Managerial Economics

1

The market demand function for a product is a statement of the relationship between the

A) Quantity of the services B) Quantity of the product demanded and all the factors that affect this quantity C) Quantity of the product demanded and all the profit D) Product demand and cost

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Answer & Solution

Answer: Option B

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2

Total utility of a commodity can be found by

A) Multiplying price by number of units B) Adding up the marginal utility of all units C) Multiplying the number of units by its marginal utility D) None of these

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Answer & Solution

Answer: Option B

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3

A product that enjoys rapidly growing demand over time is likely to be

A) an inferior good B) a noncyclical normal good C) a cyclical normal good D) neither a normal nor an inferior good

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Answer & Solution

Answer: Option C

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4

The demand function yield price function is given below, the price for market will be: (P_b = 32 - Q_b)

A) 19 B) 215 C) 20 D) 30

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Answer & Solution

Answer: Option A

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5

The competitive equilibrium leads to

A) Firms producing at a cost higher than the minimum B) The firms producing at their minimum costs C) The firm producing with excess capacity D) Some firms producing under decreasing costs and others under increasing costs

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Answer & Solution

Answer: Option B

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6

The period of time in which the plant capacity can be varied is known as

A) The market period B) The short period C) The long period D) None of the above

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Answer & Solution

Answer: Option C

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7

Which is true?

A) If AR = AC, the firm earns only normal profit B) If AR > AC, there is economic profit for the firm C) If AR < AC, though only a theoretical possibly, the firm makes losses D) All of the above

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Answer & Solution

Answer: Option D

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8

Monopoly situation is not desirable mainly because of the monopolist.

A) Seeks to earn net revenue on the sale of all goods including those involving no cost of production B) Is able to earn net revenue in all time periods C) Is able to charge different prices from different categories of buyers D) Will produce below its economic capacity level when it exhibits satisfaction with the normal profits only

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Answer & Solution

Answer: Option D

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9

Match the items of the List-I with that of the List-II and suggest the correct answer from the following.

List-I	List-II
a. Cost function	1. Kinked demand
b. Supply function	2. Isoquants
c. Production function	3. Engineering method
d. Oligopoly	4. Factor prices

A) a-3, b-4, c-1, d-2 B) a-2, b-1, c-3, d-4 C) a-1, b-2, c-4, d-3 D) a-4, b-3, c-2, d-1

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Answer & Solution

Answer: Option D

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10

In general, profit will be at a maximum where

A) MC = MR B) MC < MR C) MC > MR D) MC = MR = 1

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Answer & Solution

Answer: Option A

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