Mock MCQ Test - Microeconomics - BCOM 105 PDF

MOCK MCQ TEST SUBJECT: MICRO ECONOMICS PAPER CODE: BCOM 1O5  FOR PRIVATE CIRCULATION The Questions and Answers contained in this document have been prepared by the faculty of the Institute from the sources believed to be reliable. Neither the Institute nor the faculty gives...

MOCK MCQ TEST SUBJECT: MICRO ECONOMICS PAPER CODE: BCOM 1O5  FOR PRIVATE CIRCULATION The Questions and Answers contained in this document have been prepared by the faculty of the Institute from the sources believed to be reliable. Neither the Institute nor the faculty gives any guarantee with respect to completeness or accuracy of the contents contained in the document and shall in no event be liable for any errors, omissions or damages arising out of use of the matter contained in the document. The Institute and the faculty specifically disclaim any implied warranty as to merchantability or fitness of the information for any particular purpose.  MULTIPLE CHOICE QUESTIONS Subject: MICRO ECONOMICS Paper Code: BCOM 105 1. The Scope of Business Economics covers: A. Microeconomic B. Macroeconomic 2. The scope of business economics is: A. Narrow B. Wide 3. The cost of next best alternative foregone is: A. Opportunity Cost B. Marginal Cost C. Total Cost 4. “Earlier one receives the better it is”, it defines: A. Opportunity Cost B. Sunk Cost C. Time Value of Money 5. The change in total of any quantity due to a one unit change in its determinant: A. Incremental B. Marginal C. Total 6. The variability of returns on an investment: A. Risk B. Profit C. Revenue 7. It includes a reward for the riskiness of investments: A. Risk B. Profit C. Revenue 8. The uninsurable risk is also known as: A. Systematic Risk B. Unsystematic Risk C. Financial Risk 9. In business economics which theory is used: A. Profit theory B. Social Responsibility C. Both (a) & (b) 10. Macro Economics has: A. Wide Scope B. Narrow Scope C. Definite Scope 11. Economics is best defined as A. How people make money and profits in the stock market. B. Making choices from an unlimited supply of goods and services. C. Making choices with unlimited wants but facing a scarcity of resources. D. Controlling a budget for a household. 12. Economics is A. A physical science B. The study of scarcity and choices C. The study of normative questions D. The easiest course at your university. 13. The study of the choices made by individuals is part of the definition of A. Microeconomics. B. Positive economics. C. Macroeconomics. D. Normative economics. 14. The first big economic questions concern all of the following except A. What goods and services are produced? B. How are goods and services produced? C. For whom are goods and services produced? D. What determines the standard of living? 15. The need for study for economics arises because A. The resources are scarce B. The resources have alternative uses C. Human wants are unlimited D. All of the above 16. Assumptions of the Indifference Curve theory are: A. Rationality B. Ordinality C. Diminishing MRS D. All of the above 17. The demand of a commodity which is backed by purchasing power and willingness to spend money: A. Effective Demand B. Budget Line C. Indifference Curve 18. The goods having income elasticity greater than 1: A. Luxury Goods B. Necessity Goods C. Inferior Goods 19. The goods having income elasticity equal to zero: A. Luxury Goods B. Necessity Goods C. Inferior Goods 20. The Geometric method of measuring elasticity of demand is also known as: A. Point Method B. Outlay Method C. Proportionate Method 21 Consumer incomes increase. Which one of the following is most likely in the market for automobiles? A. Price rises, quantity falls. B. Both price and quantity fall. C. Both price and quantity rise. D. Price falls, quantity rises. 22 For the law of demand, the assumption of ceteris paribus means that all variables are held constant except: A. Consumer tastes and preferences. B. Consumer income. C. Prices of related goods. D. Own price and quantity demanded. E. The number of consumers in the market. 23 The slope of the demand curve for butter shows that an increase in the price of butter leads to A. A decline in the amount of butter available B. An increase in demand for margarine C. An expected decline in the price of butter D. A decline in the price of margarine 24 Assume the demand curve for compact discs slopes downwards, and the supply curve slopes upwards. If the price of CD players decreases, then: A. The equilibrium price of compact discs will fall B. The equilibrium price of compact discs will rise C. The equilibrium price of compact discs will stay the same D. None of the above are correct 25 The value of price elasticity of demand: A. Depends on the units that are used to measure quantities B. Has the same value as the slope of the demand curve C. Depends on the units that are used to measure prices D. Does not depend on the units in which quantity and price are measured. 26 Price elasticity at a given price is not affected by A. The price of complements. B. The price of substitutes. C. The consumer’s income. D. A change in tastes. E. A change in supply. 27. The arc elasticity formula is used to estimate elasticity when A. The product is thought to be inelastic. B. The product is thought to be elastic. C. The demand function is known. D. There are two observations of price and quantity. E. None of the above. 28. The price elasticity of demand is the same thing as the negative of the A. Slope. B. Reciprocal of slope. C. The first derivative of the demand function. D. Reciprocal of slope times the ratio of price to quantity. E. All of the above. 29. An elasticity coefficient of -1 means that A. The demand curve is perfectly inelastic. B. The demand curve is perfectly elastic. C. The relative changes in price and quantity are equal. D. Expenditures on the good would increase if prices were reduced. E. Expenditures on the good would decrease if prices 30. The term "market" refers to A. Trading arrangements that have been approved by the government. B. Locations where buyers and sellers physically meet. C. Any arrangement that enables buyers and sellers to get information and trade with One another.  D. Physical structures only. 31. Which of the following is a variable cost? A. Interest payments B. Raw materials costs C. Property taxes D. All of the above are variable costs. 32. Which of the following is an implicit cost? A. The salary earned by a corporate executive B. Depreciation in the value of a company-owned car as it wears out C. Property taxes D. All of the above are implicit costs. 33. If an input is owned and used by a firm, then its A. explicit cost is zero. B. implicit cost is zero C. opportunity cost is zero D. economic cost is zero. 34. One reason that a firm may experience increasing returns to scale is that greater levels of output make it possible for the firm A. employ more specialized machinery. to B. obtain bulk purchase discounts C. employ a greater division of labor D. All of the above are correct 35. Which of the following is an assumption of linear break-even analysis? A. Output price is constant B. Average variable cost is constant C. Average fixed cost is constant D. All of the above are assumptions of linear breakeven analysis 36. In the 3rd stage of operation of the law of variable proportions, the marginal product becomes ________. A. Negative B. Positive C. Zero 37. Isoquants are convex to the origin. This is possible because A. Money outlay of the entrepreneur is constant B. Marginal rate of technical substitution between labor (L) and capital (K) is decreasing C. It is not possible to have infinite number of combinations of two outputs D. Both (a) and (b) above 38. When a proportional change in input combination caused the same proportionate change in output, the returns to scale is said to exhibit A. Increasing returns B. Decreasing returns C. Constant returns D. Negative returns E. Law of variable proportion. 39. When one input is variable and all other inputs are fixed, the firm’s production exhibits________ A. Law of Returns to a Scale B. Long run analysis C. Law of variable proportions D. Long run production function 40. AC and ----------curves never intersect each other as AFC can never be zero A. AVC B. MC C. TC 41 Under monopoly the demand curve slopes A. Downward B. Upward 42 Under the imperfect market, the market in which few firms exist is called as A. Oligopoly B. Monopoly C. Monopolistic competition 43 Under monopoly entry of new firms is A. Prohibited B. Limited 44 The demand curve (A.R.) of a firm under perfect competition is A. Perfectly elastic B. Perfectly inelastic 45 Firms in perfect competition face a: A. Perfectly elastic demand curve B. Perfectly inelastic demand curve C. Perfectly elastic supply curve D. Perfectly inelastic supply curve 46. A tangency point between an isoquant and an isocost line identifies A. the least costly combination of inputs required to produce various levels of outputs.  B. the various levels of output that can be produced using a given level of inputs. C. the various combinations of inputs that can be used to produce a given level of output. D. the least costly combination of inputs required to produce a given level of output. 47. A society that is producing on its production possibilities frontier is A. Fully utilizing all of its productive resources. B. Not being technologically efficient. C. Not utilizing all of its resources. D. Producing too much output. 48 If a country decreases current consumption to increase the amount of capital goods it produces today, then it A. Must not have private ownership of property and will have to follow planning authorities decisions today and in the future. B. Must be producing along the production possibilities frontier today and will see a shift outward of the frontier in the future if produces more capital goods. C. Must be using resources inefficiently today but will be more efficient in the future. D. Must be producing outside the production possibilities frontier and will continue to do in the future. 49. A tradeoff is A. A constraint that requires giving up one thing to get another. B. Represented by a point outside a PPF. C. A transaction at a price either above or below the equilibrium price. D. Represented by a point inside a PPF. 50 If additional units of a good could be produced at a constant opportunity cost, the production possibilities frontier would be A. Bowed outward. B. Positively sloped. C. Bowed inward. D. a straight line. 51 Opportunity cost is represented on the production possibilities frontier by A. The amount of good Y forgone when more of good X is produced. B. Efficient and inefficient points. C. Technological progress. D. Attainable and unattainable points. 52 Economic growth is the result of all of the following EXCEPT A. Investment in human capital. B. Technological change. C. Opportunity cost. D. Capital accumulation. 53 The term "market" refers to A. Trading arrangements that have been approved by the government. B. Locations where buyers and sellers physically meet. C. Any arrangement that enables buyers and sellers to get information and trade with One another. D. Physical structures only. 54 Individual economic decisions are coordinated by A. Government through adjustments in sales taxes. B. Markets through adjustments in sales levels. C. Government through adjustments in income taxes. D. Markets through adjustments in prices. 55 Economic growth comes from ________. A. Producing more goods than people want to consume B. Capital accumulation and the avoidance of opportunity cost C. People willing to increase their skills in which case, economic growth is free D. Capital accumulation and technological advance 56 Market equilibrium refers to a situation in which market price A. is high enough to allow firms to earn a fair profit B. is low enough for consumers to buy all that they want C. is at a level where there is neither a shortage nor a surplus D. is just above the intersection of the market supply and demand curves 57 The average fixed cost (AFC) curve -------------as additional units are produced, and continue to decline. A. shifts upwards B. declines C. remains same 58 The average variable cost (AVC) curve ---------- (but not as steep as the marginal cost), and then goes up. A. shifts upwards B. goes down C. remains same 59 The average total cost (ATC) curve initially --------------as fixed costs are spread over a larger number of units, but then goes up as marginal costs increase due to the law of diminishing returns. A. shifts upwards B. declines C. remains same  60 AC is greater than AVC by the amount of ------. A. AFC B. MC C. TC ANSWER KEY 1 A 11 C 21 C 31 B 41 A 51 A 2 A 12 B 22 B 32 B 42 A 52 D 3 A 13 A 23 D 33 A 43 A 53 C 4 C 14 D 24 D 34 D 44 A 54 D 5 B 15 D 25 B 35 C 45 A 55 D 6 A 16 D 26 E 36 C 46 D 56 C 7 B 17 A 27 D 37 B 47 A 57 B 8 A 18 A 28 D 38 C 48 B 58 B 9 A 19 B 29 C 39 C 49 A 59 B 10 A 20 A 30 C 40 A 50 D 60 A