Managerial Economics

1

The price of a commodity is Rs. 20 and the quantity demanded at this price is 200 units. If the price falls to Rs. 16 and the quantity demanded increases to 280 units, calculate the price (arc) elasticity

A) 1.6 B) 1.5 C) 1.9 D) 1.3

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Answer & Solution

Answer: Option B

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2

Price control will effect the monopolist firm's

A) equilibrium output and profits B) equilibrium output C) profits D) average revenue in the short run

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Answer & Solution

Answer: Option A

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3

Which is the method of measuring GNP?

A) Expenditure method B) Income method C) Product method D) All of these

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Answer & Solution

Answer: Option D

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4

Consider the following demand schedule

Price per unit (Rs.)	Quantity demanded (000)
6	3
5	9
4	15
3	20

When price falls from Rs. 5 to Rs. 4, elasticity of demand can be expressed numerically as

A) 3.75 B) 2.5 C) 3.3 D) 1.0

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Answer & Solution

Answer: Option C

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5

Given, $$ = \sum\limits_{t = 1}^n {\frac{{T{R_t} - T{C_t}}}{{{{\left( {1 + i} \right)}^t}}}} $$
The above formula may be used for:

A) Value of the firm B) Capital budgeting C) Profit D) Cost of capital

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Answer & Solution

Answer: Option A

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6

Excess capacity is not found under

A) Monopolistic competition B) Monopoly C) Perfect competition D) Oligopoly

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Answer & Solution

Answer: Option C

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7

In the long-run, due to blocked entry pure profits can be made by

A) Pure duopolist B) Pure monopolist C) Pure oligopolist D) None of the above

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Answer & Solution

Answer: Option B

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8

An entrepreneur will stay in business in the long run as long as he meets

A) Variable costs of production B) Fixed costs of production C) All costs of production D) None of these

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Answer & Solution

Answer: Option D

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9

If the demand curve is a rectangular hyperbola, elasticity is

A) 1 B) 0 C) ∞ D) less than 1

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Answer & Solution

Answer: Option A

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10

In the case of an inferior good, the income effect

A) Partially offsets the substitution effect B) Is equal to the substitution effect C) Reinforces the substitution effect D) More than offsets the substitution effect

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Answer & Solution

Answer: Option A

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