On This Page
This set of Managerial Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Managerial Economics 1 Set 4
Q1 | The utility may be defined as:
- the desire for a commodity
- the usefulness of a commodity
- the necessity of a commodity
- the power of a commodity to satisfy wants
Q2 | The utility of a commodity is:
- its expected social value
- the extent of its practical use
- its relative scarcity
- the degree of its fashion
Q3 | Marginal utility curve of a given consumer is also his:
- indifference curve
- total utility curve
- demand curve
- supply curve
Q4 | The relationship between demand for a commodity and price, ceteris paribus, is:
- negative
- positive
- non-negative
- non-positive
Q5 | A demand curve which takes the form of horizontal line parallel to quantity axisillustrates elasticity which is:
- zero
- infinite
- greater than one
- less than one
Q6 | Consider a demand curve which takes the form of a straight line cutting both axes.Elasticity at the mid-point of the line would be:
- zero
- one infinite
- infinite
- cannot be calculated
Q7 | The elasticity of demand for a product will be higher:
- the more available are substitutes for that product
- the more its buyers demand loyalty
- the more the product is considered a necessity by its buyers
- all of the above
Q8 | In case of Giffen goods, demand curve will slope:
- vertical
- horizontal
- upward
- downward
Q9 | Cross elasticity of demand between tea and sugar is:
- positive
- zero
- infinity
- negative
Q10 | If the percentage increase in quantity of a commodity demanded is its price, thecoefficient of price elasticity of demand is:
- greater than 1
- equal to 1
- less than 1
- zero
Q11 | If the quantity of a commodity demanded remains unchanged as its price changes, thecoefficient of price elasticity of demand is
- greater than 1
- equal to 1
- less than 1
- zero
Q12 | Unitary elasticity of demand is:
- zero
- equal to one
- greater than 1
- less than 1
Q13 | The real business cycle theory is most closely related to
- keynesian theory
- monetarist theory
- the classical theory
- the new keynesian theory
Q14 | In the real business cycle model, business cycles are
- efficient and do not represent lost output
- driven by technology shocks
- occur when markets clear
- all of the above
Q15 | Real business cycle proponents argue that
- recessions are caused by movements of output away from the natural rate of output
- prices and wages are sticky
- macroeconomics should be based on the same assumptions as microeconomics
- monetary policy is important in determining recessions
Q16 | Implicit costs are:
- equal to total fixed costs.
- comprised entirely of variable costs.
- payments" for self-employed resources.
- always greater in the short run than in the long run.
Q17 | The law of diminishing returns only applies in cases where:
- there is increasing scarcity of factors of production.
- the price of extra units of a factor is increasing.
- there is at least one fixed factor of production.
- capital is a variable input.
Q18 | When the total product curve is falling, the:
- marginal product of labour is zero.
- marginal product of labour is negative.
- average product of labour is increasing.
- average product of labour must be negative.
Q19 | When marginal product reaches its maximum, what can be said of total product?
- total product must be at its maximum
- total product starts to decline even if marginal product is positive
- total product is increasing if marginal product is still positive
- total product levels off
Q20 | Variable costs are:
- sunk costs.
- multiplied by fixed costs.
- costs that change with the level of production.
- defined as the change in total cost resulting from the production of an additional
Q21 | The reason the marginal cost curve eventually increases as output increases for thetypical firm is because:
- of diseconomies of scale.
- of minimum efficient scale.
- of the law of diminishing returns.
- normal profit exceeds economic profit.
Q22 | If the short-run average variable costs of production for a firm are rising, then thisindicates that:
- average total costs are at a maximum.
- average fixed costs are constant.
- marginal costs are above average variable costs.
- average variable costs are below average fixed costs.
Q23 | If a more efficient technology was discovered by a firm, there would be:
- an upward shift in the avc curve.
- an upward shift in the afc curve.
- a downward shift in the afc curve.
- a downward shift in the mc curve.
Q24 | The firm's short-run marginal-cost curve is increasing when:
- marginal product is increasing.
- marginal product is decreasing.
- total fixed cost is increasing.
- average fixed cost is decreasing.
Q25 | A firm encountering economies of scale over some range of output will have a:
- rising long-run average cost curve.
- falling long-run average cost curve.
- constant long-run average cost curve.
- rising, then falling, then rising long-run average cost curve.