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MBA - First Semester > 1. Principles of Economics and Markets > Flashcards

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

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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

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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

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4
Q

Paul Samuelson is the contributor of of economics.

A

Growth viewpoint

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5
Q

______involves the application of different economic tools, theories and methodologies for scrutinising business problems and decision making.

A

Managerial economics

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6
Q

Due to scarcity, every choice involves:

A

An opportunity cost

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7
Q

Issues faced related to the selection of investment project can be solved by using the:

A

Capital theory

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8
Q

The problem of ‘how to produce’ is the problem of:

A

Choice of technique

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9
Q

The question, ‘Should Britannia produce more bread or more biscuits?’ is an example of the:

A

‘What to produce’ question

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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

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11
Q

When a country produces more houses and fewer computers, it is answering the_______question.

A

“What to produce”

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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

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13
Q

The ________ deals with maximisation of output (when the resources are limited) and determination of optimum size of output.

A

Production theory

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14
Q

Which of the following is the neo-classical standpoint of economics?

A

Welfare viewpoint

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15
Q

Which branch of economics primarily studies the determination of price in individual markets?

A

Microeconomics

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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

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17
Q

Which is not a basic economic question?

A

How to stop its production?

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18
Q

Microeconomic answers:

A

All of these

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19
Q

The problem of ‘how to produce’ is the problem of:

A

choice of technique

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20
Q

Which of the following are the fundamental economic reasons?

A

All of these

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21
Q

______ science refers to the science that deals with the question of what is.

A

Positive

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22
Q

Macroeconomics includes all the following key principles except:

A

Production theory

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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

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24
Q

Which of the following factors does the economic environment of a country comprise?

A

All of these.

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25
Q

Which of the following statements are correct?

A

Both A and B

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26
Q

Economics studies how organisations make their decisions regarding:

A

All of these.

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27
Q

Demand for labour is always a(n)______demand.

A

Derived

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28
Q

Which of the following determinants result in a fall in the demand of a commodity?

A

Fall in the price of substitute goods

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29
Q

As the price of a commodity will increase, its quantity demanded will:

A

Decrease

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30
Q

Which factor will increase the demand for a premium brand of Biryani masala?

A

Increase in the consumers’ income

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31
Q

Demand for house is___ demand, while demand for bricks____ is demand.

A

Direct, derived

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32
Q

Demand for water used in beverages like Coca-Cola is demand.

A

Derived demand

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33
Q

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?

A

Bread is a Giffen good

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34
Q

The relationship between the income of individuals and the demand for normal goods is:

A

Positive

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35
Q

The price of mutton increases. The people buy more of chicken. Therefore, chicken and mutton are:

A

Substitutes

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36
Q

People demand certain goods at higher prices not because of their worth but because of their prestige value. This effect is called:

A

Veblen effect

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37
Q

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:

A

Purchasing ability

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38
Q

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:

A

Willingness to pay

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39
Q

All of the following are the reasons for the negative slope of the demand curve, except:

A

Complementary effect

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40
Q

What does the elasticity of demand measure?

A

The responsiveness of the quantity demanded to change in price

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41
Q

The cross-elasticity of demand for petrol and car is:

A

Always less than zero

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42
Q

When the demand for printers increases, people start buying more of ink cartridges. This is due to:

A

Complementary effect

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43
Q

According to the law of supply, more goods will be supplied at:

A

Higher price

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44
Q

During the festival of Diwali, the demand for sweets goes up. Consequently, the demand for sugar will:

A

Increase

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45
Q

Supply is the specific quantity of a good that a producer is and to offer for sale to consumers.

A

Willing, able

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46
Q

The price of the Ariel detergent goes up. Consequently, people start to buy more of Tide detergent. This is due to

A

Substitution effect

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47
Q

The period of time during which a firm can change only some factors of production (such as labour) is called:

A

Short run

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48
Q

When total product increases at a diminishing rate, the marginal product will:

A

Decrease

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49
Q

Accounting costs are also called:

A

Money costs

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50
Q

Which law exclusively applies to long-run production?

A

Law of returns to scale

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51
Q

Which of the following options is true with respect to the graphical representation of the Total Fixed Cost (TFC) curve?

A

It is parallel to the horizontal axis.

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52
Q

For the producer’s equilibrium, isoquants must be________ to the origin.

A

Convex

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53
Q

Total product divided by the amount of variable factor is:

A

Average product

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54
Q

The following equation represents which expression?

C = PL × L + PK × K

A

Iso-cost line

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55
Q

Total physical product is derived by___________ the marginal physical product.

A

Summing up

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56
Q

The technological relationship between physical inputs and the maximum producible output is:

A

Production function

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57
Q

Which of the following costs are not recorded in the books of accounts?

A

Implicit cost

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58
Q

Which of the following factors does not result in the economies of scale?

A

Diminishing managerial expertise

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59
Q

In a short-run production,_________ factors of production are in___________ supply.

A

Some, fixed

60
Q

The line that shows various combinations of factors that yield a given output is called

A

Isoquant curve

61
Q

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.

62
Q

In which production has all factors of production variable?

A

Long-run production

63
Q

In the short-run production, the slope is zero at___________ .

A

Maximum TPL

64
Q

In which of the following stages of production, the total product starts declining with an increase in the number of workers?

A

Stage of negative returns

65
Q

Which expression below defines the production function?

X – level of output, L – labour, K – capital, S – land, T – state of technology

A

X = f (L,K,S)

66
Q

In________ cost, there is no fixed cost and all the costs are variable.

67
Q

Which of the following is not a feature of perfect competition?

A

Unidentical products

68
Q

Which of the following is not a type of product differentiation under the monopolistic competition market structure?

A

Price variation

69
Q

Which of the following is not a characteristic of a monopoly?

A

Free entry and exit for other sellers

70
Q

A monopoly does not engage in price discrimination in order to___________ .

A

Create barriers for customers

71
Q

Complete the following formula:

AC= /________ Output

72
Q

__________ represents a market structure where there are many buyers and sellers and goods or services are identical.

A

Perfect competition

73
Q

Which of the following is not a characteristic of a monopolistic competition market structure?

A

Every product is identical

74
Q

State which of the following comes under monopolistic competition.

A

Automobile servicing industry

75
Q

The monopolistic competition market structure for firm forms a ________ demand curve.

76
Q

In the oligopoly market structure, there are/is________.

77
Q

According to modern economists, ____________ are the rewards of purely entrepreneurial functions.

78
Q

In a monopoly market, there is/are_________ seller(s).

79
Q

Which condition requires that Marginal Revenue (MR) should be equal to Marginal Cost (MC)?

A

First order condition

80
Q

TC also changes with the changes in the level of output as there is a change in _________ .

81
Q

Complete the following formula:

_______= Price (P) × Total output (Q)

82
Q

Which of the following is/are (an) example(s) of a perfect competition market structure?

A

All of these:
Oil & petrol
Share Mkt
Agricultural Products

83
Q

Which of the following represents the correct formula for calculating the H-H Index?

A

The squared values of the percentage market shares of each firm operating in the oligopoly market are added together.

84
Q

According to__________ , “The Revenue of a firm is its sales receipts or money receipts from the sale of a product.”

85
Q

The profit would be maximised when the difference between the _________ and_________ is maximum.

A

Total revenue, total cost

86
Q

When a monopoly decides to supply output at different prices to different consumers or groups of consumers, it is called__________ .

A

Price discrimination

87
Q

In India, the_________ and ___________ industries are the perfect examples of the oligopoly market form:

A

Aviation and telecommunication

88
Q

Price leadership works when:

A

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
Q

Setting the price below average cost to force the rivals out of business is known as:

A

Predatory pricing

90
Q

What happens to the slope of a kinked demand curve?

A

It differs in different conditions.

91
Q

In oligopoly, the price and output are:

A

Indeterminate

92
Q

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__________ .

A

Limit pricing

93
Q

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?

A

Volume pricing

94
Q

A market that is dominated by 2 or more than 2 sellers having control over the market is called:

95
Q

Oligopoly market form is a system which is:

A

Price searcher

96
Q

____________ takes place when there is only one dominant organisation in the industry, which sets the price and others follow it.

A

Price leadership

97
Q

A ____________ is an organization of independent firms, whose purpose is to control and limit production and maintain or increase prices and profits:

98
Q

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:

A

Price searcher

99
Q

In an oligopoly market, the sellers operating are:

A

Mutually interdependent

100
Q

Is flexibility important for any business cartel?

A

Yes, flexibility is important.

101
Q

What does a firm in an oligopoly market following the price leader called?

A

Price follower

102
Q

If one firm or individual in an oligopoly reduces the prices of their good then prices of other firms:

103
Q

What are the characteristics of an oligopoly market form?

A

All of these:

  1. Few sellers & many buyers.
  2. Homogeneous/Differentiated products.
  3. Barriers to entry &exit.
  4. All of these.
104
Q

The term oligopoly has been derived from which language:

105
Q

Volume pricing is also called as ___________ .

A

Volume discounting

106
Q

___________ 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.

107
Q

GDI adjusts the average achievement to show the disparities between men and women to which of the following dimensions?

A

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
Q

Economic development implies that the share of agriculture in _____________ should decline and the share of industrial sector and services should increase.

109
Q

Fundamental factors of economic growth include:

A

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
Q

The World Bank’s environmentally sustainable development division has established a new index called:

A

Green Index

111
Q

___________ is a relative measure of life expectancy, learning, education and standards of living for every country.

112
Q

In HPI, the indicators to measure the deprivations are normalized between:

113
Q

Which of the following is not a measure suggested by the World Bank to developing countries?

A

Reduction of income

114
Q

In the UN’s development program, the ____________ says, “While geography can pose challenges, it does not define a country’s destiny.”

A

World Bank

115
Q

_______________ assigns economic value to land, water, woods, minerals and all natural resources.

A

Green Index

116
Q

Socio-economic factors of economic growth include:

A

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
Q

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?

A

All of these:

  1. Open market conditions.
  2. Cash Reserves Ratios
  3. All of these.
  4. Liquidity Reserve Ratios.
118
Q

Which of the following is not an objective of the fiscal policy?

A

Increasing public spending

119
Q

The CRR is the reserve which commercial banks have to keep with____ .

120
Q

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?

A

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
Q

An increase in CRR:

A

Decreases credit and money supply

122
Q

Public borrowing is desirable in the situation of:

123
Q

What is the main feature of the fiscal policy of India?

A

Controlling taxes and public expenditure

124
Q

________________ 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).

125
Q

____________ is the rate at which the RBI buys or rediscounts bills of exchange or other commercial papers.

126
Q

RBI’s policy has the main objectives of:

A

Price stability with growth

127
Q

Monetary policy objectives include:

A

Price stability and credit availability

128
Q

OMOs consist of two types of operations:

A

Outright purchase/sale and repo/reverse repo of government securities

129
Q

For budgetary deficits, the government may like to use

A

both A&B (Missed the options for this one).

130
Q

Repo/reverse repo are from the side of

A

Buyer/seller

131
Q

Which of the following is/are the instruments of fiscal policy?

A

All of these

  1. All of these.
  2. Borrowings from a bank.
  3. Printing of money.
  4. Treasury withdrawal.
132
Q

Monetary policy should aim primarily at:

A

Inflation control

133
Q

Base rate includes:

A

Cost of deposits, cost of complying with the CRR and SLR requirements and general overhead costs

134
Q

Monetary policy influences:

A

Both a & b

  1. Availability of credit.
  2. Cost of credit.
  3. None.
  4. Both a&b.
135
Q

The important quantitative instruments for controlling inflation are:

A

CRR and SLR

136
Q

Which of the following is the component of the fiscal policy?

A

All of these

  1. All of these
  2. Changes in public spending.
  3. Changes in tax rate.
  4. Automatic stabilizers.
137
Q

According to the _________________ , the less developed countries are characterised by a number of rigidities that inhibited or prevented these countries from undergoing any change.

A

Structuralist View

138
Q

The Directive Principles laid down in the Indian Constitution aim at creating a society in which:

A

All of these

  1. No exploitation of weak by strong
  2. Right to work
  3. Equal Opportunity
  4. All if these
139
Q

The real beginning of planning in India was made in March 1950 when the Indian Planning Commission was set up with_____________ as its chairman.

A

Pt. Jawaharlal Nehru

140
Q

The Finance Commission was constituted by the President under article____________ of the Constitution.

141
Q

In NITI Aayog, the word NITI stands for:

A

National Institution for Transforming India

142
Q

Who chairs the Governing Council of NITI Aayog?

A

Prime Minister

143
Q

The first attempt at systematic planning in India was made by Sh. M. Visvesvaraya when he published his book Planned Economy for India in_____________ .

144
Q

____________ means the allocation of limited resources among different uses in such a way that it would bring about the maximum welfare for the people.

A

Economic Planning

145
Q

Which of the following are the major objectives of economic planning in India?

A

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
Q

NITI Aayog’s entire gamut of activities can be divided into:

A

All of these

  1. Design policy and program framework
  2. Foster cooperative federalism
  3. monitoring and evaluation
147
Q

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

A

c. Capital theory

MBA - First Semester (17 decks)

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