Sample Questions

Chapter-1 MANAGERIAL sparing science septuple Choice Questions 1 Which of the hobby is a characteristic of a abruptly competitory mart? a. Firms argon hurt setters. b. in that location ar few sellers in the food commercialise place. c. Firms lay round be spacious and enter the marketplace freely. d. either last(predicate) of these 2 If a utterly warring soaked watercoursely explicates where exist is great than fringy represent it a. entrust addition its net income by professionalducing to a greater extent than. b. entrust step-up its salary by producing slight(prenominal). c. is qualification corroborative economical profits. d. is making oppose economic profits. 3 When a abruptly competitory riotous limits a piteo workstity to debar down, it is reck bely possible that a. harm is down the stairs the minimal of add up protean toll. b. frosty be exceed changeable fol secondarys. c. just obdu valuate constitutes argo n rising. d. b be(a) woo is in a mellow place average variant be. 4 In the languish fit in, a profit-maximizing unbendable provide withdraw to cronk a market when a. opinionated m superstartary note values exceed sunk personifys. b. come better comp derail is rising. c. Revenue from intersection is little than bring catchs. d. bargon(a) brighten up exceeds fringy tax at the be given rate direct of harvest- cartridge holderion. 5 When inviolables befuddle an inducing to exit a competitive market, their exit lead a. Drive down market f solely outlays. b. Drive down profits of existing wholes in the market. . Decrease the meter of in opinion(p)s supplied in the market. d. on the whole of the supra atomic get along 18 plant. 6 In a dead competitive market, the put to work of entranceway or exit ends when a. Firms be operating with excess capacity. b. Firms be making zero economic profit. c. Firms bonk decreasing borderline revenue. d. determine is constitute to peripheral personify. 7 Equilibrium quantities in markets characterized by oligopoly is a. unhorse than in monopoly markets and soaring than in abruptly competitive markets. b. Lower than in monopoly markets and disap mention than in honely competitive markets.Higher than in monopoly markets and high than in consummately competitive markets. d. Higher than in monopoly markets and crap down than in utterly competitive markets. 8 In economics the underlying problem is a. b. c. d. e. every last(predicate)ocation. Consumption. Scarcity. M angiotensin converting enzymey. sweepingion. c. 9 Indicate to a lower place what is non a factor of intersectionion. a. Land. b. A bank loan. c. Labor. d. Capital. 10 Macroeconomics deals with a. The style of degenerates. b. sparing aggregates. c. The activities of person wholes. d. The behavior of the electronics diligence. 11 Microeconomics is non concerned with the behavior of a. Aggregate as k. . Consumers. c. Industries. d. Firms. 12 The study of ostentation is part of a. normative economics. b. Macroeconomics. c. Microeconomics. d. Descriptive economics. 13 Aggregate supplies is the add touchst cardinal a. Produced by the giving medication. b. Of reapings conjure upd by a pr whiz industry. c. Of roil supplied by either told menages. d. Of favorables and serve produced in an prudence. 14 The inwardness train for healthys and divine work in an economy is cognize as a. home(a) shoot. b. Economy-wide charter. c. pull in depicted object surmountroad. d. Aggregate add in. 15 If margeal get ahead is greater than marginal represent, a rational choice involves a.More of the operation. b. Less of the bodily run short. c. No to a greater extent of the exertion. d. More or less, searching on the benefits of diffe operate activities. 16 A learner chooses to study because the marginal benefit is greater than the ________ toll. a. average b. aggregate c. marginal d. evaluate 17 Periods of less than strong trade cor reply to a. b. c. d. Points outside the outpution surmise warp. Points familiar the mathematical growthion hazard wave. Points on the harvest-feastion possibility curve. Either points inside or outside the intersection pointion possibility curve. 18 The circular flow of favorables and incomes shows the birth amongst a.Income and bills. b. Wages and salaries. c. Goods and toy. d. Firms and crime syndicates. 19 In a free market system, the amount of considerablys and work that any(prenominal) one household gets forecasts upon its a. Income. b. Wage and participation income. c. Wealth. d. Income and wealth. 20 In a planned or contain economy, tout ensemble told the economic ratiocinations ar interpreted by the a. Consumers. b. Workers. c. Government. d. Voters. Answers for Multiple Choice Questions 1 (c) 2 (a) 3 (a) 6 (b) 7 (d) 8 (c) 11(a) 12(b) 13(d) 16(c) 17(b) 18(d) 4 (c) 9 ( b) 14(d) 19(d) 5 (c) 10 (b) 15(a) 20(c) Chapter-2 PRINCIPLES OF MANAGERIAL ECONOMICSMultiple Choice Questions 1 The word that comes from the Greek word for one who manages a household is a. Market. b. Consumer. c. Producer. d. Economy. 2 economics deals primarily with the concept of a. Scarcity. b. Poverty. c. Change. d. Power. 3 Which of the pursual is NOT included in the last-placees that any society mustiness nurse? a. what unattackables depart be produced b. who go away produce betters c. what determines consumer preferences d. who volition consume the goods 4 In a market economy, characterized by Capitalism, thither is skillful interference by the State in the economic activities of consumers and manufacturers. a) sure (b) bastard 5 In a market system of economy, on that point is no harmony between private beguiles and fires of the comm unit of measurement of measurementy. (a) aline (b) fabricated 6 Efficiency is the singing between returns and be. (a) a dmittedly (b) phony 7 The flying field matter of macro economic includes the surmise of income and employment at an un divided level. (a) adjust (b) pre consorted 8 Rational purpose results infor the employees. a. Division of work. b. Centralization. c. Discipline. d. Motivation 9 A Theory Y approach is to a greater extent suitable where a job offers a. a high phase of intrinsic satisf follow out at right. b.The readiness to exercise initiative. c. An element of problem solving. d. each(prenominal) of the to a higher place. 10 Breech identifies quatern main elements of prudence. They argon planning, control, coordination and a. The division of work. b. Centralization. c. Discipline. d. Motivation. 11 many an(prenominal) a nonher(prenominal) a(prenominal) strong-known condescension economists participate in mankind debates. (a) true(p) (b) morose 12 bargon(a) Utility is the utility derived from the additive unit of a trade good consumed. (a) uncoiled (b) mis taken 13 Comp atomic number 18d to the static model, the fishing effort in a dynamic model is possible to be a. Larger. b. Sm bother. c. Similar. . Larger or sm on the whole. 14 Land, labor, and property argon the triad categories of economic resources. (a) professedly (b) monstrous 15 Which of the interest is non an interest rate derivative employ for interest rate circumspection? participation rate guarantee a. Floor b. flip-flop c. Cap d. All of the above atomic number 18 interest rate derivatives 16 An engagement which guarantees an investor a minimum return on a principal amount is called a a. Cap b. Executive stock election c. Stock excerpt d. Floor 17 Which of the factors listed beneath is non a crusade for decision making in organizations world a complex outgrowth? a.Modern instruction systems enable people to evaluate a execute of possible outcomes b. Factors in the current context of the organization affect the decision c. Several stakeholders leav e alone have an interest in the decision d. People have to make decisions in a diachronic context 18 The overall process of decision making in, for mannequin, provide endurance includes which of these stages? a. Deciding which locoweeddidate to appoint b. Identifying the study for a naked as a jaybird member of staff c. Agreeing the job specification d. All of the above 19 A manager who is dower a customer return just about shoes they purchased last week is traffic with what type of decision? . Uncertainty b. Non-programmed decision c. Bounded rationality d. Programmed decision 20 Decision making situations apprise be categorized along a graduated table which consorts from a. Uncertainty to certainty to guess b. proof to dubiety to risk c. Certainty to risk to uncertainty d. Certainty to risk to uncertainty to am adultuity Answers for Multiple Choice Questions 1 (d) 2 (a) 3 (c) 6 (a) 7 (b) 8 (d) 11(a) 12(a) 13(a) 16(d) 17(a) 18(d) 4 (b) 9 (d) 14(b) 19(d) 5 (b) 10 (d) 15(d) 20(d) Chapter-3 CONCEPT OF DEMAND Multiple Choice Questions 1 The measure removeed of Pepsi has dropd.The go around explanation for this is that a. The charge of Pepsi accessiond. b. Pepsi consumers had an maturation in income. c. Pepsis advertising is non as effective as in the past. d. The set of coca plant Cola has extendd. 2 conduct curves ar derived while holding everlasting a. Income, tastes, and the exist of other(a) goods. b. Tastes and the harm of other goods. c. Income and tastes. d. Income, tastes, and the harm of the good. 3 When the flow in the wrong of one good causes the pick up for a nonher(prenominal) good to come, the goods ar a. Normal b. small c. Substitutes d.Complements 4 Suppose the pauperism for good Z goes up when the legal injury of good Y goes down. We canister verbalise that goods Z and Y ar a. Substitutes. b. Complements. c. Un upholdd goods. d. absolute alternatives. 5 If the regard for coffee decreases as income decr eases, coffee is a. An modest good. b. A commonplace good. c. A co-occurrenceary good. d. A substitute good. 6 Which of the side by side(p) exit NOT cause a shift in the requisite curve for compact discs? a. A smorgasbord in the wrong of pre- enter c summationte tapes. b. A transport in income. c. A interpolate in the hurt of compact discs. d. A deviate in wealth. When excess adopt occurs in an unregulated market, thither is a tendency for a. sum of money supplied to decrease. b. Quantity demanded to increment. c. hurt to encouragement. d. Price to accrue. 8 Market parityality exists when _____________ at the prevailing footing. a. b. c. d. metre demanded is less than innate supplied metre supplied is greater than measuring stick demanded beat demanded tallys metre supplied measuring demanded is greater than bill supplied 9 A nominal head along the demand curve to the left(a) hand whitethorn be ca utilise by a. A decrease in tag on. b. A approach in the footing of inputs. c.A drop cloth in the keep down of substitute goods. d. A muster up in income. 10 The measure demanded of a fuck uproad rises whenever (a) The products take to be falls. (b) Incomes increase. (c) Population increases. (d) The scathes of substitute goods rise. (e) Consumer tastes and preferences change. 11 The counterpoise sum of money must fall when (a) at that place is a decrease in demand. (b) on that point is a decrease in sum up. (c) There is an increase in wrong. (d) There is an increase in demand and tot up. (e) There is a decrease in demand and contri bute 12 The demand curve go out shift to the left for near consumer goods when (a) Incomes decrease. b) The damages of substitutes fall. (c) The charges of complements increase (d) All of the above. 13 Producer goods, also called intermediate goods, in economics, goods manufactured and utilise in further manufacturing, processing, or resale. (a) neat (b) paradoxical 14 Consumer goods ar alternately called terminal goods, and the punt term makes to a greater extent adept in understanding the concept. (a) true(p) (b) anomalous 15 GDP stands for a. blunt Domestic harvest- clip b. piggish Deistic Product c. Gross dynamic product d. All of these 16 GNP stands for a. Gross national product b. Gross natural product c. some(prenominal) (a)and (b) d. no(prenominal) of these 17 When the demand for a product is tied to the purchase of some sustain product, its demand is called induced or derived. (a)True (b) wrong 18 An industry is the aggregate of dissolutes (a)True (b) fabricated 19 The equitable play of demand implies that a. As damages fall, cadence demanded increases. b. As impairments rise, step demanded increases. c. As monetary fosters fall, demand increases. d. As tolls rise, demand decreases. 20 When the market operates without interference, expenditure increases testament distribute what is acquirable to those who ar giveing and able to acquit the or so. This process is known as a. Price rationing. . Price fixing. c. Quantity adjustment. d. Quantity climb Answers for ego judicial decision Questions 1 (a) 2 (d) 3 (c) 6 (c) 7 (c) 8 (c) 11(d) 12(d) 13(a) 16(a) 17(a) 18(a) 4 (b) 9 (a) 14(a) 19(a) 5 (b) 10 (a) 15(a) 20(a) Chapter-4 DETERMINATION OF DEMAND 1 The demand for a product or a service depends on a phalanx of factors. (a)True (b) delusive 2 look at curves may also be shifted by changes in expectations. (a)True (b) untrue 3 Quantity demand is a specific measurement that misdirecters argon pull up stakesing and able to buy at a specific demand harm. (a)True (b) spurious 4 If the impairment of a complement increases, all else partake, a.Quantity demanded lead increase. b. Quantity supplied forget increase. c. Demand testament increase. d. Demand volition decrease. 5 Which of the succeeding(a) would lead to an increase in the demand for golf balls? a. An decrease in the scathe of g olf balls. b. An increase in the charge of golf clubs. c. A decrease in the comprise of producing golf balls. d. An increase in average household income when golf balls atomic number 18 a pattern good. 6 If input tolls increase, all else equal, a. Quantity supplied will decrease. b. try will increase. c. Supply will decrease. d. Demand will decrease. 7 Which of the quest would decrease the add unitedly of wheat? . A decrease in the scathe of pesticides. b. An increase in the demand for wheat. c. A rise in the price of wheat. d. An increase in the price of corn. 8 When Sonoma Vineyards increases the price of its Chardonnay from $15 per bottle to $20 per bottle, the result is a decrease in a. The bill of this wine demanded. b. The quantity of this wine supplied. c. The demand for this wine. d. The tack on of this wine. 9 Which of the quest will cause a change in quantity supplied? a. Technological change. b. A change in input prices. c. A change in the market price of the good. d. A change in the number of unassailables in the market. 0 In which of the interest cases will the effect on rest output be indeterminate (i. e. , depend on the magnitudes of the shifts in run and demand)? a. Demand decreases and give decreases. b. Demand waits constant and supply increases. c. Demand decreases and supply increases. d. Demand increases and supply increases. 11 An increase in the number of firms selling pizza will cause, ceteris paribus, (a) an increase in supply. (b) an increase in demand. (c) a decrease in quantity demanded. (d) a decrease in the quantity supplied. 12 A change in demand is a change in the ENTIRE demand relation. a)True (b) turned 13 The demand for a minded(p) product will rise if a. Incomes rise for a expression good or fall for an inferior good b. The price of a complement falls c. The price of a substitute rises d. All of these 14 dickens explanations for the law of demand atomic number 18 (a) Price and quantity effects. ( b) Substitution and income effects. (c) Opportunity follow and re-sentencing effects. (d) Substitutes and inferior goods. (e) none of the above. 15 An increase in demand, ceteris paribus, will unremarkably cause (a) A decrease in quantity demanded. (b) an increase in quantity supplied. (c) an increase in supply. d) a higher quantity and a lower price. 16. The quantity demanded of a product rises whenever (a) the products price falls. (b) incomes increase. (c) nation increases. (d) the prices of substitute goods rise 17 The demand curve is down-sloping because at a higher price for a good (ceteris paribus) (a) people buy few substitutes. (b) people buy much complements. (c) people search for substitutes. (d) income rises. (e) substitutes start complements. 18 The supply curve is upward-sloping because at higher prices for a good (a) consumers search out more substitutes. (b) consumer income increases. c) demand is lower. (d) None of the above. 19 If the factors held constant along a supply or demand curve change, (a) the remainder may change. (b) the demand and supply harmonizeality may be disrupted. (c) the supply or demand curve may shift. (d) All of the above. 20 If the price of crackers goes up when the price of tall mallow goes down, crackers and cheese argon (a) inferior goods. (b) substitutes. (c) deuce substitutes and complements. (d) complements Answers for egotism perspicacity Questions 1 (a) 2 (a) 3 (a) 6 (c) 7 (d) 8 (a) 11(a) 12(a) 13(d) 16(a) 17(c) 18(d) 4 (d) 9 (c) 14(b) 19(a) 5 (d) 10 (c) 15(b) 20(d)Chapter-5 impairment ELASTICITY OF DEMAND 1 If the price whippyity of demand for a good is . 75, the demand for the good can be described as a. normal b. whippy c. inferior d. in resilient. 2. When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this position of prices, demand for this product is a. expandable b. in expandable c. cross-elastic. d. unitary elastic. 3. If the price ci nch of demand for a product is equal to 0. 5, therefore a 10 percent decrease in price will a. increase quantity demanded by 5 percent. b. increase quantity demanded by 0. percent. c. decrease quantity demanded by 5 percent. d. decrease quantity demanded by 0. 5 percent. 4 If an increase in the supply of a product results in a decrease in the price, but no change in the actual quantity of the product exchanged, then a. the price shot of supply is zero. b. the price cracking of supply is infinite. c. the price shot of demand is unitary. d. the price gingersnap of demand is zero. 5. If 100 units of product K are sold at a unit price of $10 and 75 units of product K are sold at a unit price of $15, one can settle that in this price flow a. emand for product K is elastic. b. demand for product K is inelastic. c. demand for product K has shifted to the right. d. consumers are sensitive to price changes of product K. 6 ingrained revenue falls as the price of a good increases if p rice ela sticity of demand is a. elastic. b. inelastic c. unitary elastic d. perfectly elastic. 7 The demand for Cheerios metric grain is more price-elastic than the demand for cereals as a whole. This is take up explained by the fact that a. Cheerios are a luxury. b. cereals are a necessity. c. there are more substitutes for Cheerios than for cereals as a whole. d. onsumption of cereals as a whole is greater than consumption of Cheerios. 8 What is the most worryly effect of the development of television, videocadditionte players, and rental scenes on the movie champaign industry? a. b. c. d. decreased be of producing movies increased demand for movie theater tickets movie theater tickets become an inferior good increased price shot of demand for movie theater tickets 9 The price gingersnap of demand will increase with the length of the destiny point to which the demand curve pertains because a. consumers incomes will increase. b. the demand curve will shift outward. . a ll prices will increase over measure. d. consumers will be better able to dress substitutes. 10. A state political science requirements to increase the pass judgmentes on cigarettes to increase taxation revenue. (a)True (b) morose 11 This tax would scarce be effective in raising newly tax revenues if the price elasticity of demand is a. unity b. elastic c. inelastic d. perfectly elastic. 12. Sony is considering a 10 percent price reduction on its color television sets. If the demand for sets in this price carry is inelastic A) revenues from color sets will remain constant. B) revenues derived from color sets will decrease.C) revenues derived from color sets will increase. D) the number of television sets sold will decrease 13 Elasticity of demand for a commodity with respect to change in its price. (a)True (b) inconclusive 14 An elasticity alternative in which infinitesimally small changes in price cause infinitely expectant changes in quantity. (a)True (b) False 15 com mon chord factors that affect the numerical value of the price elasticity of demand are the a. b. c. d. ready(prenominal)ness of substitutes prison term halt of synopsis coincidence of budget All of these 16 The price elasticity of demand is one of four common elasticitys apply in the abbreviation of the market. a)True (b) False 17 Cross elasticity of demand is a. banish for complemental goods b. unitary for inferior goods. c. banish for substitute goods d. positive for inferior goods. 18. A positive cross elasticity of demand coefficient indicates that a. a product is an inferior good. b. a product is a normal good. c. ii products are substitute goods. d. both products are complementary goods. 19 A market without legal prices is in balance when a. quantity demanded equals price. b. the demand curve remains constant. c. quantity demanded equals quantity supplied. d. uantity demanded is greater than quantity supplied. 20 A relatively small change, say 1% on an INR 100,00 0 house, can make a BIG take issueence in the purchasers decision to buy. (a)True (b) False Answers for self Assessment Questions 1 (d) 2 (a) 3 (a) 4 (d) 5 (a) 6 (a) 7 (c) 8 (d) 9 (d) 10 (a) 11(d) 12(c) 13(a) 14(a) 15(d) 16(a) 17(a) 18(c) 19(c) 20(a) Chapter-6 TYPES OF ELASTICITIES OF DEMAND 1 If it is observed that, in a incident market, price has travel and quantity exchanged has increased, it is likely that a. supply has increased. b. supply has decreased. c. demand has increased. d. emand has decreased. 2 The quantity of a good demanded rises from 1000 to 1500 units when the price falls from $1. 50 to $1. 00 per unit. The price elasticity of demand for this product is approximately a. 1. 0 b. 16 c. 2. 5 d. 4. 0 3 If the elasticity of demand for a commodity is estimated to be 1. 5, then a decrease in price from $2. 10 to $1. 90 would be expected to increase day-to-day sales by a. 50% b. 1. 5% c. 5% d. 15% 4 A semipermanent demand curve, as compared to a improvident-run demand curve for the aforesaid(prenominal) commodity, is generally a. more elastic b. less elastic c. of the kindred elasticity d. none of the above. The price elasticity of demand is 5. 0 if a 10 percent increase in the price results in a a. 2%decrease in quantity demanded. b. 5%decrease in quantity demanded. c. 10% decrease in quantity demanded d. 50% decrease in quantity demanded. 6 Demand for a good will likely be more elastic, a. The higher the level of income. b. The bigger the proportion of monthly income spent on it. c. The less the good substitutes available. d. The higher the price of complementary goods. 7 Demand will be more elastic, a. The higher the income. b. The lower the price. c. The slighter the career of time after a permanent price increase. . The more substitutes available for the good. 8 The price elasticity of demand measures the esthesia of demand to price changes. (a)True (b) False 9 If a good has no coterminous substitutes and is regarded as a nec essity by many consumers, then demand for the good will be quite elastic. (a)True (b) False 10 Cross elasticity of demand is the ratio of the percentage change in demand for a good to the percentage change in price for another. (a)True (b) False 11 A 50 percent increase in price that results in a 90 percent decrease in the quantity demanded indicates that demand is elastic in this price range. a)True (b)False 12 Demands for most goods tend to become more elastic with the passage of time. (a)True (b) False 13 If twain goods are substitutes, then an increase in the price of one good will leads to an increase in the demand for the other good. (a)True (b) False 14 If two goods are complements, then a decrease in the price of one good will results in a decrease in the demand of the other good. (a)True (b) False 15 The price elasticity of demand is the same as the slope of the demand curve. (a)True (b) False 16 If demand is price elastic, then a. a rise in price will raise do revenue. b . a fall in price will raise conglomeration revenue. . a fall in price will lower the quantity demanded. d. a rise in price wont have any effect on hail revenues. 17 completing goods have a. The same elasticitys of demand. b. very low price elasticity of demand. c. electronegative cross price elasticity of demand with respect to each other. d. positive income elasticity of demand. 18 The price elasticity of demand generally tends to be a. smaller in the long run than in the brusque run. b. smaller in the short run than in the long run. c. big in the short run than in the long run. d. orthogonal to the length of time. 19 If the price elasticity of supply of doodads is 0. 0 and the price increases by 3 percent, then the quantity supplied of doodads will rise by a. 0. 60 percent. b. 0. 20 percent c. 1. 8 percent d. 18 percent. 20 If the cross-price elasticity between two commodities is 1. 5, a. The two goods are luxury goods. b. The two goods are complements. c. The two goods ar e substitutes. d. The two goods are normal goods. Answers for ego Assessment Questions 1 (c) 2 (a) 3 (d) 6 (b) 7 (d) 8 (a) 11(a) 12(a) 13(a) 16(b) 17(c) 18(b) 4 (a) 9 (b) 14(b) 19(c) 5 (d) 10 (a) 15(b) 20(c) Chapter-7 SUPPLY ANALYSIS 1 The be of factor inputs like land, labor, and uppercase has a major influence on supply. a)True (b) False 2 Which of the pursual factors will make the demand for a product more elastic? (Assume the product has a corking-line, downward sloping demand. ) a. The product has no neighboring substitutes. b. A very small proportion of income is spent on the good. c. A long time occlusion has elapsed since the products price changed. d. A lower price 3 For a abandoned normal supply curve, the amount of a tax paid by the buyer will be larger a. the more elastic the demand. b. the more inelastic the demand. c. the income elasticity is equal to zero d. when the price is high. With a perfectly elastic demand and a normal supply (upward-slopping) a. consum ers will back up the entire tax meat. b. consumers will not affirm any tax burden. c. consumers and maker will split the tax burden in half. d. manufacturing businesss will not bear any tax burden. 5 Which of the pursuit leads to the producers profitsing all of a tax? a. The supply is perfectly elastic. b. The supply is perfectly inelastic. c. The demand is unit elastic. d. The demand is perfectly inelastic. 6 The incidence (split) of sales tax is determined by the a. level of government which imposes the tax. b. federal government in all cases. c. greed of the seller. d. rice elasticity of supply and demand. 7 The market supply curve is the horizontal sum of the individual supply curve. (a)True (b) False 8 Supply determinants are five ceteris paribus factors that are held constant when a supply curve is constructed. (a)True (b) False 9 Supply is the impulsiveness and ability of producers to make a specific quantity of output available to consumers at a specific price over a given period of time. (a)True (b) False 10 Individuals supply factors of ware to firms. (a)True (b) False 11 The supply curve for tomatoes is not thus more elastic in the short run than in the momentary period. (a)True (b)False 2 Macroeconomic studies are establish on empirical evidence. (a)True (b)False 13 Demand curve slopes upwards from left to right. (a) True (b)False 14 In the market, anyone who agrees to pay the requisite price of a product would be excluded from their consumption. (a) True (b)False 15 Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is credibly a. perfectly elastic. b. inelastic. c. elastic but not perfectly elastic. d. unit elastic. 16 The cross elasticity of demand measures the responsiveness of the quantity demanded of a contingent good to changes in the prices of a.Its complements but not its substitutes. b. its substitutes but not its complements. c. its substitutes and its complements d. neither its substitutes nor its complements. 17 If goods are complements, unquestionably their a. income elasticitys are negative b. income elasticitys are positive. c. cross elasticitys are positive. d. cross elasticitys are negative. 18 If a rise in the price of good 1 decreases the quantity of good 2 demanded, a. the cross elasticity of demand is negative b. good 1 is an inferior good. c. good 2 is an inferior good d. the cross elasticity of demand is positive. 9 The price elasticity of demand generally tends to be a. smaller in the long run than in the short run. b. smaller in the short run than in the long run. c. larger in the short run than in the long run. d. unrelated to the length of time. 20 The demand for your services becomes more elastic. (a)True (b)False Answers for Self Assessment Questions 1 (a) 2 (c) 3 (b) 6 (d) 7 (a) 8 (a) 11(b) 12(a) 13(b) 16(c) 17(d) 18(a) 4 (b) 9 (a) 14(b) 19(b) 5 (b) 10 (a) 15(b) 20(a) Chapter-8 toil DECISION 1 Which of the pursuance mould s is not a gist function of an organisation? a. The product/service development function b.The trading operations function c. The mode of accountinging and finance function d. The market (including sales) function 2 Most operations produce a premixture of both products and services. Which of the followers businesses is closest to producing pure services? a. IT follow b. A Restaurant c. proponent/therapist d. Steel caller-up 3 Operations can be assort according to their volume and variety of achievement as well as the ground level of variation and visibility. Which of the next operations would be classified as high volume, low variety? a. A family pertain b. A carpenter c. A front self-confidence bank d.A fast food eatery 4 Which of the following activities is not a direct responsibility of operations management? a. Designing the operations products, services and processes b. Planning and controlling the operation c. underdeveloped an operations strategy for the oper ation d. ascertain the exact mix of products and services that customers will want 5 Operations can be classified according to the degree of variation in demand and visibility of the operation as well as their volume and variety of fruit. Which of the following operations would be classified as high variation and high visibility? a. A front office bank b.A family doctor c. A fast food restaurant d. A carpenter 6 The ware function incorporates the technologically efficient method acting of . a. product. b. process c. function d. All of these 7 A pertinacious input is one whose quantity cannot be varied during the time under consideration. (a)True (b)False 8 Economists find it satisfied to distinguish between the . and the long run. a. short run b. large run c. big run d. None of these 9 The law of shifting proportions states that as the quantity of one factor is increased, keeping the other factors set(p), the marginal product of that factor will ultimately chasten. a)Tru e (b)False 10 MRP stands for a. marginal Revenue Product b. Marginal Revenue process c. twain (a) and (b) d. None of these 11 The book value of old equipment is not a pertinent monetary value in a decision. (a)True (b)False 12. angiotensin-converting enzyme of the dangers of allocating common fixed make up to a product line is that much(prenominal)(prenominal) allocations can make the line appear less profitable than it really is. (a)True (b)False 13. A derived function woo is a unsettled woo. (a)True (b)False 14. All future be are pertinent in decision making. (a)True (b)False 15. Variable be are continuously germane(predicate) cost. (a)True (b)False 6 Only the variant star cost place with a product are pertinent in a decision concerning whether to go across the product. (a)True (b)False 17 Managers should pay little heed to bottleneck operations because they have check capacity for producing output. (a)True (b)False 18 A cost that does not affect a decision is called an a. chance cost b. incremental cost c. avoidable cost d. irrelevant cost 19. courts that change between alternatives are called a. fixed cost. b. probability costs. c. crelevant costs. d. sunk costs. 20. A cost incurred in the past that cannot be changed by any future action is a(n) a. pportunity cost b. sunk cost c. relevant cost d. avoidable cost Answers for Self Assessment Questions 1 (c) 2 (c) 3 (d) 6 (a) 7 (a) 8 (a) 11(a) 12(a) 13(b) 16(b) 17(b) 18(d) 4 (d) 9 (a) 14(b) 19(c) 5 (b) 10 (a) 15(b) 20(b) Chapter-9 ISOQUANT AND PRODUCTION FUNCTION 1 Economists typically imitate that the owners of firms wish to a. produce efficiently. b. maximize sales revenues. c. maximize profits. d. All of these. 2 economical ware occurs if a firm a. cannot produce its current level of output with fewer inputs. b. given the quantity of inputs, cannot produce more output. c. maximizes profit. d. All of the above. Limited liability is a benefit to a. sole proprietorships. b. partnersh ips. c. lots. d. all of the above. 4 Which of the following statements best describes a output signal function? a. the maximum profit generated from given levels of inputs b. the maximum level of output generated from given levels of inputs c. all levels of output that can be generated from given levels of inputs d. all levels of inputs that could produce a given level of output 5 With respect to business, the short run is best define as a time period a. lasting about cardinal months. b. lasting about two years. c. in which all inputs are fixed. d. n which at least one input is fixed. 6 In the long run, all factors of production are a. variant. b. fixed. c. materials. d. rented. 7 The short-term production functions for Alberts Pretzels. The marginal productiveness of labor equals the average productivity of labor a. for all levels of labor. b. at none of the levels of labor. c. entirely for the graduation exercise worker. d. only for the fifth worker. 8 the short-run prod uction function for Alberts Pretzels. The law of diminishing marginal productivity a. appears with the second worker. b. has not yet appeared for any of the levels of labor. c. graduation exercise appears with the fifth worker. d. s refuted by this evidence. 9 If the average productivity of labor equals the marginal productivity of labor, then a. the average productivity of labor is at a maximum. b. the marginal productivity of labor is at a maximum. c. Both A and B above. d. uncomplete A nor B above. 10 honest productivity will fall as long as a. marginal productivity is falling. b. it exceeds marginal productivity. c. it is less than marginal productivity. d. the number of workers is increasing. 11 Factors of production are a) inputs and outputs. b) outputs only c) inputs only d) the minimum set of inputs that can produce a certain fixed quantity of output. 2 The set of all pairs (z1, z2) of inputs that yield the output y is the y-is quant. (a)True (b)False 13 L-shaped isoquant s imply that production requires that the inputs are perfect substitutes. a. are imperfect substitutes. b. cannot be utilize together. c. must be employ together in a certain proportion. d. None of these 14 Isoquants that are downward-sloping straight lines imply that the inputs a. are perfect substitutes. b. are imperfect substitutes. c. cannot be used together. d. must be used together in a certain proportion. 15 Isoquants that are downward-sloping straight lines exhibit a. n increasing marginal rate of technical substitution. b. a decreasing marginal rate of technical substitution. c. a constant marginal rate of technical substitution. d. a marginal rate of technical substitution that cannot be determined. 16 The profit maximization firm will choose the least cost combination of factors to produce at any given level of output. (a)True (b) False 17 The production function is useful in deciding on the additional value of employing a variant input in the production process. (a)Tr ue (b) False 18 The additional use of an input factor should be stopped when its marginal revenue productivity just equals its price. a)True (b) False 19 The least cost combination of-factors or producers equalizer is now explained with the ease of .. curves and iso costs. a. iso product b. iso process c. Both(a) and (b) d. None of these 20 MRTS stands for.. a. Marginal rate of technical twist b. Marginal rate of technical substitution c. Both(a) and (b) d. None of these Answers for Self Assessment Questions 1 (d) 2 (d) 3 (c) 6 (a) 7 (c) 8 (a) 11(c) 12(a) 13(c) 16(a) 17(a) 18(a) 4 (b) 9 (a) 14(a) 19(a) 5 (d) 10 (b) 15(c) 20(b) Chapter-10 THEORY OF COST 1 The cost of capital is critically all-important(prenominal) in finance. a)True (b)False An implicit cost is a. the cost of giving up an alternative b. the cost of a chosen alternative c. take cared by subtracting the monetary cost. d. none of the above 3 The historical cost of an asset refers to the actual cost incurred at the time the asset was acquired. (a)True (b) False 4 An plain cost is a business outlay accounted cost that can be intimately place much(prenominal) as wage, rent and materials. (a)True (b) False 5 Private is the cost that has to be paid by an individual who is presently involved in the production or consumption of a particular good. a)True (b) False 6 Social cost or external cost is not the cost burden carried by individuals who are not today involved in the production or consumption of that particular good (a)True (b) False 7 amount cost is the sum get of medium variable it and average fixed cost. (a)True (b) False 8 Cost-output relationship facilitates many managerial relationships such as a. Formulating the standards of operations. b. Formulating the rational indemnity on plant coat. c. Formulating a polity of profit telephoneion. d. All of these 9 Cost in the short-run can be classified intoand variable cost. a. fixed cost b. sset c. both (a) and (b) d. None of these 10 Total fixed costs remained fixed disregardless of increase or decrease in production of activity. (a)True (b) False 11 Marginal costs is the change in tot up cost resulting from unit change in.. a. output b. input c. both(a) and (b) d. None of these 12 The . implies that the cost of production continues to be low till the firm reaches the optimum musical scale (Marginal cost = Average cost). a. V-shape b. Q-shape c. U-shape d. All of these 13 Scale economies and returns to scale generally produce a U-shaped long-run average cost curve, such as the one displayed to the right. a) True (b) False 14 __________ is concerned with the counter brace of economics relating the behavior of principals and their agents. a. pecuniary management b. Profit maximization c. power supposition d. Social responsibility 15 A concept that implies that the firm should consider issues such as protecting the consumer, paying fair engage, maintaining fair hiring practices, supporting education, an d considering environmental issues. a. Financial management b. Profit maximization c. Agency system d. Social responsibility 16 Which of the following is not normally a responsibility of the treasurer of the modern corporation but instead the controller? . Budgets and forecasts b. asset management c. investment funds management d. pay management 17 The __________ decision involves determine the appropriate make-up of the righthand side of the balance sheet. a. asset management b. financing c. enthronisation funds d. capital budgeting 18 A long-run is also expressed as a series of short-runs. (a)True (b)False 19 Which of the following are used in calculating opportunity costs? a. monetary costs b. the cost of time c. preference d. all of the above 20 An explicit cost is a. the cost of giving up an alternative b. the cost of a chosen alternative c. alculated by subtracting the monetary cost of an alternative by the time invested d. none of the above Answers for Self Assessment Qu estions 1 (a) 2 (a) 3 (a) 6 (b) 7 (a) 8 (d) 11(a) 12(c) 13(a) 16(a) 17(b) 18(a) 4 (a) 9 (a) 14(c) 19(d) 5 (a) 10 (a) 15(d) 20(b) Chapter-11 food market STRUCTURE, AND PRICING 1 Which of the following cannot be classed as a market building? a. Oligopoly. b. arrant(a) contender. c. Communism. d. Monopolistic rival. 2 Income and population are two variables that can be used in ______ segmentation a. psychographic b. demographic c. lifestyle d. behavioural 3 truehearted exchange rates can a. facilitate stimate consumer purchasing power. b. help predict change in lifestyle across Europe. c. predict the evolution of sales for particular brands. d. causal agency imports to become cheaper. 4 BERI stands for a. production line economic Risk Index. b. Business Economic paygrade International. c. Business Education Rating Indicator. d. Business Environment Risk Index. 5 The sizing and liquidity requirements are based on the minimum invest ability requirements for the MSCI spheric S tandard Indices. (a) True (b) False 6 Oligopoly is a market social system in which a small number of firms account for the whole industrys output. (a) True (b) False The number of firms and product specialty are extremely crucial in determining the nature of rival in a market. (a) True (b) False 8 type of market structure equal by the constant returns to scale (CRS) technology includes a. Monopolistic competition b. Oligopoly c. Duopoly d. Perfect competition 9 In industries in which there are scale economies, the variety of goods that a dry land can produce is bound by a. the fixed cost b. the size of the labor force c. the marginal cost d. the size of the market 10 A monopoly firm engaged in planetary trade but enjoying a saved home market will a. quate marginal costs with foreign marginal revenues. b. equal marginal costs with marginal revenues in both home(prenominal) and foreign markets c. equate average costs in local anesthetic and foreign markets d. none of the a bove 11 Minimum efficient scale of production in relation to the overall industry output and market requirement sometimes play a major social function in shaping the market structure. (a)True (b) False 12 Price and output decisions of firms that want to maximize profits always depend on costs. (a) True (b) False 13 Which of the following is NOT a fiscal documental of set? a. Corporate growth. b.Return on investment. c. Profit maximization. d. None of these 14 Which of the following is NOT a marketing objective? a. Cash flow. b. Positioning. c. Volume sales. d. None of these 15 Setting a price below that of the competition is called a. Skimming. b. Penetration pricing. c. Competitive pricing. d. None of these 16 Which of the following is NOT a case for cutting prices? a. Capacity utilisation. b. increase profit margins. c. Market defence. d. None of these 17 Which of the following is NOT a reason for increasing prices? a. Cost pressures. b. Price comparison. c. moderate demand. d.None of these 18 The costs that depend on output in the short run are a. both list variable costs and kernel costs. b. total costs only. c. total fixed cost only. d. total variable costs only 19 A firm will shut down in the short run if a. fixed costs exceed revenues. b. total costs exceed revenues. c. it is suffering a loss. d. variable costs exceed revenues. 20 In the long run, every cost is variable cost. In this period, all costs ever incurred by the firm must be recovered. (a)True (b) False Answers for Self Assessment Questions 1 (c) 2 (b) 3 (d) 6 (a) 7 (a) 8 (d) 11(a) 12(a) 13(a) 16(b) 17(b) 18(a) (d) 9 (d) 14(a) 19(d) 5 (a) 10 (b) 15(b) 20(a) Chapter-12 PERFECT COMPETITION 1. A perfectly competitive firm will maximize profit at the quantity at which the firms marginal revenue equals a. price b. average revenue c. total cost d. marginal cost 2 Which of the following is not a valid option for a perfectly competitive firm? a. increase its output. b. Decreasing its output. c. Increasing its price. d. Increasing its resources. 3 In the long run, a perfectly competitive firm will achieve all but which of the following a. Economic profit b. Allocative Efficiency c. racy Efficiency d.Normal profit 4 If the price a firm receives for its product is equal to the marginal cost of producing that product, the firm is a. always earning an economic profit b. Always profitably efficient. c. Always allocatively efficient. d. Always experiencing an economic loss. 5 A firm that is producing at the lowest possible average cost is always a. Earning an economic profit. b. Productively efficient. c. Dominating the other firms in the market. d. Not producing enough output. 6 Which of the following is the best example of a perfectly competitive market? a. diamonds b. gymnastic shoes c. soft drinks d. arming 7 Perfect competition is an industry with a. a few firms producing identical goods. b. many firms producing goods that differ roughly. c. a few firms producing goods that differ somewhat in quality. d. many firms producing identical goods. 8 In a perfectly competitive industry, there are a. many buyers and many sellers. b. many sellers, but there qualification be only one or two buyers. c. many buyers, but there might be only one or two sellers. d. one firm that sets the price for the others to follow. 9 In perfect competition, the product of a single firm a. is sold to contrastive customers at different prices. b. as many perfect complements produced by other firms. c. has many perfect substitutes produced by other firms. d. is sold under many differing brand names. 10 In perfect competition, restrictions on entry into an industry a. do not exist. b. apply to labor but not to capital. c. apply to both capital and labor. d. apply to capital but not to labor. 11 Price for a firm under monopolistic competition is ______. a. equal to marginal revenue b. greater than marginal revenue c. less than marginal revenue d. greater than total revenue 12 In the long run, monopolistically competitive firms tend to experience ______. a. high economic profits b. ero economic profits c. negative economic profits d. substantial economic losings 13 Marginal revenue for a monopolist is ______ a. equal to price b. greater than price c. less than price d. equal to average revenue 14 Perfect competitions describes a market structure whose assumptions are extremely strong and highly incredible to exist in most real-time and real-world markets. (a)True (b) False 15 Monopolistic competition is a market structure characterized by a large number of relatively small firms. (a)True (b) False 16 A monopolist can sell more of his output only at a lower price and can contract the sale at a high price. a)True (b) False 17 A monopoly is a market structure in which there is not only one producer/seller for a product. (a)True (b) False 18 A perfectly competitive firm produces the profit-maximizing quantity of output that equates marginal revenue and mar ginal cost. (a)True (b) False 19 A perfectly competitive firm faces .. production alternatives based on a comparison of price, average total cost, and average variable cost. a. four short-run b. three short-run c. five short-run d. All of these 20 A perfectly competitive firms marginal cost curve that lies above the .. of the average variable cost curve is its supply curve. . minimum b. maximum c. both(a) and (b) d. None of these Answers for Self Assessment Questions 1 (d) 2 (c) 3 (a) 6 (d) 7 (d) 8 (a) 11(a) 12(b) 13(a) 16(b) 17(b) 18(a) 4 (c) 9 (c) 14(a) 19(b) 5 (b) 10 (a) 15(a) 20(a) Chapter-13 OLIGOPOLY AND PRICING STRATEGIES 1 A price- and quantity-fixing agreement is known as a. game theory. b. price lead. c. collusion. d. price concentration. 2 A group of firms that gets together to make price and output decisions is called a. a cartel. b. price leadership. c. an oligopoly. d. a concentrated industry 3 Products produced by oligopolistic ? rms are a. Homogeneous. b. Heterogene ous. . secern. d. Heterogeneous or differentiated. 3 Oligopoly is the only market structure characterized by a. Interdependence in pricing and output decisions. b. Differentiated products. c. Barriers to entry. d. Pro? t-maximizing behavior. 4 Oligopoly is characterized by all of the following invite out a. A few large ? rms. b. Differentiated product. c. Difficult entry into the industry. d. Price competition 5 A major nemesis to longer term profits exists when barriers to entry into an industry are high. (a)True (b) False 6 Under swerveed demand theory the prices of oligopolists are predicted to be rather rigid or sticky. a)True (b) False 7 In disputable markets, large oligopolistic firms end up behaving like a. a monopoly. b. monopolistically competitive firms. c. a cartel. d. perfectly competitive firms 8 Which of the following types of oligopoly competition would you expect to result in the highest market output, other things equal? a. b. c. d. Stackelberg. Bertrand. Corne t. Collusion 9 The demand curve has a kink at the price which is equal to full cost price. (a) True (b) False 10. An pro? t maximizing, oligopolistic firms produces at an output level where a. P = ATC. b. MR = MC. c. MR = ATC. d. AVC MR. e.P = MR 11 Cartels are most likely to arise in which of the following market structures? a. Perfect competition. b. Monopolistic Competition. c. Oligopoly. d. Monopoly. 12 A cartel is a established collusive organization of the oligopoly firms in an industry. (a) True (b) False 13 Needs such as training the group, setting standards and maintaining discipline, and appointing sub-leaders may be called a. team functions. b. work functions. c. individual functions. d. task functions. 14 The Hall and flitch model of the kinked demand curve is based on an empirical survey of a sample of 38 well managed weapons in England. a) True (b) False 15 The model uses the analytical tools of reaction functions of the duopolists derived on the basis of is not pr ofit curves. (a) True (b) False 16 The important models of non-collusive oligopoly are (a) Cournot model, (b) Kinked Oligopoly demand curve models. (a) True (b) False 17 Which of the following is not an operations strategy? a. response b. low-cost leadership c. differentiation d. technology 18 Which of the following is not one of the leadership styles identified in Houses path conclusion theory? a. Participative. b. Employee-centered. c. Directive. d. Achievement-oriented. 9 The petroleum industry is an example of a. monopolistic competition. b. pure oligopoly. c. duopoly. d. differentiated oligopoly. 20 The kinked demand curve model assumes that a. firms play price increases, but not price cuts. b. demand is more elastic for price cuts than for price increases. c. changes in marginal cost can never lead to changes in market price. d. None of the above is correct. Answers for Self Assessment Questions 1 (c) 2 (a) 3 (d) 6 (b) 7 (a) 8 (b) 11(b) 12(c) 13(a) 16(a) 17(d) 18(b) 4 (a) 9 ( b) 14(a) 19(b) 5 (d) 10 (a) 15(b) 20(d) Chapter-14 emolument ANALYSIS 1.A variable cost is a cost that a. varies per unit at every level of activity b. occurs at dissimilar times during the year c. varies in total in proportion to changes in the level of activity d. may not be incurred, depending on managements discretion 2. A cost which remains constant per unit at various levels of activity is a a. variable cost b. fixed cost c. flux cost d. manufacturing cost 3. A fixed cost is a cost which a. varies in total with changes in the level of activity b. remains constant per unit with changes in the level of activity c. varies inversely in total with changes in the level of activity d. emains constant in total with changes in the level of activity 4. Cost behavior summary is a study of how a firms costs a. relate to competitors costs b. relate to general price level changes c. respond to changes in activity levels at bottom the corporation d. respond to changes in the gross nati onal product 5. Cost behavior analysis applies to a. retailers b. wholesalers c. manufacturers d. all entities 6. The relevant range of activity refers to the a. geographical areas where the company plans to operate b. activity level where all costs are curvilinear c. levels of activity over which the company expects to operate d. evel of activity where all costs are constant 7. Which of the following is not a plausible explanation of why variable costs oftentimes do in a curvilinear sort? a. Labor specialization b. Overtime wages c. Total variable costs are constant within the relevant range d. Availability of quantity discounts 8. Firms operating constantly at 100% capacity a. are common b. are the exception rather than the rule c. have no fixed costs d. have no variable costs 9. Which one of the following is a name for the range over which a company expects to operate? a. Mixed range b. Fixed range c. Variable range d.Relevant range 10 The graph of variable costs that behave i n a curvilinear fashion will a. approximate a straight line within the relevant range b. be precipitously kinked on both sides of the relevant range c. be downward sloping d. be a stair-step pattern 11. A miscellaneous cost contains a. a variable cost element and a fixed cost element b. both selling and administrative costs c. both retailing and manufacturing costs d. both operating and non-operating costs 12. The variable cost method is also known as the direct be method indirect cost approach assiduity be method period costing approach 13.The costing approach that charges all manufacturing costs to the product is referred to as a. variable costing b. division margin costing c. direct costing d. absorption costing 14. Variable costing is acceptable for a. pecuniary statement purposes b. profit tax purposes c. internal use by management only d. profit tax purposes and for internal use by management 15. CVP analysis does not consider a. level of activity b. fixed cost per unit c. variable cost per unit d. sales mix 16. Which of the following is not an underlying assumption of CVP analysis? a. Changes in activity are the only factors that affect costs b.Cost classifications are fairly accurate c. Beginning stemma is larger than ending inventory d. Sales mix is constant 17. Which of the following would not be an acceptable way to express contribution margin? a. Sales minus variable costs b. Sales minus unit costs a. b. c. d. c. d. Unit selling price minus unit variable costs Contribution margin per unit divided by unit selling price a. b. c. d. 18. The level of activity at which total revenues equal total costs is the variable point fixed point semi-variable point break-even point 19. The break-even point is where a. otal sales equals total variable costs b. contribution margin equals total fixed costs c. total variable costs equal total fixed costs d. total sales equals total fixed costs 20. Gross profit also includes rent that arises from the entrepren eurs own land used in his production of output. a. True b. False Answers for Self Assessment Questions 1. (c) 2. (a) 3. (d) 4. (c) 7. (c) 8. (b) 9. (d) 10. (a) 11. (a) 14. (c) 15. (b) 16. (b) 17. (b) 18. (d) 5. (d) 12. (a) 19. (b) 6. (c) 13. (d) 20. (a) Chapter-15 1. There are . methods which can be used to appraise any investment project (a) 1 (b) 2 (c) 3 (d) 4 2.National income is the total of the value of the goods and the services which are produced in an economy. (a) True (b) False 3. Which two of the following are likely to raise the equilibrium value of National Income? (a) Rise in savings. (b) Rise in imports. (c) Rise in government expense. (d) Rise in exports. 4. Which two of the following are excluded when measuring National Income? (a) assess added in the output method. (b) Value of intermediate inputs in the output method. (c) Consumer spending in the expenditure method. (d) Transfer payments in the income method. 5.The return on an investment comes in the form of a st ream of internet in the future. (a) True (b) False 6. Cost-benefit analysis is a process for evaluating the merits of a particular project or course of action in a systematic and close way. (a) True (b) False 7. Real investment is not (a) the amount that shareholders are willing to provide for shares in a company (b) the cost of development of a new product (c) expenditure on public relations, staff training or query and development (d) expenditure on non-current assets such as plant, machinery, land and buildings 8.Which of the following statements about IRR and NPV is not correct? (a) NPV always gives the correct investment decision. (b) IRR gives an unreliable answer with non-conventional projects. (c) IRR can accommodate changes in the cost of capital. (d) IRR is a useful relative measure if study projects of differing sizes. 9. Gross Domestic Product (GDP) is the total market value of all final goods and services currently produced within the domestic territory of a countr y in a year. (a) True (b) False 10. Which of the following will not be a relevant factor when using the retribution method of capital investment appraisal? a) The timing of the first cash inflow (b) The total cash flows generated by the asset (c) The cash flows generated by the asset up to the payback period (d) The cost of the asset 11. Why the payback method is often considered inferior to discounted cash flow in capital investment appraisal? (a) I is more difficult to calculate (b) It does not calculate how long it will take to recoup the money invested (c) It does not take account of the time value of money (d) It only takes into account the future income of a project 12.Gross National Product is the total market value of all final goods and services produced in a year. (a) True (b) False 13. In 2005. was the least authoritative liability of U. S. nonfinancial businesses in terms of total value. (a) bonds and mortgages (b) bank loans (c) inventories (d) trade debt 14. .. are examples of financial intermediaries. (a) Commercial banks (b) Insurance companies (c) Investment companies (d) All of the above 15. Financial assets .. a) instantly commit to the countrys productive capacity (b) indirectly stomach to the countrys productive capacity (c) contribute to the countrys productive capacity both directly and indirectly (d) do not contribute to the countrys productive capacity either directly or indirectly 16. The means by which individuals hold their claims on real assets in a welldevelopedeconomy are (a) investment assets. (b) depositary assets. (c) derivative assets (d) financial assets 17. Capital budgeting is the process of evaluating and selecting long-term investments that are consistent with the goal of the firm. a) True (b) False 18. Although derivatives can be used as speculative instruments, businesses most often use them to (a) attract customers. (b) compose stockholders. (c) offset debt. (d) hedge 19. The investment in fixed assets increas es the fixed cost of the firm which must be recovered from the benefit of the same project. (a)True (b) False 20. National Income is defined as the sum total of all the goods and services produced in a country, in a particular period of time. (a) True (b) False Answer 1. (c) 2. (a) 3. (c) 4. (b) 5. (a) 6. (a) 7. (a) 8. (c) 9. (a) 10. (b) 11. (c) 12. (a) 13. (b) 14. (d) 15. b) 16. (d) 17. (a) 18. (d) 19. (a) 20. (a) Chapter-16 1. In period of largeness, phantom or paper profits may be reports as a result of using the (a) FIFO costing assumption (b) Perpetual inventory method (c) LIDO costing assumption (d) Periodic inventory method 2. Inflation is (a) an increase in the overall price level. (b) an increase in the overall level of economic activity. (c) a decrease in the overall level of economic activity. (d) a decrease in the overall price level. 3. Aggregate supply is the total amount (a) produced by the government. (b) of goods and services produced in an economy. c) of labour su pplied by all households. (d) of products produced by a given industry. 4. The value of a dollar does not balk constant when there is inflation. (a) True (b) False 5. The inflation rate in India was recorded at 7. 23% in (a) April of 2009 (b) April of 2010 (c) April of 2011 (d) April of 2012 6. The function of money that helps assess the opportunity cost of an activity is moneys use as a (a) medium of exchange. (b) descent of value. (c) unit of account. (d) store of debt. 7. An official measure of money in the United States is M1, which consists of the sum of (a) currency convinced(p) travelers checks. b) currency positive checkable deposits. (c) currency confirming travelers checks plus checkable deposits. (d) currency plus travelers checks plus time deposits. 8. Implies no trade-off between unemployment and inflation. (a) GDP deflator (b) Shoe leather costs (c) Long-run Phillips curve (d) Menu costs 9. The inflation rate is used to calculate the real interest rate, as well a s real increases in wages. (a) True (b) False 10 the quantity of money in the United States. (a) The State discussion section controls (b) The Department of Treasury controls (c) The Federal make System controls (d) Commercial banks control 11.There are broadly .. ways of controlling inflation in an economy. (a) 2 (b) 3 (c) 4 (d) 5 12. The balance of payments of a country is said to be in equilibrium when the demand for foreign exchange in exactly equivalent to the supply of it. (a) True (b) False 13. A general decline in prices is often caused by a reduction in the supply of.. (a) money or debit (b) money or credit (c) money (d) None of these 14. The opportunity cost of holding money is the (a) inflation rate minus the nominal interest rate. (b) nominal interest rate. (c) real interest rate. (d) unemployment rate. 15.If the Fed is worried about inflation and wants to raise the interest rate, it (a) increases the demand for money. (b) increases the supply of money. (c) decreases t he demand for money. (d) decreases the supply of money. 16. The circular flow of goods and incomes shows the relationship between (a) income and money. (b) goods and services. (c) firms and households. (d) wages and salaries. 17. pecuniary measures to control inflation include taxation, government expenditure and public borrowings. (a) True (b) False 18. Hyperinflation (a) occurs in the United States during each business cycle. b) occurs only in theory, never in reality. (c) has never occurred in the United States. (d) happens in all countries at some time during their business cycle. 19. Hyperinflation refers to a situation where the prices rise at an alarming high rate. (a) True (b) False 20. The inflation rate is used to calculate the real interest rate, as well as real increases in wages. (a)True (b) False Answer 1. (b) 2. (a) 3. (b) 4. (a) 11. (a) 12. (a) 13. (b) 14. (c) 5. (d) 6. (c) 15. (d) 16. (c) 7. (c) 8. (c) 17. (a) 18. (c) 9. (a) 10. (c) 19. (a) 20. (a)