RISHI RAJ 1 Mb.

: 9999983856

UTILITY ANALYSIS
1. ……………… is defined as want satisfying power of a good.

2. ……………… is the rate of change in total utility.

3. The word “Satiety” refers to …………….. .

4. The basic objective of consumer is to maximize the level of ………………. With given level of
……………..
5. At the Point of Satiety :
(a) MU = O (b) MU = 1 (c) MU =  1 (d) MU increases

6. Total utility falls only when MU is :

(a) Negative (b) Zero (c) Positive (d) None of the above
7. At Point of Inflexion ………………… is maximum
(a) TU (b) AU (c) MU (d) All of the above

8. When MU = 0; TU is …………………
(a) Minimum (b) Zero (c) Negative (d) Maximum

9. At the point of “Saturation” :

(a) ATU is Maximum (b) MU = 0 (c) TU is minimum (d) Both (a) and (b)

10. The unit of utility is ……………..

(a) Litre (b) Metre (c) Utils (d) Kilograms.

11. ……………. Is the slope of TU

(a) AU (b) MU (c) MPP (d) MC

12. Under the law of DMU with additional consumption of units consumed the total utility tends to
…………….
(a) Rises (b) Falls (c) Remains constant (d) None of the above.

13. In a situation where money worth of marginal utility that the consumer gets is exactly equal to
market price he has to pay is known as :
(a) Consumer Equilibrium (b) Point of Maximum satisfaction
(c) State of rest (d) All of the above.

14. “Each consumer demands each good up to the point at which the marginal utility per rupee spent
on it is the same as the marginal utility of a rupee spent on each other good”, is a case of :
(a) One Commodity equilibrium (b) Two Commodity equilibrium.

15. Equilibrium is struck when :

(a)
MUx MU (b)
MUx MU (c)
MUx  MU (d)
MUx 0
M M M
Px Px Px Px
RISHI RAJ 2 Mb.: 9999983856

16. TU is the sum total of MU from all units of consumption of a commodity.

(a) True (b) False (c) Partially True (d) None of above

17. Total utility starts diminishing when MU begins to diminish.

(a) True (b) False (c) Partially True (d) None of above.

18. Principal limitation of utility analysis is that utility can be expressed in terms of ……………
(a) Numbers (b) Alphabets (c) Figures (d) None of above.

19. While buying a unit of a commodity, consumer always compares additional benefit and additional
cost related to that unit means :
(a) PX = TUX (b) PX = AUX (c) PX = MUX (d) PX  MUX

20. Ice creams sell for ` 30. Lakshmi who loves ice-creams, has already eaten 3. Her MU from eating
3 ice-creams is 90. Suppose further that, for her the MU of one rupee is 3. Should she eat more
ice-cream or should she stop.

21. When additional units are consumed, consumption level rises and utility
(a) Falls (b) Rises (c) Constant (d) Rise and Fall.

22. If
MUX  MUY ; what a rational consumer do to retain equilibrium.
PX PY
RISHI RAJ 3 Mb.: 9999983856

CONSUMER BEHAVIOUR
(ASSIGNMENT)

1. The cross price elasticity of demand for the products Rolex and Bollix is 10. It implies that Rolex
and Bollix are :
(a) Substitutes (b) Complements (c) Inferior goods (d) Luxury goods

2. The demand for most products varies directly with the change in consumer income. Such
products are known as :
(a) Normal Goods (b) Prestigious Goods
(c) Complementary Goods (d) Inferior Goods.

3. Which of the following does not change or cause a shift in the demand curve ?
(a) Change in income (b) Change in Preferences
(c) Change in price of related goods (d) Change in price of goods.

4. If the purchase of a good can be postponed, it implies that the :

(a) Demand for good is perfectly inelastic (b) Demand for good is relatively inelastic
(c) Demand for good is relatively elastic (d) Demand for good is unitary elastic.

5. The demand for which of the following goods best illustrates derived demand ?
(a) Chocolate (b) Motorbike (c) Showroom (d) Refrigerator

6. The consumers bear more tax burden that the producer, when the :
(a) Cost of producing is too high (b) TU = TC
(c) Good is a necessary good (d) ES > Ed

7. Which of the following explain(s) the downward slope of demand curve ?

(a) Equi Marginal Principle (b) Law of D.M.U.
(c) Substitution and income effect (d) All (a), (b) and (c)

8. If the sale of an addictive substance is prohibited from wide public use, the following is/are likely
to happen :
(a) The supply curve will move downward
(b) Illegal price is greater than legal price
(c) The occasional users may switch over to substitutes
(d) Both (b) and (c)

9. Which of the following goods can be compliments :

(a) Car and Petrol (b) Pen and Refill (c) Both (a) and (b) (d) Apple and Mango

10. A curve drawn indicating the slope of the TU curve closely resembles the :
(a) Demand curve (b) Supply curve
(c) Average utility curve (d) Marginal revenue curve

11. Which of the following statement regarding demand curve is true ?

(a) Dd curve is downward sloping (b) Slope is negative
(c) Dd curve inversely related curve (d) All of the above
RISHI RAJ 4 Mb.: 9999983856

12. Which of the following better resembles the demand curve of a consumer ?
(a) Indifference curve (b) MU curve (c) TU curve (d) Budget line

13. Cardinal approach of utility best relates to :

(a) Supply (b) Demand (c) Indifference curve (d) None

14. which of the following statements are true :

(a) I.C. curve is always convex to origin (b) I.C. curve is based on ordinal utility approach
(c) I.C. curve’s slope is DMRSXY (d) All of these

15. The Income elasticity of demand for inferior goods is :

(a) Negative (b) Positive (c) Zero (d) None of these.

16. The term Price Ratio of 2 goods relates to :

(a) Indifference curve (b) Budget line (c) Price line (d) Both (b) and (c)

17. The concept of price inelastic demand relates to :

(a) Salt (b) Medicine (c) School uniform (d) All of these.

18. The cross Ed of substitute goods is always :

(a) Positive (b) Negative (c) Zero (d) None of these

19. During recession demand for these goods rises :

(a) Inferior (b) Substitute (c) Normal (d) Complementary.

20. The Law of Diminishing marginal utility applies in :

(a) Long run (b) Short run (c) Very long run (d) None of these

21. Consumer is in equilibrium when I.C. is ………..

(a) Horizontal (b) Vertical (c) Tangent (d) None

22. …………… goods are the products which the people continue to buy even at high prices due to
lack of substitute products.
(a) Inferior goods (b) Normal goods (c) Giffen goods (d) Luxury goods.

23. Which amongst the following is incorrect in relation to the assumption of DMU ?
(a) All the units are homogeneous (b) the units are of reasonable size\
(c) More than one commodity is consumed (d) Consumption is continuous

24. If there is a case of utility of many combinations of A and B, then it is a case of :

(a) Indifference curve (b) P.P.C. (c) Budget line (d) None of these.

25. The curve, which neither touches X-axis nor is parallel to X-axis :
(a) Indifference curve (b) PPC (c) Budget line (d) None of these

26. In case of Multinational Co., which goods are not beneficial :

(a) Demerit goods (b) Poor goods (c) Normal goods (d) None of these

27. Who criticized the concept of cardinal utility :

(a) Pareto (b) H.D. Dickinson (c) Marshall (d) Hicks & Allen.
RISHI RAJ 5 Mb.: 9999983856

28. For luxuries the elasticity is :

(a) Less than 1 (b) Equal to 1 (c) More than 1 (d) Zero

29. Higher I.C. specifies ……………. Level of satisfaction.

(a) Same (b) Higher (c) Different (d) Lower.

30. If the price for laptops increases, and relatively the demand for tablets increases then, laptops and
tablets are :
(a) Cateris Paribus Products (b) Independent Products
(c) Substitute Products (d) Complementary Products.

31. Higher I.C. specifies …………….. level of satisfaction

(a) Same (b) Higher (c) Different (d) Lower.

32. Necessities are price …………….., while luxury goods are ……………
(a) Unitary, Inelastic (b) Elastic, Unitary (c) Elastic, Inelastic (d) Inelastic, elastic

33. When T.U. decreases, M.U. ……………..

(a) Decreases (b) Increases
(c) Decreases Negatively (d) Decreases Positively

34. Under Law of Demand :

(a) Price is independent variable (b) Quantity demanded is dependent variable
(c) Inverse relation between Price and Qty. (d) All of the above.

35. The concept of cardinal measurability of utility was explained by :

(a) Alfred Marshall (b) Hicks & Allen (c) Lionel Robbins (d) None of these.

36. A set of Indifference Curve is called :

(a) Indifference Schedule (b) Indifference Map
(c) Indifference Polygon (d) None of the above.

37. Higher indifference curve is called :

(a) Lower Satisfaction Point (b) Higher Satisfaction Point
(c) Maximum Price Point (d) None of the above.

38. Contraction of Demand is the result of :

(a) Decrease in number of consumers (b) Increase in price of the goods
(c) Increase in price of other goods (d) Decrease in income of purchases.

39. In the case of an inferior goods, the income elasticity of demand is :

(a) Positive (b) Zero (c) Negative (d) Infinite

40. …………….. is the want satisfying of a commodity :

(a) Indifference curve (b) Utility (c) Consumer surplus (d) None of above

41. Utility is a ………………… entity and varies from person to person.

(a) Subjective (b) Objective (c) Restrictive (d) None of above.

42. Marginal utility analysis theory is propounded by :

(a) Hicks & Allen (b) Samuelson (c) Marshall (d) Robbins
RISHI RAJ 6 Mb.: 9999983856

43. According to law of diminishing marginal utility, the extra satisfaction that the consumer derives
from an extra unit of a good goes on :
(a) Increasing (b) Falling (c) Same (d) Either (a) or (b)

44. When TU is increasing at increasing rate MU us …………..

(a) Decreasing (b) Constant (c) Increasing (d) Negative.

45. All of the following are determinants of demand except :

(a) Tastes and Preferences (b) Quantity supplied
(c) Income (d) Price of related goods.

46. Budget line is also known as :

(a) Propensity line (b) Price line (c) Parallel line (d) None of these

47. On a straight line demand curve intercepting both horizontal and vertical axis, Ed would be equal
to unit at the :
(a) Middle point on the curve
(b) Point where the curve forms an intercept with X-axis
(c) Point where the curve form an intercept with (Y-axis)
(d) None of the above.

48. A consumer would be in equilibrium if he does not has to pay any price for the commodity
consumed at the level of consumption where ……………
(a) T.U. is maximum (b) MU = 0
(c) He has reached at the point of full satisfaction (d) All of the above

49. With fall in the price of a commodity :

(a) Demand for the commodity increases (b) Demand for the commodity decreases
(c) Qty. demanded of the commodity contracts (d)Quantity demanded of the commodity expands

50. An upward sloping demand curve can be expected for :

(a) Giffen Goods (b) Consumer Goods (c) Precious Goods (d) Capital Goods

51. A consumer will be maximizing his utility if he allocated his money income so that :
(a) The MU of the last unit of each product consumed is equal
(b) The U from the last rupee spent on each purchased product is the same
(c) Ed is the same for all purchased products
(d) TU gained from each product consumed is the same.

52. Total utility of a commodity can be found by :

(a) Multiplying the number of units by its MU (b) Adding up the MU of all units
(c) Multiplying price by number of units (d) None of these.
RISHI RAJ 7 Mb.: 9999983856

THEORY OF SUPPLY
1. The concept of supply is a ……………… concept
(a) Stock Flow (c) Both (d) None of these

2. Supply is that economic variable which is measured at a particular point of time.

(a) True (b) False (c) Partially True (d) None

3. Supply is an economic variable to be measured over a period of time.

(a) True (b) False (c) Partially True (d) None

4. If the supply curve is forming an angle of 450, it is satid to be equal to :

(a) ES > 1 (b) ES < 1 (c) ES = 1 (d) ES = 0

5. There is a ……………… relationship between price of good and quantity supplied.

(a) Direct (b) Inverse (c) No relation (d) None

6. Following goods are exception to law of supply :

(a) Agricultural Goods (b) Perishable goods
(c) Both (d) None.

7. Due to introduction of Goods and Service Taxes, the cost of production on some goods fall as a
result of which supply of goods ……………….
(a) Increases (b) Decreases (c) Both (d) None

8. With the upgradation of technology the productivity level of output rises as a result supply ………..
(a) Increases (b) Decreases (c) Falls (d) None

9. There is a ………………. Relationship between price of related goods and supply of commodity
(a) Direct (b) Inverse (c) No relation (d) None

10. Government decides to cut-down the subsidy on fertilizers. How it will effect the supply of
fertilizers in market.
(a) Increases (b) Decreases (c) No change (d) Falls.

11. A vertical supply curve shows that :

(a) ES = 1 (b) ES = 0 (c) ES = ∞ (d) ES < 1

12. A horizontal supply curve shows that :

(a) ES = 1 (b) ES = 0 (c) ES = ∞ (d) ES < 1

13. If commonly available inputs are used for production, the supply is said to be ………………
(a) Elastic (b) Inelastic (c) Zero (d) Infinity.

14. Supply of Teak Wood will be :

(a) Less elastic (b) More elastic (c) Unitary elastic (d) Infinite

15. If producer is willing to take risk of higher output, the supply will be :
(a) More elastic (b) Less elastic (c) Inelastic (d) Zero
RISHI RAJ 8 Mb.: 9999983856

16. Perishable goods are relatively less elastic in supply than durable goods :
(a) True (b) False (c) Partially True (d) None of above.

17. Supply will be …………….. in case increase in production :

(a) Less elastic (b) Moe elastic (c) Inelastic (d) Zero

18. Supply will be ……………… in case if technology is complex and expensive technology :
(a) Less elastic (b) More elastic (c) Perfectly elastic (d) Perfectly inelastic

19. An increase in the number of sellers of bikes will increase the :

(a) the price of a bike (b) demand for bikes
(c) the supply of bikes (d) demand for helmets.

20. If the supply of water bottles decreases, the equilibrium price ……………. And the equilibrium
quantity
(a) Increases; decreases (b) decreases; increases
(c) decreases; decreases (d) increases; increases.

21. If good growing conditions increases the supply of strawberries, the quantity of strawberries
bought :
(a) increases and the price might rise, fall or not change
(b) doesn’t change but the price falls
(c) doesn’t change but the price rises
(d) increases and the price rises.

22. In a very short period the supply :

(a) Perfectly inelastic supply (b) Perfectly elastic supply
(c) Unitary elastic (d) More than unitary elastic.
RISHI RAJ 9 Mb.: 9999983856

PRODUCTION FUNCTION
1. When value of MPP = 0; TPP at its ………….. point
(a) Maximum (b) Minimum (c) Negative (d) Zero.

2. When MPP lies below (X-axis); TPP curve :

(a) Rises (b) Falls (c) Vertical (d) Horizontal

3. In production function the relationship between physical inputs and physical output is :
(a) Psychological (b) Geometrical (c) Technical (d) Numerical.

4. The slope of TPP is :

(a) APP (b) MPC (c) APC (d) MPP

5. At the point of inflexion …………… is maximum.

(a) PP (b) MPP (c) APP (d) None of he above

6. At the point of saturation ……………. Is maximum.

(a) TPP (b) APP (c) MPP (d) None of the above

7. During diminishing returns; TPP ………………

(a) Rises (b) Falls (c) Unchanged (d) None of above.

8. MPP curve is short run lies ……………

(a) Above (X-axis) (b) At (X-axis) (c) Below (X-axis) (d) All of he above.

9. In case of negative returns TPP curve :

(a) Rises (b) Falls (c) Vertical (d) Horizontal

10. During returns to factor only …………….. factor inputs changes.

(a) Fixed (b) Variable (c) Both (d) None of above.

11. Long Run Production Function also known as :

(a) Return to Scale (b) Returns to Factor (c) Returns to Inputs (d) None of above.

12. In the concept of Iso-Quant, the word “Iso” refers to :

(a) Equal (b) Unequal (c) More (d) Less

13. Price ratio of two factor inputs is known as :

(a) Isoquant (b) Iso cast line (c) Indifference curve (d) None

14. In case of producer to be rational; the word “rational” refers to :

(a) Objective is to maximize profits
(b) Cost Minimization
(c) Optimum utilization of fixed and variable inputs
(d) All of the above.

15. Isoquant curve is always …………… to origin.

(a) Concave (b) Convex (c) Straight line (d) Parallel
RISHI RAJ 10 Mb.: 9999983856

16. Isoquant curves are always …………… sloping.

(a) Downwards (b) Upwards (c) Horizontal (d) Vertical

17. The convexiety of Iso quant curve is due to ……………..

(a) DMRTSLK (b) IMRTSLK (c) CMRTSLK (d) None of above

18. Two Isoquant curves can never touch or intersect each other.
(a) True (b) False (c) Partially True (d) None.

19. In case of constant marginal rate of technical substitution; the isoquant curve is :
(a) Concave (b) Convex (c) Straight Line (d) None

20. In case 2 factor inputs are substitutes of each other the shape of isoquant curve is :
(a) Straight line (b) Concave (c) Convex (d) None

21. If at 2 units of output is 20 and at 4 units of output is 36, the value of MPP is :
(a) 16 (b) 8 (c) 9 (d) 6.

22. If APP = MPP = 10; it means MPP curve is …………..

(a) Rising (b) Falling (c) Unchanged (d) Vertical.

23. At the point of producer’s equilibrium the isocost line is …………… to the isoquant curve.
(a) Rising (b) Falling (c) Tangent (d) None.

24. When APP is rising; MPP curve

(a) Also rises (b) Reaches to maximum
(c) Falls (d) All of the above.

25. At a point where APP is Maximum :

(a) APP = MPP (b) APP < MPP (c) APP > MPP (d) None.

26. It is because of the law of variable proportions that MP curve makes an inverted U
(a) False (b) True (c) Partially True (d) None.

27. APP may continue to rise even when MP starts declining

(a) True (b) False (c) Partially True (d) None.

28. Should both TP and MP be declining in a situation of diminishing returns :

(a) True (b) False (c) Partially False (d) None.

29. Ideal factor ratio of two factor inputs fixed and variable exist during :
(a) Increasing returns (b) Diminishing returns
(c) Negative returns (d) None.

30. Of the ideal factor ratio is crossed, than …………. Returns to factor exist
(a) Increasing returns (b) Diminishing returns
(c) Negative returns (d) None.

31. In case of law of variable proportion which is the optimum stage for producer :
(a) First (b) Second (c) Third (d) None.
RISHI RAJ 11 Mb.: 9999983856

32. Which stage of variable proportion is known as non-economic region of production :

(a) First (b) Second (c) Third (d) None.

33. The law of diminishing returns exist due to :

(a) Fixity of the factor (b) Imperfect factor substituability
(c) Poor coordination between the facto (d) All of the given

34. Which of the following is considered production in Economics ?

(a) Tiling of soil
(b) Singing a song before friends
(c) Preventing a child from falling into a man-hole on the road.
(d) Painting a picture for pleasure.

35. The average product of labour is maximized when marginal product of labour :
(a) Equals the average product of labour (b) Equals Zero
(c) is maximized (d) None of above.

36. If the proportional change in level of inputs is greater than the proportional change in output level
it is the case of :
(a) Increasing returns to scale (b) Constant returns to scale.
(c) Decreasing returns to scale (d) Returns to factor.

37. Which of the following is not a characteristic of land ?

(a) Its supply for the economy is limited (b) It is immobile
(c) Its usefulness depends on human efforts (d) It is produced by the forefathers.

38. As APP curve falls :

(a) APP = MPP (b) APP < MPP (c) APP > MPP (d) None

39. Which of the following is a function of entrepreneur ?

(a) Initiating a business (b) Risk bearing
(c) Innovating (d) All of the above.

40. When APP is highest :

(a) MPP = APP (b) MPP > APP (c) MPP < APP (d) None
RISHI RAJ 12 Mb.: 9999983856

UTILITY ANALYSIS
1. Mr. X introduced his savings of ` 1,00,000 in the business during the year; it is known as :
(a) Explicit cost (b) Real cost (c) Implicit cost (d) Money cost.

2. If resources are scarce which concept of cost is to be exist :

(a) Private cost (b) Social cost (c) Alternative cost (d) Implicit cost.

3. Government of India spends huge expenditure on advertising campaign of “Saving Girl Child”; it
is related to :
(a) Private cost (b) Real cost (c) Social cost (d) Money cost.

4. Which cost curve in short run is a horizontal line parallel to X-axis ?

(a) TVC (b) AFC (c) TC (d) TFC

5. At zero output level in short run, total cost is equal to :

(a) TVC (b) AFC (c) TFC (d) AVC.

6. When ATC falls in short run; MC curve behaves :

(a) Falls (b) Minimum (c) Rises (d) All of above.

7. MC curve in short run cuts ATC curve at its …………….. point.

(a) Falling (b) Rising (c) Maximum (d) Minimum

8. Which cost curve in short run is rectangular hyperbola curve :

(a) AFC (b) AVC (c) ATC (d) TC

9. AFC curve in short run intersects which curve :

(a) ATC (b) MC (c) AVC (d) TVC

10. The vertical distance between TVC and TC curve is …………..

(a) AVC (b) AVC (c) ATC (d) TFC

11. As output level rises both ATC and AVC coe closer to each other, but never intersect each other :
(a) True (b) False (c) Partially True (d) None of above.

12. Which of the following cost curve is inverse “S” shaped curve :
(a) TVC (b) TC (c) Both (d) None of above.

13. In short run ATC, AVC and MC curves are U-shaped due to :
(a) Returns to scale (b) Returns to factor
(c) Both (d) Negative returns.

14. Which of the following cost curves is not U-shaped ?

(a) TVC (b) ATC (c) AVC (d) MC

15. Long run average cost curve is known as :

(a) U-shaped curves (b) Planning curve
(c) Envelop curve (d) All of the above.
RISHI RAJ 13 Mb.: 9999983856

16. When ATC curve falls :

(a) MC = ATC (b) MC < ATC (c) Both (d) MC > ATC

17. Falling portion of LAC curve shows :

(a) Economies of scale (b) Returns to factor
(c) Diseconomies of scale (d) All of above.

18. As ATC curve rises :

(a) MC = ATC (b) MC > ATC (c) MC < ATC (d) None of given.

19. Cost an account of owner’s managerial skills is known as :

(a) Implicit cost (b) Explicit cost (c) Opportunity cost (d) Real cost

20. In long curve LAC curve is tangent to all ………….. curves :

(a) SMC (b) SAC (c) SAVC (d) SAFC

21. In long run LMC curve intersects LAC curve at its …………. Point.
(a) Rising (b) Falling (c) Minimum (d) Maximum

22. If at 2 units of output TC = 10, and at 4 units of output TC = 26; value of MC is :

(a) 13 (b) 5 (c) 12 (d) 8

23. If at zero output level TRC = 50; the TFC at 10 units of output is :
(a) 5 (b) 500 (c) 50 (d) 0

24. If at given output level ATC = MC; we can say that :

(a) ATC > MC (b) ATC < MC (c) ATC minimum (d) ATC maximum

25. …………….. curve in log run is a saucer shaped curve :

(a) LAC (b) LTC (c) LMC (d) LC

26. ……………… cost is the cost on account of paid, sacrifice, courage is known as :
(a) Money (b) Social (c) Private (d) Real

27. Which of the following statements is true ?

(a) AFC is a horizontal straight line (b) MC curve intersect AC curve at its least point
(c) AC curve starts rising prior to MC curve (d) At large volume of output both TC = TVC.

28. With a given plant size, an increase in the output cannot produce an increase in :
(a) TC (b) TFC (c) TVC (d) MC

29. Which of the following is true with respect to AFC curve :

(a) It is a bell shaped curve
(b) As quantity increases AFC tends to zero
(c) If quantity produced tends to zero, AFC is infinity
(d) AFC curve is an U-shaped curve.

30. Which of the following are not true if fixed cost = ` 10,000 ?
(a) AFC  0 (b) AFC is minimum when (AFC = MC)
(c) AFC is rectangular hyperbola (d) AFC never touch (X-axis)
RISHI RAJ 14 Mb.: 9999983856

31. The cost of curve(s) that depends on the level of output in the long-run is / are :
(a) TC (b) TVC (c) AFC (d) Both (a) and (b)

32. Which of the following is / are true if the LAC is increasing ?

(a) A rising MC curve (b) Operation of law of diminishing productivity
(c) Economies of scale (d) Both (a) and (b)

33. Which of the following is not an explicit cost :

(a) Salaries paid to workers
(b) Payment of telephone bill
(c) Advertisement expenditure by a firm
(d) The firm’s owner has given up a job, where he was earning ` 10,000 p.m. to run firm.
RISHI RAJ 15 Mb.: 9999983856

PRODUCTION COST
1. Land is a variable factor in the ………………
(a) Short period (b) Long period (c) Initial stage (d)Final stage

2. Area under MC curve is :

(a) TFC (b) TC (c) TVC (d) ATC

3. TFC is constant; therefore, the shape of AFC is :

(a) Upward sloping (b) Downward sloping straight line
(c) Rectangular hyperbola (d) Vertical

4. What will happen to AVC when MC > AVC

(a) AVC will fall (b) AVC will rise
(c) AVC will remain constant (d) AVC will be zero.

5. Salaries paid to permanent staff is an example of :

(a) Variable cost (b) Fixed cost (c) Marginal cost (d) None.

6. When AP is less than MP :

(a) AP rises (b) AP falls (c) AP remains constant (d) None of these

7. Increasing returns to scale is due to :

(a) Economies of scale (b) Specialization
(c) Diseconomies of scale (d) None.

8. The cost of one thing in terms of the alternative given up is known as :

(a) Production cost (b) Real cost (c) Physical cost (d) Opportunity cost

9. When MC is equal to ATC, ATC is :

(a) Rising (b) Falling (c) Minimum (d) Maximum.

10. Diminishing marginal returns implies :

(a) Decreasing AVC (b) Decreasing MC (c) Increasing MC (d) Decreasing AFC

11. Which of the following cost curves is never U-shaped ?

(a) ATC (b) AVC (c) MC (d) AFC

12. At saturation point …………….. is maximum :

(a) TPP (b) APP (c) MPP (d) None.

13. When MP = AP; AP is

(a) Rising (b) Falling (c) Maximum (d) Minimum

14. The efficient scale of production is the quantity of output that maximizes :
(a) AFC (b) ATC (c) AVC (d) MC

15. Which of the following is not a determinant of cost function :

(a) Production function (b) The Price of labour
(c) Taxes (d) The price of firm’s output.
RISHI RAJ 16 Mb.: 9999983856

16. With which concept is MC, closely related ?

(a) Fixed cost (b) Opportunity cost (c) Variable cost (d) Economics cost

17. The rising portion of LAC is due to :

(a) Economies of scale (b) Increasing returns
(c) Specialization (d) Diseconomies of scale.

18. In describing a given production technology; the short run is best described as :
(a) Lasting up to 6 months (b) Up to five years
(c) As long as all inputs are fixed (d) As long as fixed inputs remains unchanged

19. The change in total product resulting from change in variable input is :
(a) ATC (b) AP (c) MC (d) MP

20. Which of the following relates to diminishing marginal returns :

(a) 50, 50, 50, 50 (b) 60, 120, 190, 270 (c) 100, 150, 200, 250 (d) 50, 90, 120, 140

21. At maximum point of MPP; MC is ………… in short run :

(a) MC is maximum (b) MC is rising (c) Minimum (d) Falling

22. A rational producer always operates in stage ……………. Of law of variable proportion :
(a) First (b) Second (c) Third (d) None.

23. LAC curve is known as :

(a) U-shaped curve (b) Envelope curve (c) Planning curve (d) All of the given.

24. If the proportionate change in input level is greater than the proportionate change in output level it
is the case of :
(a) IRTS (b) CRTS (c) DRTS (d) None of these.

25. At point of inflexion ……………… is maximum and …………….. is minimum :

(a) TPP, TC (b) APP, ATC (c) MPP, MC (d) TFC, AFC
RISHI RAJ 17 Mb.: 9999983856

UNIT - 1
INTRODUCTION TO MICRO

1. A PPC can never be :

(a) Concave (b) Convex
(c) Straight line (d) Upward sloping straight line.

2. Marginal rate of transformation can be written as :

(a) Gain – Loss (b) Loss x Gain (c)
Loss (d)
Gain
Gain Loss
3. Economic problem arises due to
(a) Limited Resources (b) Unlimited wants
(c) Both (a) and (b) (d) Neither (a) nor (b)

4. PPC will shift right when there is :

(a) Unemployment of resources (b) Fuller employment of resources
(c)Loss of resources (d) None

5. Make in India will :

(a) Shift the PPC left (b) Shift the PPC right
(c) Not move the PPC (d) Let economy operate on PPC.

6. PPC is convex when :

(a) MOC is rising (b) MOC is falling (c) MOC is constant (d) None.

7. Price Mechanism is an important characteristic of :

(a) Centrally planned economy (b) Market economy
(c) Mixed economy (d) All of the above.

8. Which of the following is related to the problem of ‘For Whom to Produce’?

(a) Factor distribution of income (b) Choice of product
(c) The choice of technique (d) All

9. An economy is producing both wheat and tanks. There is an improvement in the wheat producing
technology, this will lead to :
(a) Rightward shift in PPC (b) Upward movement along PPC
(c) Rotation in PPC (d) Leftward shift in PPC

10. When an economy is operating on PPC it indicates

(a) Potential output > actual output (b) Potential output < actual output
(c) Potential output = actual output (d) None

11. Example of micro economics is :

(a) National Income (b) Aggregate supply (c) Market demand (d) Aggregate demand

12. PPC is also called :

(a) Production Possibility Frontier (b) Transformation curve
(c) Fuller Employment Curve (d) All
RISHI RAJ 18 Mb.: 9999983856

13. Economics was originally developed as a science of …………..

(a) State craft (b) Business management
(c) Wealth management (d) Resource management

14. If 100 gs. Of wheat is sacrificed in order to produce rice, this sacrifice is called …………..
(a) Average cost (b) Marginal Cost (c) Opportunity cost (d) Total fixed cost

15. A land can produce 80 tonnes of wheat and the same land can produce 60 tonnes of pulses.
What is the opportunity cost for producing wheat ?
(a) 80 (b) 140 (c) 20 (d) 60

16. Theory of demand is a concept of …………..

(a) Microeconomics (b) Macroeconomics (c) Both (a) and (b) (d) None of above.

17. Which economic analysis deals with “things as they are” ?

(a) Normative economic analysis (b) Positive economic analysis
(c) Both (a) and (b) (d) None

18. Scarcity problem arises because our resources are ……………..

(a) Unlimited (b) Limited (c) Sufficient (d) Vast

19. Microeconomics deals with …………..

(a) Theory of production (b) Theory of cost
(c) Factor pricing (d) All of the above

20. Selection of production technique is a problem of ……………….

(a) What to produce (b) How to produce (c) For whom to produce (d) All of the above.

21. Problem of allocation of resources includes ………………

(a) What to produce (b) How to produce (c) For whom to produce (d) All of the above.

22. If actual output is equal to the potential output, the economy will :
(a) Operate outside PPC (b) Operate inside PPC
(c) Operate on PPC (d) None

23. Problem of distribution of resources is related to ……………

(a) For whom to produce (b) What to produce
(c) Fuller utilization of resources (d) Economic growth

24. Rightward shift of production possibility curve means ………………..

(a) Under utilization of resource (b) Economic growth
(c) Production of capial good only (d) Production of consumer goods only.

25. Growth concept of Economics was presented by ……………

(a) Adam Smith (b) Marshall (c) Robbinson (d) Samuelson

26. Production of Y falls from 50 units to 35 units leading to increase in production of X from 20 to 25
units. The MOC is :
(a) 3 (b) 2 (c) 5 (d) 15
RISHI RAJ 19 Mb.: 9999983856

27. ……………… of resources is necessary for the development of the economy.

(a) Utilization (b) Growth (c) Wastage (d) None-utilization

28. Cotton industry is studied under :

(a) Micro Economics (b) Macro Economics
(c) Developmental Economics (d) Welfare Economics.

29. A point inside PPC shows :

(a) Inefficient use of resources (b) Unemployment of resources
(c) Wastage of resources (d) All of the above.

30. Which of the following countries will not face central problems ?
(a) USA (b) India (c) China (d) None
RISHI RAJ 20 Mb.: 9999983856

UNIT - 2
THEORY OF CONSUMER BEHAVIOUR AND DEMAND
1. Marginal utility curve always :
(a) Slopes downward (b) Never slopes upward
(c) Is Parallel to axis (d) Falls under normal conditions

2. A consumer who always tries to maximize his satisfaction and get best is :
(a) An emotional consumer (b) An active consumer
(c) An indifferent consumer (d) A rational consumer

3. If with the rise in price the total expenditure falls, elasticity of demand is :
(a) Greater than 1 (b) Equal to one (c) Less than one (d) Equal to zero

4. Price line is another name for :

(a) Indifference curve (b) Demand curve
(c) Budget line (d) Production possibility curve.

5. If demand curve is vertical the elasticity of demand is equal t :

(a) 0 (b) 1 (c) Infinity (d) Greater than 1

6. In case of complimentary goods, cross elasticity of demand will be :

(a) Positive (b) Negative (c) Zero (d) Infinity.

7. If MUX > PX, the consumer :

(a) Has reached the equilibrium (b) Has started incurring losses
(c) Can consume more of X (d) Must stop consuming X

8. Coefficient of both demand elasticity of and supply elasticity positive numbers :

(a) True (b) False (c) Nothing can be interpreted (d) All

9. A consumer purchases a good on the basis of :

(a) Its price (b) Its utility (c) Its taste (d) All

10. When with change in price the outlay remains constant, it is a case of :
(a) Highly elastic demand (b) Perfectly elastic demand
(c) Unitary elastic demand (d) Perfectly inelastic demand.

11. A consumer is in equilibrium, consuming two goods, X and Y. Price of goods X falls, what will be
the effect on the demand of Y :
(a) Increase (b) Decrease (c) Remains constant (d) None

12. A consumer consumes only two goods, if the price of good X falls, then the budget line will :
(a) Shift rightwards (b) Shift leftwards
(c) Rotate towards right on x (d) Does not move.

13. What will be the impact of change in income on the demand of normal goods ?
(a) Increase in demand (b) Decrease in demand
(c) (d)
RISHI RAJ 21 Mb.: 9999983856

14. What will be the cross price effect of substitute goods ?

(a) Negative (b) Positive (c) Zero (d) None

15. Utility is a ………… approach ?

(a) Qualitative (b) Quantitative (c) None (d) Both (a) and (b)

16. Demand curve for Giffen goods will :

(a) Slope downwards (b) Slope upward
(c) Can be both (d) None.

17. MU is falling but remains positive, TU will be :

(a) Falling (b) Constant (c) Rising (d) Maximum

18. MRE is the :

(a) Slope of PPC (b) Slope of budget line
(c) Slope of IC (d) Slope of demand curve

19. A consumer spends his entire income on consumption of two goods (X and Y), if price of X rises
the slope budget line will :
(a) Fall (b) Rise (c) Remains constant (d) None.

20. A commodity having many substitutes has :

(a) Inelastic demand (b) Highly elastic demand
(c) Zero elastic demand (d) None

21. MUX / PX > MUY / PY, the consumer must

(a) Consume more of X and Y (b) Consume more of Y
(c) Consume less of X (d) Consume more of X

22. If price of sugar rises, demand for sweets :

(a) Falls (b) Rises (c) Remains constant (d) None

23. If good takes up a significant share in consumer’s budget, it will be :

(a) Inelastic (b) Elastic (c) Unitary elastic (d) Less elastic.

24. Veblen goods are :

(a) Inferior goods (b) Necessities (c) Goods of ostentation (d) Normal goods

25. In case of luxury goods, the income elasticity of demand will be :

(a) Positive (b) Negative (c) Zero (d) None

26. The formula of marginal utility is …………..

(a)  TU (b) TUn - TUn1 (c) TU / MU (d) TU x Units

27. When income elasticity of demand is greater than one, then the commodity is :
(a) A luxury (b) A non-related good
(c) A necessity (d) An inferior good.

28. Demand for a tractor is a :

(a) Direct demand (b) Derived demand (c) Both (a) and (b) (d) Neither (a) nor (b)
RISHI RAJ 22 Mb.: 9999983856

29. With the increase in the price of tea, the demand for coffee will :
(a) Rise (b) Fall (c) Won’t be affected (d) Expand

30. The area which lies under demand curve is :

(a) MU (b) TU (c) Total income (d) Total Supply

31. The effect of change in price of relaed goods on demand of commodity is :

(a) Income effect (b) Substitution effect (c) Cross price effect (d) None.

32. Price of good X rise from ` 40 per unit to ` 80 per unit. The consumer buys the same quantity, he
bought at ` 40, the elasticity of demand is :
(a) Infinity (b) Zero (c) Less than one (d) More than one.

33. Total utility and marginal utility are same when a consumer takes …………….. of a commodity :
(a) 5th Unit (b) 10th Unit (c) 6th Unit (d) 1st Unit.

34. Mr. X spends ` 500 on a commodity which is at ` 5 per unit and when the price rises by 20% he
spends ` 420, the elasticity of demand will be :
(a) 1.5 (b) () 1.5 (c) 3 (d) 2

35. Consumer’s equilibrium is a situation in which a consumer can get …………… satisfaction from
his current level of income :
(a) Maximum (b) No (c) Less (d) (a) and (c) both

36. In economics term utility means …………

(a) Sorrow (b) Enjoyment (c) Satisfaction (d) (a) and (b) both

37. Increase in wages due to industrial development is an example of …………

(a) Income demand (b) Cross demand (c) Derived demand (d) Competitive demand

38. A consumer can get maximum satisfaction where the ……….. are same :
(a) Total utility and marginal utility (b) Price of a commodity and marginal utility
(c) Price of commodity and total utility (d) (a) and (b) both

39. Change in the demand of apples due to increase in its price is ……….. of demand :
(a) Contraction (b) Extension (c) Increase (d) Decrease

40. The father of modern economics is …………..

(a) Adam Smith (b) Prof. Ragnar (c) Kenneth Boulding (d) Prof. Walker

41. Change in the demand due to increase in the income of the consumers is known as ……………..
of demand :
(a) Increase (b) Decrease (c) Extension (d) Conraction

42. Increase in the price of ink will ……………. The demand of pen :
(a) Increase (b) Decrease (c) Keep constant (d) No effect

43. Change in the demand of a commodity due to change in the price of the substitute is an example
of ………………. :
(a) Cross elasticity (b) Price elasticity (c) Income elasticity (d) Neither of the above
RISHI RAJ 23 Mb.: 9999983856

44. The law of demand is given by …………..

(a) Prof. Marshall (b) Adam Smith (c) Prof. Walker (d) J.B. Say.

45. In a case of …………… demand, a slight change in the price will make greater changes in
demand
(a) Perfectly elastic (b) Perfectly inelastic (c) Elastic (d) Inelastic.

46. The demand will be ………………. If there is no change in the demand of the commodity, in spite
of the change in the price of the commodity :
(a) Perfectly elastic (b) Elastic (c) Perfectly inelastic (d) Inelastic

47. If change in the demand of the commodity is equal to change in price, the demand of the
commodity will be ………….
(a) Unit elastic (b) Less than unit elastic
(c) Perfectly elastic (d) Perfectly inelastic

48. If the demand of the commodity changes at faster rates than the change in the price of the
commodity, the demand of the commodity will be known as …………..
(a) Perfectly elastic (b) Inelastic (c) Perfectly inelastic (d) Elastic.

49. If due to increase in the price of X, demand for Y falls, They are :
(a) Unrelated (b) Complementary (c) Substitutes (d) None.

50. It is a case of …………….. if demand of the commodity changes with the change in price :
(a) Income elasticity (b) Price elasticity (c) Cross elasticity (d) All of the above.
RISHI RAJ 24 Mb.: 9999983856

UNIT - 3
PRODUCER’S BEHAVIOUR AND SUPPLY
1. In short period there is no change in …………….. factors :
(a) Fixed (b) Variable (c) Human (d) Physical

2. Increase in supply due to causes other than change in price is termed as …………… supply :
(a) Increase in (b) Decrease in (c) Extension of (d) Contraction of

3. In case …………. The supply is inelastic :

(a) Of decreasing marginal cost (b) Of increasing marginal cost
(c) Of marginal cost remaining constant (d) The law of increasing return is in operation.

4. If marginal product is decreasing total product will increase at the ………… rate.
(a) Same (b) Increasing (c) Decreasing (d) Normal

5. In the …………. Change in all factors of production is possible :

(a) Short period (b) Long period (c) Intermediate period (d) Market period

6. Law of supply is ……………

(a) Quantitative (b) Qualitative (c) Both (d) Neither of the two

7. Supply curve presents ……………..

(a) Price of the commodity
(b) Supply of the commodity
(c) Relationship between price and supply of the commodity
(d) Demand of the commodity.

8. Product obtained from the additional factor of production is termed as ……………

(a) Marginal product (b) Total product (c) Average product (d) Annual product

9. If marginal product goes no increasing, it should be understood that law of ……………. Is applying
(a) Increasing returns (b) Decreasing returns
(c) Constant return (d) Diminishing returns

10. If marginal product goes no decreasing, it should be understood that law of ………… is applying
(a) Increasing cost (b) Decreasing cost (c) Constant cost (d) None

11. In case, law of constant return is applicable ……………

(a) Marginal product will be more than average product
(b) Marginal product will be lesser than average product
(c) Marginal and average product will be equal
(d) Total marginal and average product will be equal

12. Modern economies have propounded the law of …………….

(a) Increasing return (b) Decreasing return
(c) Constant return (d) Variable proportion.

13. Supply means ……………..

(a) Quantity of goods produced (b) Stock of goods produced
RISHI RAJ 25 Mb.: 9999983856

(c) Quantity of goods available for sale (d) Total of produced and imported goods.

14. Application of 5 units of factors of production results in the product of 24 units. Introduction of 6 th
additional unit increases total product to 30. Average product in this case will be ………..
(a) 30 (b) 6 (c) 5 (d) 24

15. Total product / Units of variable factors. The above formula is used to calculate ……………..
(a) Total product (b) Average product (c) Marginal product (d) Annual product

16. Supply of agricultural produce depends upon …………….

(a) Natural causes (b) Taxation policy
(c) Technological development (d) Price of other goods

17. Change in supply due to increase in price is termed …………… supply :

(a) Extension of (b) Contraction of (c) Increase in (d) Decrease in

18. Supply of the rare coins ……………

(a) Perfectly inelastic (b) Inelastic (c) Elastic (d) Perfectly elastic

19. If 10% increase in the price of scooters increase supply of scooter by 20% the supply of scooters
will be …………..
(a) Perfectly elastic (b) Elastic (more than unit)
(c) Inelastic (d) Perfectly inelastic

20. The supply in the long period is …………….

(a) Inelastic (b) Elastic (c) Perfectly inelastic (d) Perfectly elastic

21. In ………….. the supply is inelastic :

(a) Short period (b) Long period (c) Initial stage (d) Final stage

22. Land is a variable factor in the :

(a) Short period (b) Very short period (c) Long period (d) Medium period.

23. Area under MC curve is :

(a) TFC (b) TC (c) TVC (d) AC

24. TFC is constant, therefore, the shape of AFC is :

(a) Upward sloping (b) Downward sloping straight line
(c) Rectangular hyperbola (d) Downward sloping concave.

25. Diminishing marginal returns for the first four units of a variable input is exhibited by the total
product sequence :
(a) 50, 50, 50, 50 (b) 60, 120, 190, 270 (c) 100, 150, 200, 250 (d) 50, 90, 120, 140

26. If the MC of producing 1 unit of a commodity is ` 30 and that of producing 2 units is ` 20 :

(a) Total cost = ` 50 (b) Variable cost = ` 50
(c) Average cost = ` 10 (d) None

27. What will happen to AVC when MC > AVC :

(a) AVC will fall (b) AVC will rise
(c) AVC will remains constant (d) AVC will be zero
RISHI RAJ 26 Mb.: 9999983856

28. Salaries paid to permanent staff is an example of :

(a) Variable cost (b) Fixed cost (c) Marginal cost (d) None

29. As long as MR is positive :

(a) TR keeps falling (b) TR remains constant
(c) TR rises (d) TR is negative.

30. Seller is generally not willing to sell commodity below ………….

(a) Reserve Price (b) Average Price (c) Marginal Price (d) Neither of the above

31. When AP is less than MP :

(a) AP rises (b) AP falls (c) AP remains constant (d) None of these

32. In monopolistic competition :

(a) MR > AR (b) MR < AR (c) MR = AR (d) None of these

33. Increasing returns to scale is due to :

(a) Economies of scale (b) Specialization
(c) Diseconomies of scale (d) None.

34. When MC is equal to AC is :

(a) Rising (b) Falling (c) Minimum (d) Maximum

35. Diminishing marginal returns implies :

(a) Decreasing average variable cost (b) Decreasing marginal cost
(c) Decreasing marginal cost (d) Decreasing average fixed cost.

36. Which of the following cost curves is never U-shaped ?

(a) AC (b) AVC (c) MC (d) AFC

37. The cost of one thing in terms of the alternative given up is known as :
(a) Production cost (b) Real cost (c) Physical cost (d) Opportunity cost

38. When MP = AP, AP is :

(a) Rising (b) Falling (c) Maximum (d) Minimum

39. The efficient scale of production is the quantity of output that maximizes :
(a) AFC (b) ATC (c) AVC (d) MC

40. Which of the following is not a determinant of firm’s cost functions ?

(a) Production function (b) The price of labour
(c) Taxes (d) The price of firm’s output

41. With which concept is MC, closely related ?

(a) Fixed cost (b) Opportunity cost (c) Variable cost (d) Economics cost

42. A firm’s average fixed cost is ` 20 at 6 unit of output. What will it be at 4 units of output ?
(a) ` 60 (b) ` 40 (c) ` 20 (d) ` 30
RISHI RAJ 27 Mb.: 9999983856

43. The rising part of LAC is due to :

(a) Economics of scale (b) Increasing returns
(c) Specialization (d) Diseconomies of scale.

44. A firm’s average total cost is ` 300 at 5 units of output and ` 320 at 6 units of output. The MC of
producing 6th units is :
(a) ` 20 (b) ` 120 (c) ` 320 (d) ` 420

45. In describing a given production technology, the short run is best described as :
(a) Lasting up to six months from now (b) Up to five years from now
(c) As long as all inputs are fixed (d) As long as at least one input is fixed

46. Identify fixed cost from the following :

(a) Cost of raw materials (b) Wages
(c) Salary of watchmen (d) Electricity bill

47. Which of the statement is true ?

(a) Services of Chartered Accountant is considered production
(b) Service of a house wife is considered production
(c) When a man creates anything, he creates matter
(d) None of the above

48. The production process described below exhibits :

No. of Workers Outputs
0 0
1 22
2 38
3 50
(a) Increasing returns to a factor (b) Diminishing returns to a factor
(c) Negative returns to a factor (d) None

49. The change in total product resulting form change is variable input is :
(a) Average (b) Average product (c) Marginal cost (d) Marginal product

50. If the firm increases its output even after MR = MC then :

(a) MR becomes greater than MC (b) Total profit reduces
(c) Total profit increase (d) Normal profit is earned.
RISHI RAJ 28 Mb.: 9999983856

UNIT - 4
MARKET FORMS AND PRICE DETERMINATION
1. In ………………. Market goods are sold at uniform price :
(a) Perfect competition (b) Monopoly
(c) Oligopoly (d) Duopoly

2. Huge selling costs are incurred in :

(a) Perfect competition (b) Monopolistic competition
(c) Oligopoly (d) Both (b) and (c)

3. In case of …………. Market the policy of product differentiation is adopted by producers.

(a) Perfect competition (b) Imperfect competition
(c) Both (a) and (b) (d) None

4. A monopolist will determine very ………….. price for a commodity if it is inelastic :

(a) High (b) Low (c) Normal (d) Neither of the above

5. In a perfectly competitive market ………….. price of a commodity prevails :

(a) Different (b) Uniform (c) Very High (d) Very low

6. A firm can fix independent price under ………… market :

(a) Perfect competition (b) Pure competition
(c) Imperfect competition (d) Neither of the above.

7. Classifying market as open market and black market is based upon ……………
(a) Competition (b) Time period (c) Legality (d) Area

8. At equilibrium price ……………

(a) Demand is more (b) Supply is more
(c) Demand and supply are equal (d) None of the above

9. If demand increase at faster rate than the supply equilibrium price will ……………..
(a) Increase (b) Decrease
(c) Neither increase nor decrease (d) None of the above.

10. If demand increase and supply change at the same rates, the equilibrium price will ……………
(a) Remain constant (b) Increase (c) Decrease (d) None of the above

11. ……………. A dominant role in determining equilibrium price in the short period :
(a) Demand plays (b) Supply plays
(c) Demand and supply play (d) Neither of the above.

12. ………….. a dominant role in determining equilibrium price in the long period :
(a) Demand plays (b) Supply plays
(c) Demand and Supply play (d) Neither of the above

13. In …………. market there are two sellers of the commodity :

(a) Perfect competition (b) Monopoly
(c) Duopoly (d) Oligopoly
RISHI RAJ 29 Mb.: 9999983856

14. Fresh vegetable market is …………… market :

(a) Very short period (b) Short period
(c) Long period (d) Very long period

15. …………….. a dominant role in determining market price :

(a) Demand plays (b) Supply plays
(c) Demand and Supply play (d) Neither of the above

16. The concept of equilibrium price is ………………

(a) Theoretical (b) Practical
(c) Both theoretical and practical (d) Neither theoretical nor practical

17. Traders enjoy ………… profit at equilibrium price :

(a) Normal (b) Abnormal (c) Lesser (d) None

18. Market of gold and silver is …………. market :

(a) Short period (b) Long period (c) Very long period (d) International

19. Stock exchange market is the example for :

(a) Unregulated market (b) Regulated market
(c) Spot market (d) None.

20. Main feature of oligopoly market :

(a) Price discrimination (b) Price control
(c) Price rigidity (d) None

21. Price discrimination is related to :

(a) Time (b)Size of the purchase (c) Income (d) Any of the above

22. The demand curve of monopoly is ………………

(a) Inelastic (b) Elastic (c) Perfectly elastic (d) Perfectly inelastic

23. Secular price is fixed in the ……………… period

(a) Very short (b) short (c) Long (d) Very long

24. Restricted entry leads to :

(a) Normal profits in short run (b) Normal profits in long run
(c) Abnormal profits in short run (d) Abnormal profits in long run

25. Normal price is fixed in the ………….. period

(a) Market (b) Short (c) Long (d) Very Long

26. Which of the following market types has the least number of firms :
(a) Monopoly (b) Duopoly (c) Oligopoly (d) Monopolistic

27. When a monopolistic tries to sell more ?

(a) The price increases (b) The price must fall
(c) The price remains constant (d) None
RISHI RAJ 30 Mb.: 9999983856

28. Price control is one of the monopoly regulations which is more advantageous for :
(a) The producer (b) The consumer (c) The Government (d) The seller.

29. Equilibrium price …………….. with the decrease in demand :

(a) Increases (b) Decreases (c) Remains constant (d) Can’t be determined

30. When the TR and TC curves are parallel and TR exceeds TC :

(a) Normal profit is maximized (b) Normal profit minimized
(c) Total profit is maximized (d) Total profit is minimized

31. in long run, perfect competitive firms

(a) Makes an economic profit (b) Incurs economic losses
(c) Makes zero economies loss (d) Makes abnormal profit

32. Monopolistic seller has

(a) Full control over price (b) No control over price
(c) Partial control (d) Both (a) and (b)

33. What is the shape of the demand curve faced by a firm under perfect competition ?
(a) Horizontal (b) Vertical (c) Positively sloped (d) Negatively sloped

34. In which form of the market structure is the degree of control over the price of its product by a firm
very large ?
(a) Monopoly (b) Monopolistic (c) Perfect (d) Oligopoly

35. The kinked demand hypothesis is designed to explain in the context of oligopoly :
(a) Price and output determination (b) Price rigidity
(c) Price leadership (d) Collusion among rivals

36. A firm encounters its ‘shut down point’ when :

(a) ATC equal price at the profit maximizing level
(b) AVC equal price at the profit maximizing level
(c) AFC equal price at the profit maximizing level
(d) MC equal price at the profit maximizing level

37. Market price is …………… equilibrium price.

(a) More than (b) Lesser than (c) Equal to (d) Either lesser or more than

38. Which of the following statements is true ?

(a) In an oligopoly, firm is a price taker
(b) In monopolistic competition profits is maximized when MR > MC
(c) In monopoly there is free entry or exit
(d) In perfect competition both buyers and sellers have perfect knowledge

39. Hoarding and black marketing are the implications of :

(a) Price support (b) Price ceiling (c) Price discrimination (d) Price knowledge

40. Equilibrium price does not change if :

(a) Demand is inelastic (b) Supply is inelastic
(c) Either demand or supply is perfectly elastic (d) Demand is unitary elastic
RISHI RAJ 31 Mb.: 9999983856

41. Slope of supply curve is ……………

(a) Positive (b) Negative
(c) Both positive and negative (d) Parallel

42. When …………….., we know that the firms are earning just normal profits.
(a) AC = AR (b) MC = MR (c) MC = AC (d) AR = MR

43. AR can be symbolically written as :

(a) MR/Q (b) P x Q (c) TR/Q (d) None

44. When Ed > 1 the MR is :

(a) Zero (b) Negative (c) Positive (d) One

45. Agricultural goods market depicts characteristic close to :

(a) Perfect competition (b) Oligopoly
(c) Monopoly (d) Monopolistic

46. The competitive firm maximizes profit when it produces output up to the point when :
(a) P = AVC (b) MR = AR (c) MC = TR (d) MC = MR

47. Name the market which sells both homogenous and differentiated products :
(a) Monopoly (b) Perfect (c) Oligopoly (d) Monopolistic

48. Railways in India is highlighted by which of the following market forms :

(a) Perfect (b) Monopoly (c) Monopolistic (d) Oligopoly

49. What is price ceiling ?

(a) Minimum price that can be charged (b) Maximum price that can be charged
(c) Minimum support price (d) All of the above.

50. Monopoly arises due to :

(a) Patents (b) Licensing (c) Control of resources (d) All of the above.