1. Principles of Economics and Markets Flashcards
1
Q
Which of the following theory helps managers to determine the factors that affect the buying decisions of consumers and their needs and requirements?
A
Demand theory
2
Q
Who defined economics as a science of scarcity or choice in his book “An Essay on the Nature and Significance of Economic Science”, which was published in 1932?
A
Lionel Robbins
3
Q
All goods and services have different values in the eyes of consumers from the perspective of utility. Some goods and services give them more satisfaction (utility) than others.” The statement is related to:
A
What to produce
4
Q
Paul Samuelson is the contributor of of economics.
A
Growth viewpoint
5
Q
______involves the application of different economic tools, theories and methodologies for scrutinising business problems and decision making.
A
Managerial economics
6
Q
Due to scarcity, every choice involves:
A
An opportunity cost
7
Q
Issues faced related to the selection of investment project can be solved by using the:
A
Capital theory
8
Q
The problem of ‘how to produce’ is the problem of:
A
Choice of technique
9
Q
The question, ‘Should Britannia produce more bread or more biscuits?’ is an example of the:
A
‘What to produce’ question
10
Q
On a Sunday morning, you rank your choices in the following order:
Clean the house, go to the mall, watch a movie and sleep late.
Suppose you decide to clean the house. What will be your opportunity cost?
A
Going to the mall
11
Q
When a country produces more houses and fewer computers, it is answering the_______question.
A
“What to produce”
12
Q
According to______, “Political economy or economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.”
A
Alfred Marshall
13
Q
The ________ deals with maximisation of output (when the resources are limited) and determination of optimum size of output.
A
Production theory
14
Q
Which of the following is the neo-classical standpoint of economics?
A
Welfare viewpoint
15
Q
Which branch of economics primarily studies the determination of price in individual markets?
A
Microeconomics
16
Q
Which of the following subject attempts to study how people allocate their limited resources to their alternative uses to produce and consume goods to satisfy their unlimited wants and maximise their gains?
A
Economics
17
Q
Which is not a basic economic question?
A
How to stop its production?
18
Q
Microeconomic answers:
A
All of these
19
Q
The problem of ‘how to produce’ is the problem of:
A
choice of technique
20
Q
Which of the following are the fundamental economic reasons?
A
All of these
21
Q
______ science refers to the science that deals with the question of what is.
A
Positive
22
Q
Macroeconomics includes all the following key principles except:
A
Production theory
23
Q
If you wish to purchase a car, but purchasing your own house has become a necessity for you, it will create a problem of:
A
Choice
24
Q
Which of the following factors does the economic environment of a country comprise?
A
All of these.
25
Which of the following statements are correct?
Both A and B
26
Economics studies how organisations make their decisions regarding:
All of these.
27
Demand for labour is always a(n)______demand.
Derived
28
Which of the following determinants result in a fall in the demand of a commodity?
Fall in the price of substitute goods
29
As the price of a commodity will increase, its quantity demanded will:
Decrease
30
Which factor will increase the demand for a premium brand of Biryani masala?
Increase in the consumers’ income
31
Demand for house is___ demand, while demand for bricks____ is demand.
Direct, derived
32
Demand for water used in beverages like Coca-Cola is demand.
Derived demand
33
Ram Guha is a watchman. He supports a family of six people— his wife, two children, and his elderly parents. Every next day, the family eats a breakfast of bread omelette. The price of the bread has increased by ` 2. The family has reduced its consumption of eggs but increased its demand of bread. What is the reason for this exception to the law of demand?
Bread is a Giffen good
34
The relationship between the income of individuals and the demand for normal goods is:
Positive
35
The price of mutton increases. The people buy more of chicken. Therefore, chicken and mutton are:
Substitutes
36
People demand certain goods at higher prices not because of their worth but because of their prestige value. This effect is called:
Veblen effect
37
Varun is a salaried employee from a middle-class family. Being a man of modest means, however, did not prevent him from dreaming big. Since he saw the latest model of the Harley Davidson bike in an auto show, he wants to purchase it. He is even willing to pay for it. However, this is not a demand for the bike because Varun does not have the:
Purchasing ability
38
Rahul is a self-made millionaire. In a mall, he sees an expensive pair of Italian designer shoes. When he checked the price tag, he moved on. This is not a real demand for the shoes because Rahul does not have the:
Willingness to pay
39
All of the following are the reasons for the negative slope of the demand curve, except:
Complementary effect
40
What does the elasticity of demand measure?
The responsiveness of the quantity demanded to change in price
41
The cross-elasticity of demand for petrol and car is:
Always less than zero
42
When the demand for printers increases, people start buying more of ink cartridges. This is due to:
Complementary effect
43
According to the law of supply, more goods will be supplied at:
Higher price
44
During the festival of Diwali, the demand for sweets goes up. Consequently, the demand for sugar will:
Increase
45
Supply is the specific quantity of a good that a producer is and to offer for sale to consumers.
Willing, able
46
The price of the Ariel detergent goes up. Consequently, people start to buy more of Tide detergent. This is due to
Substitution effect
47
The period of time during which a firm can change only some factors of production (such as labour) is called:
Short run
48
When total product increases at a diminishing rate, the marginal product will:
Decrease
49
Accounting costs are also called:
Money costs
50
Which law exclusively applies to long-run production?
Law of returns to scale
51
Which of the following options is true with respect to the graphical representation of the Total Fixed Cost (TFC) curve?
It is parallel to the horizontal axis.
52
For the producer’s equilibrium, isoquants must be________ to the origin.
Convex
53
Total product divided by the amount of variable factor is:
Average product
54
The following equation represents which expression?
| C = PL × L + PK × K
Iso-cost line
55
Total physical product is derived by___________ the marginal physical product.
Summing up
56
The technological relationship between physical inputs and the maximum producible output is:
Production function
57
Which of the following costs are not recorded in the books of accounts?
Implicit cost
58
Which of the following factors does not result in the economies of scale?
Diminishing managerial expertise
59
In a short-run production,_________ factors of production are in___________ supply.
Some, fixed
60
The line that shows various combinations of factors that yield a given output is called
Isoquant curve
61
If L units of labour and K units of capital are utilised to produce X units of output then the inputs are tripled, the output will increase by_________under decreasing returns to scale.
2X
62
In which production has all factors of production variable?
Long-run production
63
In the short-run production, the slope is zero at___________ .
Maximum TPL
64
In which of the following stages of production, the total product starts declining with an increase in the number of workers?
Stage of negative returns
65
Which expression below defines the production function?
| X – level of output, L – labour, K – capital, S – land, T – state of technology
X = f (L,K,S)
66
In________ cost, there is no fixed cost and all the costs are variable.
Long run
67
Which of the following is not a feature of perfect competition?
Unidentical products
68
Which of the following is not a type of product differentiation under the monopolistic competition market structure?
Price variation
69
Which of the following is not a characteristic of a monopoly?
Free entry and exit for other sellers
70
A monopoly does not engage in price discrimination in order to___________ .
Create barriers for customers
71
Complete the following formula:
| AC= /________ Output
TC
72
__________ represents a market structure where there are many buyers and sellers and goods or services are identical.
Perfect competition
73
Which of the following is not a characteristic of a monopolistic competition market structure?
Every product is identical
74
State which of the following comes under monopolistic competition.
Automobile servicing industry
75
The monopolistic competition market structure for firm forms a ________ demand curve.
Elastic
76
In the oligopoly market structure, there are/is________.
Few firms
77
According to modern economists, ____________ are the rewards of purely entrepreneurial functions.
Profits
78
In a monopoly market, there is/are_________ seller(s).
One
79
Which condition requires that Marginal Revenue (MR) should be equal to Marginal Cost (MC)?
First order condition
80
TC also changes with the changes in the level of output as there is a change in _________ .
TVC
81
Complete the following formula:
| _______= Price (P) × Total output (Q)
TR
82
Which of the following is/are (an) example(s) of a perfect competition market structure?
All of these:
Oil & petrol
Share Mkt
Agricultural Products
83
Which of the following represents the correct formula for calculating the H-H Index?
The squared values of the percentage market shares of each firm operating in the oligopoly market are added together.
84
According to__________ , “The Revenue of a firm is its sales receipts or money receipts from the sale of a product.”
Dooley
85
The profit would be maximised when the difference between the _________ and_________ is maximum.
Total revenue, total cost
86
When a monopoly decides to supply output at different prices to different consumers or groups of consumers, it is called__________ .
Price discrimination
87
In India, the_________ and ___________ industries are the perfect examples of the oligopoly market form:
Aviation and telecommunication
88
Price leadership works when:
None of these:
Options given:
1. The no. of orgs is large
2. Products are heterogeneous
3. None of these
4. Entry to industry is unrestricted.
89
Setting the price below average cost to force the rivals out of business is known as:
Predatory pricing
90
What happens to the slope of a kinked demand curve?
It differs in different conditions.
91
In oligopoly, the price and output are:
Indeterminate
92
Pricing strategy where firms in an oligopoly or a monopolist may use to discourage entry of new firms/individuals into their market is known as__________ .
Limit pricing
93
What is the name of the method by which the overall price of items bought is lowered when increased quantities of the same item are purchased?
Volume pricing
94
A market that is dominated by 2 or more than 2 sellers having control over the market is called:
Oligopoly
95
Oligopoly market form is a system which is:
Price searcher
96
____________ takes place when there is only one dominant organisation in the industry, which sets the price and others follow it.
Price leadership
97
A ____________ is an organization of independent firms, whose purpose is to control and limit production and maintain or increase prices and profits:
Cartel
98
In the market economics, a__________ is a person or a business that sells products, goods or services and therefore influences the price of the commodity in the market based on the number of units of that item sold:
Price searcher
99
In an oligopoly market, the sellers operating are:
Mutually interdependent
100
Is flexibility important for any business cartel?
Yes, flexibility is important.
101
What does a firm in an oligopoly market following the price leader called?
Price follower
102
If one firm or individual in an oligopoly reduces the prices of their good then prices of other firms:
Decrease
103
What are the characteristics of an oligopoly market form?
All of these:
1. Few sellers & many buyers.
2. Homogeneous/Differentiated products.
3. Barriers to entry &exit.
4. All of these.
104
The term oligopoly has been derived from which language:
Greek
105
Volume pricing is also called as ___________ .
Volume discounting
106
___________ denotes a situation in which two or more firms jointly set their prices or output, divide the market among them or make other business decisions.
Collusion
107
GDI adjusts the average achievement to show the disparities between men and women to which of the following dimensions?
All of these:
1. Knowledge as measured by adult literacy rate and the combined primary, secondary and higher gross enrolment ratio.
2. All of these.
3. A long & healthy life, as measured by life expectancy at birth.
4. A decent standard of living as measured by estimated earned income.
108
Economic development implies that the share of agriculture in _____________ should decline and the share of industrial sector and services should increase.
GDP
109
Fundamental factors of economic growth include:
All of these
1. The qty & quality of natural resources.
2. The qty and quality of labor force.
3. All of these.
4. The qty& quality of real capital.
110
The World Bank’s environmentally sustainable development division has established a new index called:
Green Index
111
___________ is a relative measure of life expectancy, learning, education and standards of living for every country.
HDI
112
In HPI, the indicators to measure the deprivations are normalized between:
0 and 100
113
Which of the following is not a measure suggested by the World Bank to developing countries?
Reduction of income
114
In the UN’s development program, the ____________ says, “While geography can pose challenges, it does not define a country’s destiny.”
World Bank
115
_______________ assigns economic value to land, water, woods, minerals and all natural resources.
Green Index
116
Socio-economic factors of economic growth include:
All of these:
1. The sociological and cultural structure
2. All of these.
3. The legal structure of country.
4. The distribution of income and wealth.
117
Monetary policy instruments are the various tools that a central bank can use to influence money market and credit conditions and pursue its monetary policy objectives. Such instruments include which among the following?
All of these:
1. Open market conditions.
2. Cash Reserves Ratios
3. All of these.
4. Liquidity Reserve Ratios.
118
Which of the following is not an objective of the fiscal policy?
Increasing public spending
119
The CRR is the reserve which commercial banks have to keep with____ .
RBI
120
Monetary policy refers to the use of monetary policy instruments which are at the disposal of the central bank to regulate the availability, cost and use of money and credit. The objectives served by monetary policy include which of the following?
All of these
1. All of these.
2. Maintain price stability, optimum level of output and employment.
3. Facilitate balance of payments equilibrium.
4. Promote economic growth.
121
An increase in CRR:
Decreases credit and money supply
122
Public borrowing is desirable in the situation of:
Inflation
123
What is the main feature of the fiscal policy of India?
Controlling taxes and public expenditure
124
________________ refers to the average daily balance that a bank is required to maintain with the RBI as a proportion of its Net Demand and Time Liabilities (NDTL).
CRR
125
____________ is the rate at which the RBI buys or rediscounts bills of exchange or other commercial papers.
Bank rate
126
RBI’s policy has the main objectives of:
Price stability with growth
127
Monetary policy objectives include:
Price stability and credit availability
128
OMOs consist of two types of operations:
Outright purchase/sale and repo/reverse repo of government securities
129
For budgetary deficits, the government may like to use
both A&B (Missed the options for this one).
130
Repo/reverse repo are from the side of
Buyer/seller
131
Which of the following is/are the instruments of fiscal policy?
All of these
1. All of these.
2. Borrowings from a bank.
3. Printing of money.
4. Treasury withdrawal.
132
Monetary policy should aim primarily at:
Inflation control
133
Base rate includes:
Cost of deposits, cost of complying with the CRR and SLR requirements and general overhead costs
134
Monetary policy influences:
Both a & b
1. Availability of credit.
2. Cost of credit.
3. None.
4. Both a&b.
135
The important quantitative instruments for controlling inflation are:
CRR and SLR
136
Which of the following is the component of the fiscal policy?
All of these
1. All of these
2. Changes in public spending.
3. Changes in tax rate.
4. Automatic stabilizers.
137
According to the _________________ , the less developed countries are characterised by a number of rigidities that inhibited or prevented these countries from undergoing any change.
Structuralist View
138
The Directive Principles laid down in the Indian Constitution aim at creating a society in which:
All of these
1. No exploitation of weak by strong
2. Right to work
3. Equal Opportunity
4. All if these
139
The real beginning of planning in India was made in March 1950 when the Indian Planning Commission was set up with_____________ as its chairman.
Pt. Jawaharlal Nehru
140
The Finance Commission was constituted by the President under article____________ of the Constitution.
280
141
In NITI Aayog, the word NITI stands for:
National Institution for Transforming India
142
Who chairs the Governing Council of NITI Aayog?
Prime Minister
143
The first attempt at systematic planning in India was made by Sh. M. Visvesvaraya when he published his book Planned Economy for India in_____________ .
1934
144
____________ means the allocation of limited resources among different uses in such a way that it would bring about the maximum welfare for the people.
Economic Planning
145
Which of the following are the major objectives of economic planning in India?
All of these
1. Provide more employment oppurtuninties
2. Reduce inequality in inccome and wealth
3. To achieve industrialization with special reference to basic and heavy industry
4. All of these
146
NITI Aayog’s entire gamut of activities can be divided into:
All of these
1. Design policy and program framework
2. Foster cooperative federalism
3. monitoring and evaluation
147
Issues faced related to the selection of investment project can be solved by using the:
a. Demand theory
b. Production theory
c. Capital theory
d. Profit theory
c. Capital theory
