Managerial Economics

31

Value of the firm can be defined as

A) The present value of the firm's expected future net cash flows B) The present value of capital C) The future value of the firm's assets D) The future value of the firm's capital and cash

Discuss

Answer & Solution

Answer: Option A

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32

With the expansion of output, the short-run average cost curve, beyond a point, starts rising because

A) More production yields lower per unit price B) Average fixed cost increases sharply C) The law of variable proportions applies to short-run production D) Sales expenses become much larger

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Answer & Solution

Answer: Option C

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33

The optimal output decision

A) minimizes the average cost of production B) minimizes the marginal cost of production C) minimizes production costs D) is most consistent with managerial objectives

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Answer & Solution

Answer: Option D

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34

An economy that allocates resources through interaction of household demand and supply of all the firms is called

A) market economy B) social economy C) business economy D) open economy

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Answer & Solution

Answer: Option A

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35

Which one of the following formula will be used for computing the price elasticity of demand?

A) $$\frac{{\% {\text{ Change in quantity demanded}}}}{{\% {\text{ Change in price}}}}$$ B) $$\frac{{\% {\text{ Change in price}}}}{{{\text{Cost}}}} \times 100$$ C) $$\frac{{{\text{Change in quantity demanded}}}}{{{\text{Supply}}}} \times 100$$ D) $$\frac{{{\text{National income}}}}{{{\text{Cost}}}} \times 100$$

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Answer & Solution

Answer: Option A

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36

Each short-run average cost curve coincides with long run cost curve

A) At middle point B) At lower point C) At upper point D) No permanent position

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Answer & Solution

Answer: Option B

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37

On an indifference map, higher indifference curves show

A) Levels of satisfaction among which the consumer is indifferent B) The optimum level of satisfaction C) The higher level of utility D) The same lower level of satisfaction

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Answer & Solution

Answer: Option C

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38

A falling MU curve illustrates

A) The principle of diminishing marginal utility B) The principle of equi-marginal utility C) The principle of diminishing marginal rate of substitution D) None of these

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Answer & Solution

Answer: Option A

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39

Marginal utility has no place in a ordinal theory because it is

A) Not observable B) Subjective C) Introspective D) Additive

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Answer & Solution

Answer: Option D

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40

The elasticity of technical substitution is measured by

A) The ratio of factor inputs B) The change in the slope of the Iso-quant C) The slope of the Iso-quant D) None of the above

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Answer & Solution

Answer: Option D

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