Managerial Economics Multiple Choice Questions and Answers pdf

Managerial Economics Multiple Choice Questions and Answers pdf for the preparation of MBA, BBA Academic and Competitive exams.

Managerial Economics Multiple Choice Questions and Answers.

1. The firms can earn an only normal profit under ___ competition.
Ans. Perfect

2. Under perfect competition demand curve is a ___ line.
Ans. Horizontal

3. ___ seller is the price marker and can restrict the output to increase the price.
Ans. Monopoly

4. ___ monopoly is a situation in which a single seller faces a single buyer.
Ans. Bilateral

5. Under ___ there are only two large buyers for a specific product or service.
Ans. Duopsony

6. ___ is the Market situation where there is a monopoly element in the case of the buyer.
Ans. Monopsony

7. ___ is a situation in which there are a few large buyers.
Ans. Oligopsony

8. ___ costs are very important in a monopolistic market.
Ans. Selling

9. The concept of consumer surplus is based on demand theory by ___.
Ans. Marshall

10. If the price increases there will be ___ in consumer surplus.
Ans. Decrease

11. ___ is used to judge the desirability of public investment of any public projects or investment.
Ans. Cost-Benefit Analysis

12. The excess burden or net loss in welfare is called ___.
Ans. Deadweight loss.

13. The direct or indirect payment by the government to producers or consumers to defray part of the cost of economic activity is called ___.
Ans. Subsidies

14. ___ exists when the actual price exceeds the minimum price that the seller is ready to accept.
Ans. Producers’ surplus

15. Inventory, Capital stock is Macro ___ variables.
Ans. Stock

16. National Income and output are Macro ___ variables.
Ans. Flow

17. Investment is the ___ in the capital stock over a period of time.
Ans. Change

18. ___ means planned and desired whereas ___ means actual or realised value.
Ans. Ex-ante; Ex-post

19. A variable is ___ if its value varies as a result of variations in the value of some other independent variable.
Ans. Dependent

20. ___ the statistical device, which indicates relative changes of a variable over a period of time.
Ans. Index number

21. A flow variable is a quantity that can be measured in terms of a specific period of time and not at a ___.
Ans. Point of time

22. ___ is an index of prices paid by producers for their inputs.
Ans. Wholesale Price Index

23. ___ tells us the percentage of consumption out of a given level of income.
Ans. Consumption income ratio

24. When a number of commodities and their prices at two different periods are arranged in a tabular form, it is called ___.
Ans. Index number

25. The relationship between consumption and income is called ___.
Ans. Consumption Function

26. ___ is the ratio of change in total consumption to change in total income.
Ans. Marginal Propensity to consume

27. Two groups of factors that affect consumption function are ___ and ___.
Ans. Subjective and Objective factors

28. Investment made by government and departmental undertakings is called ___ investment.
Ans. Public

29. Depreciation is part of ___.
Ans. Gross investment

30. ___ investment does not depend on the changes in the national income.
Ans. Autonomous

31. ___ varies with the changes in the level of national income
Ans. Induced Investment

32. The ratio of change in national income resulting from a change in autonomous investment is called___.
Ans. Multiplier

33. When MPC = 1 multiplier will be ___. Ans. Infinite

34. ___ shows the effects of consumption on investment; whereas ___ shows the effect of investment on consumption. Ans. Multiplier; Accelerator

35. Accelerator is called ___.
Ans. Magnification of derived demand

36. ___ means constant price, over a period of time
Ans. Price stability

37. ___, by regulating its credit policy, can control the credit as per the requirement of the economy.
Ans. Central Bank

38. The two instruments of monetary policy are ___ and ___.
Ans. Quantitative and Qualitative techniques

39. The oldest method of controlling credit is ___.
Ans. Bank Rate or Discount Rate

40. Cash reserves maintained by the commercial bank is called ___.
Ans. Statutory reserve

41. Reserve over and above the Statutory Reserve is called ___.
Ans. Excess Reserve

42. ___ are also known as the selective instrument of credit control.
Ans. Qualitative instruments of monetary

43. The importance of fiscal policy as an economic tool was realized only after ___ in the 1930s.
Ans. Great Depression

44. ___ are called built- in- stabilizers to correct and thus restore economic stability.
Ans. Automatic stabilizers

45. Tax on the individual is called ___ and tax on the commodity is called ___
Ans. Direct tax and indirect tax or commodity tax

46. ___ leads to a reduction in the unequal distribution of income
Ans. Regressive tax

47. Taxes determined on the basis of the value of a particular product are called ___.
Ans. Ad valorem tax

48. Distribution of essential commodities through fair price shops is known as ___.
Ans. Public distribution system.

49. Import controls are executed through a system of ___ and ___.
Ans. Quotas and licenses

50. Existence of two prices for the same commodity at the same time one controlled price another free market price is called ___.
Ans. Dual pricing.

51. The cyclical movement of the business, both upwards and downwards is commonly called___.
Ans. Trade Cycle.

52. The five phases of business cycle are ___, ___, ___, ___,___
Ans. Depression, recovery, full employment, boom and recession

53. ___ phase of the business cycle is called the upswing.
Ans. Prosperity

54. ___ is the phase of the highest level of economic activity.
Ans. Boom

55. ___ phase is the phase of low economic activity.
Ans. Depression / Contraction

56. ___ theory says that the economic fluctuations are due to innovation in the industry.
Ans. Schumpeter’s

57. According to Professor Hayek discrepancy between the ___ and ___ of interest cause business fluctuation.
Ans. Natural and the market rate

58. According to R G Hawtrey ___ is the sole cause for business fluctuations.
Ans. The flow of money supply

59. According to ___ the interaction between multiplier and accelerator gives rise to cyclical fluctuation in economic activity.
Ans. Prof. Samuelson

60. Prof Hicles explains cyclical fluctuations in terms of ___ and ___.
Ans. Ceilings and floors

61. The value of money and price level is ___ related.
Ans. Inversely

62. The state of the steady rise in price level is called ___.
Ans. Inflation

63. According to ___ Inflation is a phenomenon where too much money chases too few goods.
Ans. Coulborn

64. The inflationary situation where people go with a basketful of money and come home with a pocketful of commodities is ___.
Ans. Jumping/galloping/hyperinflation

65. The Governments go for ___ financing to finance public expenditure.
Ans. Deficit

66. The concept of the inflationary gap was introduced by ___.
Ans. Keynes

67. The trade-off between inflation and unemployment is called the ___ Curve.
Ans. Philips

68. A situation where inflation is accompanied by stagnation is called ___.
Ans. Stagflation

69. A state of steady fall in price is called ___.
Ans. Deflation

70. External cost and benefits together are called ___.
Ans. Externalities

71. ___ refer to accidents resulting from nuclear device and radioactive materials.
Ans. Nuclear accidents

72. ___are defined as third party effects arising from production and/or consumption of goods and services for which no appropriate compensation is paid.
Ans. Negative externalities

73. Marginal social benefit = Marginal private benefit + ___.
Ans. Marginal external benefit.

74. When there are negative externalities in ___, the marginal social cost will be more than the private marginal cost.
Ans. Production.

75. The process of development will become sustainable only when the stock of various types of resources are maintained and ___.
Ans. Further improved.

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