would not change
-it would decrease by the amount of the price increase
8.A typical situation when stagnation and inflation coexist is called as an
-Disinflation
-Hyperinflation
-Stagnation
-Headline inflation
9.Point of tangency between isoquant and is cost denotes
-producer equilibrium
-least cost combination
-optical factor combination
-all of the above
10.price are measured in india by
-consumer price index
-wholesale price index
-consumer price index and wholesale price index
-None of these
11.When economist say that people act as rational decision makers, that means
-they gather all relevant information before making their purchases
-once a pattern of behaviour has been established people tend to become set in their ways
-people respond in predictable ways to changes in costs and benefits
-people rarely make errors when they are permitted to make transactions
12.production of an additional units of output by the firm gives rise to
-Explicit cost
-implicit cost
-incremental cost
-marginal cost
13.A firm earns maximum profit when
-MC=MR
-MC=ATC
-Total revenue equals total cost
-TR is greater than TC by the larger amount
14.infaltuon rates differ in metropolitan regions MOSTLY because of
-differences in retail prices
-differences in housing prices
-transportation cost
-all of these
15.Marginal utility is defined as the
-Average amount of satisfaction gained from consuming a product
-total amount of satisfaction gained from consuming a product
-additional satisfaction gained from consuming more unit of a product
-total amount of satisfaction gained from consuming a product divided by the number of units consumed
16.In choosing between burger and shirts, consumer increase their purchases of each until
-the marginal utility from the last rupee spent on one is the same as on the another
-the marginal utility from the last rupee of burger is the same as from the last shirt
-the total utility from one is the same as from the other
-none of the above
17.A movement on the demand curve will take place when there is
-a change in own price of the product
-a change in price of a substitute
-a change in consumer preferences
-an increase in per capita income
18.A firm is in equilibrium when
-marginal revenue is equal to marginal cost
-marginal revenue is more than marginal cost
-marginal cost of the firm is rising
-both conditions 1 and 2 are fulfilled
19.the law of diminishing marginal utility states that
-the total utility falls continuously additional unit of a product
-the marginal utility falls continuously with consumption additional unit of a product
-the average utility falls continuously with consumption additional unit of a product
-the marginal utility falls continuously with consumption total unit of a product
20.An increase in the money supply leads to a(n)
-decline in interest rates ,an increase in investment and an increase in aggregate demand
-decline in interest rate a decrease in investment and an increase in aggregate demand
-decline in interest rate an increase in investment and a decline in aggregate demand
-increase in interest rate an increase in investment and an increase in aggregate demand
21.If the economy experiences a contractionary gap and the RBI stimulates the economy
-The money supply is decreasing because the RBI makes open market sales
-The money supply is increasing because the RBI makes open market purchases
-The money supply is increasing because the RBI prints more money
-The money supply is decreasing because the RBI hoards money
22.when prices increase at a such speed that the value of money falls drastically is called as
-Headline inflation
-Core inflation
-Hyperinflation
-Stagflation
23.If marginal product of labour is lesser than average product of labour then average product of labour is
-Constant
-Decreasing
-Increasing
-Maximum
24.Cartel is
-a form of overt collusion
-a form of tacit collusion
-used to explain price rigidity
-non collusive oligopoly
25.To close a contractionary gap using fiscal policy, the government can
-Increase government spending by the size of the gap
-decrease government spending by the size of the gap
-increase government spending by less than the size of the gap
-decrease government spending by more than the size of the gap
26.The firm is a price taker under
-Perfect competition
-Oligopoly
-monopolistic competition
-all of these
27.Demand curve slopes downward due to
-income effect
-substitution effect
-diminishing marginal utility
-all of the above
28.Demand pull inflation is due to
-increase in money supply
-increase in purchasing power
-increasing in income with the population
-all of these
29.which of the following will not increase when net taxes decrease?
-saving
-disposable income
-consumption
-government expenditure
30.Total fixed cost includes cost of
-plant and machinery
-plant and machinery and depreciation cost of plant
-routine maintenance of plant
-plant and machinery and routine maintenance of
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