Micro Economics - Multiple Choice Question

 Micro Economics - Multiple Choice Question 

Subject :- Micro Economic - I

Unit - 1

1.  Which is the accurate definition of economics ?? (Economics is the study of …….?)

• Choices of Scarcity 

2. The Business economics theory is concerned with the management technique to achieve …..?

• Maximization of Total Revenue
• Minimization of Cost production
• Maximization of profit from business
• All of the above

3. In Economics the central problem is…..?

• Money
• Scarcity
• Allocation
• Production

4. The principal reason behind the economic problem is ….?

• Unlimited wants
• Limited or scarce resources / mains
• Alternative uses of resources / mains
• All of the above 

5. Which of the following is not an assumption of Production Possibility Curve ?

• Amount of resources are given 
• Price factor fluctuates 
• Resources are not specific
• Technology remains constant

6. Business Economics is science which deals with the application of …?

• Economic theory 
• Commerce theory
• Macro theory
• None of the above

7. Positive science concern with economic analysis of….?

• Cause relationship 
• Effect relationship
• Cause and Effect relationship
• None of the above

8. Normative economic theory deals with …?

• What is or how the economic problems facing society are solved.
• How the problem should be solved.
• What to produce 
• How to produce

9. Scarcity of resources leads to …?

• Unsatisfaction of human wants
• Evaluations of alternative uses of scarce resources 
• Both A and B
• None of the above

10. If the production possibility curve is linear , It implies that……?

• Constant Opportunity cost
• Economy is tangle 
• Underemployment of factor of production
• With increase in production opportunity cost increases 

11. The regulatory mechanism of the market  system is ….?

• Self interest
• Private Property
• Competition
• Specialization

12. The invisible hands refer to …?

• Tax system redistribute income from rich to poor
• Under competition decisions motivated by self interest promote to social interest
• Tendency of monopolistic seller rate price above competitive level 
• Fact that Govt. Controls the function of market system 

13. When an economy produces more houses and few typewriters its answering …….question?

• Where to produce
• For whom to produce 
• How to produce
• What to produce

14. When India builds a dam using few machines and large numbers of labour it's answering the …… question.

• How to produce
• What to produce 
• Where to produce
• For Whom to produce 

15. To answer the ‘For whom to produce’ question we have studied….? 

• Business cycle / Trade cycle 
• Technological changes
• The global economy 
• Income differences 

16. The fact that people with higher income get to consume more goods and services, address the….….question. 

• How to produce
• Where to produce
• For whom to produce
• When to produce

17. Because with face scarcity , every choice involves …..?

• The question what
• Money 
• Giving up something for nothing
• Opportunity cost 

18. Positive and Normative statements differ in…..?

• Normative statement depicts ‘What is’ and Positive statement depicts ‘what ought to be’
• Positive statements can be graphed whereas Normative statements can not.
• Normative statement can be tasted whereas Positive statement can not.
• Positive statements can be tasted whereas Normative statements can not.

19. Which of the following positive statements….?

• Housing cost is too much
• Low rates will restrict the supply of housing
• Low rates are good because they make house more affordable 
• Owners of buildings ought to be free to charge whatever rent they want. 

20. Which of the following is a Normative statement…..?

• The price of candy bar is Rs. 1.25 each
• Popcorn and candy are sold in movie theater
• Candy bar more expensive than Newspaper
• We should eat less candy

21. The latin term ‘Ceteris Paribus’ means….?

• What is true of the both / poll is not necessary is true of part.
• After this, therefore because of this 
• Other things being equal 
  

 

Unit - 2

1. The demand necessity is usually…..?

• Highly elastic
• Highly Inelastic
• Uniter elastic
• Relatively Inelastic

2. The responsiveness of demand to change in income is known as ….?

• Price elasticity of demand
• Cross elasticity of demand
• Income elasticity of demand
• None of the above
• 
  

3. Which of the following statements regarding cross elasticity is correct ?

• It’s always negative
• It can be either positive or negative
• It’s always positive
• It always lies between 0 and 1

= Substitute Goods -  Are Always Positive

= Complementary Goods - Negative 

4. The law which studies the direct relationship between  price and quantity supplied of commodities is….?

• Law of demand 
• Law of varticale proportion
• Law of supply
• None of the above

5. In case of perfectly inelastic supply, the supply curve will be ….?

• Rising
• Vertical ( To Y-axis)
• Horizontal 
• Falling

6. In case of imperier  (imperial)  good the income elasticity of good is….?

• Positive
• Negative
• Positive and Negative
• Negative and Positive

7. Market …….. Occurs where demand and supply are equal?

• Equilibrium 
• Utility
• Elastic
• None of the above

8. A market demand schedule for a product indicates that……?

• Product price falls consumer buy less
• There is direct relationship between price and quantity demanded
• Product price rises consumer buy less of other goods
• There is an inverse relationship between price and quantity demanded.

(06.04.21) 

9. The market demand can be derived by adding all the individual curves…?

• Vertical
• Horizontal 
• Parallel  / In Parallel 
• By any of the above

10. Law of demand does not include ..?

• Price of commodity is an independent variable
• Quantity demanded dependent variable
• Reciprocal relationship between price and quantity demanded
• Cost of Production

11. For inferior commodities goods income effect is ….?

• Zero 
• Negative
• Infinity
• Positive

12. Which of the following is not determinant of demand..?

• Income
• The cost of input in production
• The price of related goods
• Future price exception 

13. The price elasticity of demand is….?

• The percentage change in quantity demanded due to percentage change in price
• An increase in price of one will increase the demand
• The decrease in price of one will increase the demand for the other 
• The decrease in price of one will have no effect on demand for the other. 

14. The forecasts are usually classified by time horizon into three categories…?

• Short, Medium, and Long run
• Strategic, Technical, and operational 
• Regression, Time Series and Statistics
• None of these

15. Which of the following is not a step in the forecasting process?  

• Determine the use of forecast
• Eliminate any assumption
• Determine the time horizon
• Historical and Associate 

16. Time series data may not exhibit, which of the following behaviors…? 

• Trend
• Random Variation
• Seasonality
• Cyclic changes

17. The outlay method explains the relationship between price and …..?

• Demand
• Supply
• Expenditure
• Income

18. A price ceiling is ….?

• Legally established minimum price that can be charged
• Legally established maximum price that can be charged
• Minimum price that can be charge in competitive market
• Maximum price that can be charge in competitive market

19. The price floor is  …?

• Legally established minimum price that can be charged
• Legally established maximum price that can be charged
• Minimum price that can be charge in competitive market
• Maximum price that can be charge in competitive market

20. If a subsidy is introduced in a market then which of the following statements is true ?

• Consumer and Producer surplus increase but social surplus decrease 
• Consumer and Producer surplus decrease but social surplus increases 
• Consumer surplus, Producer surplus, Social surplus all increases
• Consumer surplus, Producer surplus, Social surplus all decreases

Unit - 3 

1. A graph showing all the combinations of capital and labour available for a given total cost is….? 

• Isoquant 
• Perest constraint 
• Iso cost line
• Expenditure set 

2. L-shaped isoquant implies that production requires that input is …….(Perfectly substitute)

• Are imperfect substitute
• Can not be use together
• Must be use together in a certain proportion 
• None of these

3. Isoquants that are downward sloping straight line implies that inputs are….?

• Are perfect substitute
• Are imperfect substitute
• Can not use together
• Must be use together in a certain proportion 

4. Isoquants that are downward sloping straight line exhibit…?

• An increasing Marginal Rate of Technical Substitute
• Decreasing MRTS
• Constant MRTS
• MRTS can not be determine

5. When the total product falls …..?

• Average product is zero
• Marginal Product is zero
• Average product is positive
• Average product is decline

6. Law of diminishing  returns was propounded by ….?

• Adam smith 
• Dr. Marshal 
• Devid recardo 
• J.S.L

7. The supply of products does not depend on …..?

• Labour cost 
• The number of seller in the market 
• Consumer test
• Existing Technology

8. Passive factor of production …?

• Only land
• Only capital
• Both A and B
• Neither land nor capital

= Passive factors - Land, Capital 

= Active Factors -  Labour, Entrepreneur. 

9. Reasons for increasing return in stage one of the law of variable proportion is….? 

• Individuality
• Specialization 
• Both A and B
• None of the above

10. Which of the following is not related to the factors of production ?

• Land
• Capital
• Raw Material 
• Labour

11. Which factor of production is considered as fixed input..?

• Labour
• Technology 
• Capital 
• Land

12. In law of variable proportion when total production is maximum, the marginal production is….?

• Marginal production is equal to one (M=1)
• Marginal production is less than zero  (M<0)
• Marginal production is equal to zero  (M=0)
• Marginal production is greater than one (M>1)

(07.04.21) 

13. When the total product (TP) curve is falling…..?

• Marginal product curve is zero 
• Marginal product is negative
• Average product is increasing
• Average product is negative

14. Which of the following statements best describes a production function…?

• A maximum profit generated from even level of output
• The maximum level of output generated from even level of input 
• All level of output can be generated from given level of input
• All level of inputs can produce given level of output

15. In the long run all factors of production are….?

• Variable 
• Fixed
• Material
• Rented

16. When output produced is maximum, for the given level of input, the firm achieves….?

• Maximum profit
• Technical efficiency 
• Economic efficiency 
• None of these

17. In production analysis the necessary condition for producer’s equilibrium is….?

• MRSxy = PX
• MRSxy = PY
• MRTSlk (LK) = PL/PK
• MRSxy = Px/Py

18. In production analysis, the sufficient condition for producer’s equilibrium is….. At the point of tangency isoquant must be … to the origin. 

• Upward 
• Convex  ( बहिर्वक्र )
• Concave
• Horizontal

 

Unit - 4 -

1. ….Cost, are business costs which do not involve any cash payment, But for them a provision is made in account. 

• Private cost
• Social cost
• Accounting cost
• Book cost

2. The opportunity cost is also known as …?

• Outlay cost
• Sunk cost
• Alternative cost
• Total cost

3. Social costs are those costs …?

• Not born by the firm
• Incurred by society
• Health hazards 
• All of these

4. The value of an entrepreneur’s resources that are used in production are known as…?

• Explicit cost
• Sunk cost
• Operating cost
• Implicit cost

5. The shape of the TFC curve is……?

• Horizontal 
• Downward sloping
• U-shaped
• Upward sloping

6. The shape of the AFC curve is……?

• Downward sloping

7. Indicate which of the following variable costs..?

• Cost of raw material
• Cost of machines
• Interest on capital
• Rent payment on buildings

8. The vertical difference between TVC and TC is equal  to …..?

• Marginal cost
• Average cost
• Total Fixed Cost
• None of these

9. The costs that depend on output in the short run are….?

• Total Variable Cost 

10. The difference between ATC and AFC shows ….?

• Normal profit
• Implicit cost
• Average Variable Cost
• Opportunity cost

11. LAC curve shifts upward because of…..? 

• Change in technology
• Diseconomies of scale
• Rise in price of particular factor
• All of these

12. Marginal cost cuts Average cost at…?

• The decline range of AC
• Increasing range of AC
• Minimum point of AC
• The point where MR = AC

13. The formula of AFC is …?

• TFC / Q
• TQ / TFC
• Q / TFC
• TFC - Q

14. An LAC curve is also known as….?

• Envelope curve
• Planning curve
• Operating curve
• Plant / Planned curve

= Plant / Planned curve - Short run 

15. Marginal cost (MC) means…?

• Substitutional cost
• Addition to the Total Cost
• Multipiction to the total cost
• Variable cost

16. Marginal Revenue is the addition of….? (Marginal Revenue is the addition means the…?)

• Average Revenue
• Total production
• Total Revenue
• None of these

17. Which of the following is not correct ..?

• Total Cost  = TFC + TVC
• TFC = TC - TVC
• TVC = TC - TFC 
• None of these

18. The point where Total Revenue ( TR ) curve cuts Total Cost (TC) curve is called …?

• Equilibrium point
• Split / Spool of point
• Point of inflection  
• Break Even Point (BEP)

19. Slope of TFC curve ?

• Horizontal (to Y-axis)

20. Slope of TVC curve ?

• Upward 

21. MC formula ?

• dTC / dQ

22. What is sunk cost ?

• Not recoverable

23. What if output is zero ?

• TC = TFC 

24. Long run curve ?

• U-shaped

25. SAC and LAC curve ?

• U-shaped by Sanatani Economist

26. LAC curve ?

• L-shaped by Morden Economist 

27. TR = Q x P

28. Economic profit or loss = TR-TC

29. BEP = TR=TC or TR-TC=0

30. BEP (Q)= TFC / P-AVC

31. Contribution Margin Method For BEP - 

• BEP = TFC / Contribution Margin Ratio 
•  Contribution Margin Ratio = TR-TVC / TR

32. Require Volume of Scale = F + PT / S-V

• PT= profit target 
• s= sale price
• v= variable cost
• f= fixed cost

.