University Grants Commission (UGC) NTA -NET Important Managerial Economics MCQ, Subject Management

University Grants Commission (UGC)NTA -NET Important MCQ with answers key

Subject Management

1. In long-run competitive equilibrium-

(a) Every firm will earn an economic profit

 (b) Every firm will incur losses

(c) Every firm will earn an only normal profit

 (d) The marginal firm will earn no profit

2. A firm under perfect competition faces for its product

(a) A horizontal demand curve

(b) A downward-sloping demand curve

(c) An upward rising demand curve 

(d) A vertical demand curve

3. Long-run equilibrium price of a perfectly competitive firm is always-

(a) Above the LAC 

(b) (c) Equal to AFC Below the LAC 

(d) Equal to LAC 

4. If the firms under perfect competition have different costs, abnormal profits will be earned in the long run only by-

(a) Marginal firm 

(b) All the firms

(c) Intramarginal firms

(d) None of the firms

5. Under price discrimination price will be higher in the market where demand is—

(a) Unitary elastic 

(b) Highly elastic

(c) Less elastic

 (d) None of the above

6. A perfectly competitive industry becomes a monopoly with the same cost conditions, it will now sell

(a) An unchanged output at a higher price

 (b) A larger output at the old price

(c) A larger output at a higher price

(d) A reduced output at a higher price.

7. From the resource allocation viewpoint, perfect competition is preferable because

(a) The firms operate at excess capacity levels

(b) There is a whole variety of output produced

(c) There is no restriction on the entry and exit of firms

(d) There is no idle capacity

8. The competition among buyers, each trying to get enough of the product to satisfy his wants' tends to move

(a) The consumer's price

(b) The market price change

(c) The equilibrium price

(d) All of the above

9. The supply function would shoot downward and to the right, if the MC of all the firms in a perfectly competitive industry were to

(a) Decrease

(b) Increase 

(c) No 

(d) None of these

10. Excess capacity is not found under

(a) Monopoly

(b) Monopolistic competition

(c) Perfect competition

(d) Oligopoly

11. Consumers are likely to get a variety of goods under

(a) Perfect competition

(b) Monopoly

(c) Imperfect competition

(d) Oligopoly

12. Under perfect competition a firm can produce with

(a) An optimum plant

(b) An optimum output

(c) Maximum profit

(d) Identical products at a low cost

13. Increasing returns imply

(a) Constant average cost

 (b) Diminishing cost per unit of output 

(c) Optimum use of capital and factor

 (d) External economies

14. Law of Diminishing Returns to factors is relevant to

(a) Short period

(b) Long period

(c) Secular period

(d) Both short and long periods

15. A long-run analysis of production is called

(a) Economies of Scale

(b) Law of variable proportion

 (c) Law of increasing returns

 (d) Law of Returns to Scale

16. The elasticity of substitution between two inputs in CES production function

(a) Decrease continuously

(b) Increase continuously

(c) Remains constant

(d) None of these

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

(a) Total output is constant

(b) The state of technical knowledge is unchanged

(c) Land is the factor kept constant

(d) Average output declines faster than marginal output

18. Increasing returns are not caused by

(a) Technological advance 

(b) Specialisation of labor

(c) Marketing economies

(d) Varying factor proportions

19. "The increasing returns to scale occurs because larger scale provides greater specialization to various factors' according to

(a) Joan Robinson

 (b) Alfred Marshall 

(c) Chamberlin 

(d) Paul A. Samuelson

20. Isoquant refers to:-

(a) Another name for indifference curve

(b) The production indifference curve

(c) An equal quantity curve of a consumer 

(d) An equal-cost curve of a producer 

21. The law of increasing returns is only applicable to agriculture; according to

(a) Classical school 

(b) Neo-classical school 

(c) Modern school 

(d) J. M. Keynes

22. If by increasing the quantity of labor used by one unit, the firm can give up 2 units of capital and still produce the same output, then the MRTSLK is : 

(a) 1/2 

(b) 2 

(c) 1 

(d) 4

23. What was Robert Giffen's observation in relating to price and quantity demanded.? 

(a) A commodity whose price and quantity demanded varies in a different direction

(b) A commodity whose price and quantity demanded varies in the same direction

(c) A commodity whose price and quantity demanded is always constant

(d) Both (a) and (b) are correct

24. The Revealed Preference Theory is based on a- 

(a) The assumption of indifference

 (b) Utility and demand

(c) Introspection

(d) Observed consumer behavior

25. A rightwards shift in the supply curve indicates

(a) A decrease in supply

(b) An increase in quantity supplied

(c) An increase in supply 

(d) None of the above

26. Other things being equal a decrease in the quantity supplied to the market at given prices leads to:-

(a) A higher price and a contraction of demand

(b) A lower price and an expansion of demand

(c) A higher price and an expansion of demand

(d) A lower price and a contraction of demand i

27. Other things being equal an increase in supply can be caused by:-

(a) A rise in the price

(b) An improvement in the techniques of production

(c) A rise in the income of the consumer 

(d) An increase in the income of the seller

28. When the market supply curve for a commodity is negatively sloped, we have a case of:-

(a) The general equilibrium 

(b) Partial equilibrium

(c) The stable equilibrium

(d) None of the above, unless additional information is given

29. If the supply curve of a commodity is positively sloped, a rise in the price of the commodity ceteris paribus, results in and is referred to as:-

(a) A decrease in demand

(b) A decrease in quantity supplied

(c) A decrease in supply

(d) A decrease in both demand and supply

30. The market period supply curve for perishable commodities is:-

(a) Relatively inelastic 

(b) Perfectly inelastic 

(c) Relatively elastic 

(d) Perfectly elastic

Answers keys given below:- 

1. (C) 

2. (A) 

3. (D) 

4. (C) 

5. (C) 

6. (D) 

7. (D) 

8. (D) 

9. (A) 

10. (C) 

11. (C) 

12. (A) 

13. (B) 

14. (A) 

15. (D) 

16. (C) 

17. (B) 

18. (D) 

19. (C) 

20. (D) 

21. (A) 

22. (B) 

23. (B) 

24. (D) 

25. (C) 

26. (A) 

27. (B) 

28. (D) 

29. (C) 

30. (B) 

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