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Managerial Economics

Managerial Economics Page-7 section-2

Each section contains 100 MCQs on Managerial Economics .
61
In which case the elasticity shown by the different points of a curve is the same?
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Answer & Solution
Answer: Option A
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62
Match the following:
a. Cardinal approach 1. Marginal utility
b. Ordinal approach 2. Alfred Marshall
c. Hicks-Allen approach 3. J. R. Hicks
d. Consumer's surplus 4. Indifference curve
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Answer & Solution
Answer: Option B
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63
Cross elasticity of complementary goods is
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Answer & Solution
Answer: Option A
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64
Law of diminishing marginal utility states
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Answer & Solution
Answer: Option D
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65
A cause of inflation is
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Answer & Solution
Answer: Option D
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66
A perfectly competitive firm will always expand output as long as
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Answer & Solution
Answer: Option D
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67
A monopolist will fix the equilibrium output of his product where the elasticity of his AR curve is
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Answer & Solution
Answer: Option B
Solution:
In a monopoly market, the firm determines its equilibrium output at the point where Marginal Revenue (MR) equals Marginal Cost (MC).

The Average Revenue (AR) curve of a monopolist is the same as the demand curve, which is downward sloping. Because of this, the elasticity of demand plays an important role in determining equilibrium.

When the price elasticity of demand is less than one (inelastic), the marginal revenue becomes negative. A monopolist will never produce in this region because producing additional output would reduce total revenue.

The monopolist therefore operates only in the elastic portion of the demand (AR) curve, where marginal revenue is positive. At the equilibrium point, elasticity must be greater than or equal to one.

Thus, a monopolist fixes equilibrium output where the elasticity of the AR curve is greater than or equal to one.

Hence, the correct answer is Option B: Greater than or equal to one.
68
The economic analysis expects the con sumer to behave in a manner
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Answer & Solution
Answer: Option A
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69
The advertisement cost is included in
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Answer & Solution
Answer: Option D
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70
Match the following:
List-I (Authors) List-II (Statement)
a. Marshall 1. The labour and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities, material and immaterial including services of all kinds. This is the true net annual income or revenue of the country or national dividend
b. Pigou 2. National income is that part of objective income of the community including of course income derived from abroad which can be measured in money
c. Fisher 3. The national dividend or income consists solely of services as received by ultimate consumers whether from their material or from their human environments. Thus, a Piano, or an overcoat made for me this year is not a part of this year's income, but an addition to the capital. Only the services rendered to me during this year by these things are income
d. T. F. Dernberg 4. Gross domestic product at market price is defined as the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year
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Answer: Option B
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