Managerial Economics Set 5

Bachelor of Business Administration (BBA),

Bachelor of Commerce (B Com)

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This set of Managerial Economics Multiple Choice Questions & Answers (MCQs) focuses on Managerial Economics Set 5

Q1 | An exceptional demand curve is one that slopes
  • Upward to the left
  • Downward to the right
  • Horizontally
  • Upward to the right
Answer: Upward to the right
Q2 | Which one is not an exception to the Law of Demand?
  • Normal good
  • Articles of Distinction
  • Ignorance
  • Inferior good
Answer: Normal good
Q3 | Demand for a commodity is elastic when it has:
  • Only one use
  • Uses which can not be postponed
  • Many uses
  • Uses very essential for the consumer
Answer: Many uses
Q4 | When the demand curve is a rectangular hyperbola, it represents:
  • Perfectly elastic demand
  • Unitary elastic demand
  • Perfectly inelastic demand
  • Relatively elastic demand
Answer: Unitary elastic demand
Q5 | The horizontal demand curve for a commodity shows that its demand is:
  • Perfectly elastic
  • Highly elastic
  • Perfectly inelastic
  • Moderately elastic
Answer: Perfectly elastic
Q6 | When an individual’s income falls(while everything else remains the same), his demandfor an inferior good:
  • Increases
  • Decrease
  • Remains unchanged
  • We cannot say without additional information
Answer: Decrease
Q7 | A fall in the price of a commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity to:
  • Increases
  • Decrease
  • Remains unchanged
  • Any of the above
Answer: Remains unchanged
Q8 | 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
Answer: The power of a commodity to satisfy wants
Q9 | The utility of a commodity is:
  • Its expected social value
  • The extent of its practical use
  • Its relative scarcity
  • The degree of its fashion
Answer: Its relative scarcity
Q10 | Marginal utility curve of a given consumer is also his:
  • Indifference curve
  • Total utility curve
  • Demand curve
  • Supply curve
Answer: Demand curve
Q11 | The relationship between demand for a commodity and price, ceteris paribus, is:
  • Negative
  • Positive
  • Non-negative
  • Non-positive
Answer: Negative
Q12 | A demand curve which takes the form of horizontal line parallel to quantity axis illustrates elasticity which is:
  • Zero
  • Infinite
  • Greater than one
  • Less than one
Answer: Less than one
Q13 | 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
  • Can not be calculated
Answer: One infinite
Q14 | 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
Answer: The more available are substitutes for that product
Q15 | A consumers demand curve can be obtained from:
  • ICC
  • Engel curve
  • Lorence curve
  • PCC
Answer: PCC
Q16 | In case of Giffen goods, demand curve will slope:
  • Vertical
  • Horizontal
  • Upward
  • Downward
Answer: Upward
Q17 | Cross elasticity of demand between tea and sugar is:
  • Positive
  • Zero
  • Infinity
  • Negative
Answer: Negative
Q18 | If the percentage increase in quantity of a commodity demanded is its price, the coefficient of price elasticity of demand is:
  • Greater than 1
  • Equal to 1
  • Less than 1
  • Zero
Answer: Less than 1
Q19 | 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
Answer: Zero
Q20 | Unitary elasticity of demand is:
  • Zero
  • Equal to one
  • Greater than 1
  • Less than 1
Answer: Equal to one
Q21 | The real business cycle theory is most closely related to
  • Keynesian theory
  • Monetarist theory
  • The classical theory
  • The new Keynesian theory
Answer: The classical theory
Q22 | 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
Answer: All of the above
Q23 | 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
Answer: Macroeconomics should be based on the same assumptions as microeconomics
Q24 | Which of the following statements are correct? In (the)
  • Keynesian model, unemployment is voluntary.
  • Real business cycle model, all unemployment is voluntary
  • New classical models, there is voluntary unemployment
  • Both b&c
Answer: Both b&c
Q25 | A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual, called a-------------
  • Maximizing agent
  • Representative agent
  • Republican agent
  • Informative agent
Answer: Representative agent
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