Managerial Economics

1

If two commodities are substitutes, a change in the price of the one, ceteris paribus, causes a change in the quantity purchased of the other

A) In the same direction B) In an insignificant manner C) In the opposite direction D) Cannot be known

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Answer & Solution

Answer: Option A

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2

A comparison of monopoly and cartel reveals that

A) Like monopoly, cartel also maximizes revenue of its members B) Monopoly and cartel differ in the manner they reach their pricing decisions C) Unlike monopoly, all members of cartel maximize D) None of the above

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Answer & Solution

Answer: Option C

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3

The law of equi-marginal utility states that

A) $$M{U_x}.{P_x} = M{U_y}.{P_y} = M{U_z}.{P_z}$$ B) $$\frac{{M{U_x}}}{{{P_x}}} = \frac{{M{U_y}}}{{{P_y}}} = \frac{{M{U_z}}}{{{P_z}}} = M{U_m}$$ C) $$\frac{{M{U_x}}}{{{P_y}}} = \frac{{M{U_y}}}{{{P_x}}} = M{U_m}$$ D) $$\frac{{M{U_x}}}{{{P_x}}} < \frac{{M{U_y}}}{{{P_y}}} < \frac{{M{U_z}}}{{{P_z}}}$$

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Answer & Solution

Answer: Option B

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4

Which of the stages is relevant range for a rational firm in the competitive situation in the following diagram?
Managerial Economics mcq question image

A) Stage I B) Stage II C) Stage III D) None of the above

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Answer & Solution

Answer: Option B

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5

After reaching the saturation point, consumption of additional units of the commodity causes

A) Total utility and marginal utility both to increase B) Total utility to fall and marginal utility to increase C) Total utility to fall and marginal utility to become negative D) Total utility to become negative and marginal utility to fall

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Answer & Solution

Answer: Option C

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6

The Law of Diminishing Returns is applied to all fields of production was stated by

A) A. C. Pigou B) Walras C) Alfred Marshall D) David Ricardo

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Answer & Solution

Answer: Option C

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7

In the case of an inferior commodity, the income elasticity of demand is

A) Infinity B) Unitary C) Negative D) Positive

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Answer & Solution

Answer: Option C

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8

Demand pull inflation may be caused by

A) an increase in costs B) a reduction in interest rates C) a reduction in government spending D) an outward shift in aggregate supply

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Answer & Solution

Answer: Option B

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9

Which one of these is an exception to the law of demand?

A) Demonstration effect goods B) Giffen goods C) Future -scarcity of goods D) All of the above

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Answer & Solution

Answer: Option D

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10

Elasticity of demand is based on which of the following factors?

A) Range of substitutes available B) Joint demand C) Proportion of income spent on the commodity D) All of the above

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Answer & Solution

Answer: Option D

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