MCQ on Managerial Economics 1

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Objective Questions and Answers of MBA: MCQ on Managerial Economics 1

Subject: MCQ on Managerial Economics 1

Part 1: List for questions and answers of Managerial Economics


Q1. The concept of supply curve as used in economic theory is relevant only for the case of

a) Oligopoly competition

b) Perfect or pure competition

c) Monopolistic competition

d) Monopoly


Q2. Other things being equal, an increase in supply can be caused by

a) A rise in the income of the consumer

b) An improvement in the techniques of production

c) A rise in the price of the commodity

d) An increase in the income of the seller


Q3. Direct regulation of business has the potential to yield economic benefits to society when

a) Diseconomies of scale exist

b) Barriers to entry are absent

c) there are no good substitutes for a product

d) Many firms serve a given market


Q4. The Revealed Preference Theory is based on

a) Introspection

b) Utility and demand

c) The assumption of indifference

d) Observed consumer behaviour


Q5. One would expect a firm to close down rather than continue producing in the shortperiod if

a) Variable costs were to fall below fixed costs

b) Total revenue were less than total variable cost

c) Total revenue were more than total variable cost

d) Variable costs were to rise above fixed costs


Q6. Marginal Utility (MU) curve is always

a) Parallel to X-axis

b) Falling

c) Rising

d) Parallel to Y-axis 


Q7. The Law of Diminishing Returns depends on the assumption that

a) Land is the factor kept constant

b) The state of technical knowledge is unchanged

c) Total output is constant

d) Average output declines faster than marginal output


Q8. Mrn = trn – trn_1 is the algebraic expression of

a) Information is insufficient

b) Marginal Revenue, the change in total revenue when there is a change in quantity sold of the product

c) The addition to TR earned by selling n units of product instead of (n-1) units

d) None of the above


Q9. Under perfect competition a firm can produce with

a) An optimum plant

b) Identical products at low cost

c) Maximum profit

d) An optimum output


Q10. If marginal cost is above average variable at a time when output is rising, then

a) Average variable cost is falling

b) Average variable cost is rising

c) Average total cost is falling

d) Average total revenue is rising


Q11. Equilibrium of monopolist will never lie below the middle point of the average revenue curve because below the middle point

a) Elasticity of demand is less than one

b) MR is negative

c) Both (a) and (b)

d) Market laws cease to be operate


Q12. The concept of indifference curve analysis was given scientific touch by

a) Slutsky in 1915

b) F. Y. Edgeworth in 1881

c) Irving Fisher in 1982

d) Alfred Marshall in 1921 


Q13. In monopoly, the relationship between average revenue and marginal revenue curves is as follows

a) Average revenue curve lies above the MR-curve

b) AR curve lies below the MR-curve

c) AR curve coincides with the MR-curve

d) AR curve is parallel to the MR-curve


Q14. Any supply curve which is a straight line passing through the origin whatever its slopes will possess

a) An elasticity which is less than one

b) An elasticity which is greater than one

c) Unitary elasticity of supply

d) An elasticity which is greater than zero


Q15. A monopoly producer has

a) Control over production but not price

b) Control over production, price and consumers

c) Control neither on production nor on price

d) Control over production as well as price


Q16. On an indifference map, higher indifference curves show

a) Levels of satisfaction among which the consumer is indifferent

b) The optimum level of satisfaction

c) The higher level of utility

d) The same lower level of satisfaction


Q17. When the TR curve and TC curve are parallel and TR exceeds TC

a) Total profit is minimised

b) Normal profit is minimised

c) Total profit is maximised

d) Normal profit is maximised


Q18. A circumstance in which it might pay a monopolist to cut the price of his product is where

a) MC is falling

b) MR is greater than MC

c) His advertising costs are increasing

d) Average costs seem about to fall 


Q19. From the resource allocation view point, perfect competition is preferable because

a) There is no restriction on entry and exit of firms

b) There is a whole variety of output produced

c) The firms operate at excess capacity levels

d) There is no idle capacity


Q20. The falling part of a TU curve shows

a) Zero marginal utility

b) Decreasing marginal utility

c) Increasing marginal utility

d) Negative marginal utility


Part 1: List for questions and answers of Managerial Economics


Q1. Answer:b

Q2. Answer:b

Q3. Answer:c

Q4. Answer:

Q5. Answer:b

Q6. Answer:b

Q7. Answer:b

Q8. Answer:b

Q9. Answer:a

Q10. Answer:b

Q11. Answer:c

Q12. Answer:b

Q13. Answer:a

Q14. Answer:c

Q15. Answer:a

Q16. Answer:c

Q17. Answer:c

Q18. Answer:a

Q19. Answer:d

Q20. Answer:d