IMT (2018) Question Paper

ECOC514

Part-1
Q1 If a 12% fall in price of burgers leads to a 3% increase in quantity demanded of
burgers, then price elasticity would be

 —1.25
 —4
 -0.25
 -0.5

Q 2 Price discrimination refers to

 the difference between the prices a purely competitive seller and a purely monopolistic
seller would charge
 the selling of a given product at different prices that do not reflect cost differences
 any price above that which is equal to minimum average total cost
 selling a given product for different prices at two different points in time

Q3 A movement on the demand curve will take place when there is

 a change in own price of the product

 a change in price of a substitute
 a change in consumer preferences
 an increase in per capita income

Q 4 A perfectly competitive seller

  operates at the optimum level of output and charges a higher price
 operates at the sub-optimum level of output and charges a higher price
 operates at the optimum level of output and charges a lower price
 operates at the sub-optimum level of output and charges a lower price

Q 5 The reason that you don't drink five cups of coffee at breakfast is that

 the marginal utility of extra cups of coffee eventually diminishes

 the total utility of coffee rises as you consume more cups
 the price of coffee rises as you buy more cups
 the marginal satisfaction derived from cups of coffee remains constant

Q 6 If Marginal Product of labour is lesser than Average Product of labour then Average
Product of labour is

 Constant
 Decreasing
 Increasing
 Maximum

Q 7 Oligopolistic industries are characterized by

 a few dominant firms and substantial entry barriers

 a few dominant firms and low entry barriers
 large number of firms and low entry barriers
 large firms and high entry barriers

Q 8 If planned spending exceeds planned output, the result is

 a reduction in GDP
 unintended inventory increases
 unintended inventory reductions
 an increase in government purchases
Q 9 An isoquant is

 least cost combination

 a locus of input combinations that give the same level of output
 a locus of input combinations that give different level of output
 a locus of product combinations that give the same level of satisfaction

Q 10 For an imperfectly competitive firm:

 the marginal revenue curve will lie below the demand curve because any reduction in
price applies only to the extra units sold
 the marginal revenue curve will lie above the demand curve because any reduction in
price applies to all units sold
 the marginal revenue curve will lie below the demand curve because any reduction in
price applies to all units sold
 total revenue is a straight, upward sloping line because a firms sales are independent of
product price

Q 11 If a pure monopolist is producing a level of output in excess of the MR= MC output,

 it will be in the interest of the firm and society to reduce output

 it wili be in the interest of the firm and society to increase output
 it will be in the interest of the firm, but not necessarily of society, to reduce output
 the firm may or may not be maximizing profits

Q 12 Inflation rates differ in metropolitan regions MOSTLY because of

 differences in retail prices

 differences in housing prices
 transportation cost
  All of these

Q 13 The equilibrium quantity of aggregate output occurs when

 planned aggregate expenditure equals income generated from production

 the economy reaches the full employment of labor
 actual aggregate expenditures equal real GDP
 inventories of goods and services are increasing

Q 14 In the income-expenditure framework, if planned aggregate expenditures are less

than real GDP,

 the price level will increase

 inventories will increase
 inventories will decrease
 consumption will decrease

Q 15 The demand curve faced by a pure monopolist

 is more elastic than that faced by a single purely competitive firm

 has the same elasticity as that faced by a single purely competitive firm
 is less elastic than that faced by a single purely competitive firm
 may be either more or less elastic than that faced by a single purely competitive firm

Q16 A firm facing a Kinked demand curve expects that its competitors

 will match its price increase but not its price decrease
 will match its price decrease, but not its price increase
 will match any price change it will make
 will not match any price change
 Q17 Following problem will be a part of Macroeconomic analysis
 employment of workers by Tata Motors
 analytical study of unemployment in India
 growth of employment in Tata Motors
 pricing of labourers employed by Tata Motors
Q18 The cost of the factor inputs hired by the producer to produce final output is called
as

 Explicit cost
 implicit cost
 marginal cost
 external cost

Q19 If total revenue falls, when price falls, the demand of the product will be

 Elastic
 Unitary elastic
 Inelastic
 Perfectly elastic

Q20 A purely competitive firm is in short run equilibrium and its MC exceeds its AC. It
can be concluded that

 firms will leave the industry in the long run

 the firm is realizing an economic profit
 the firm is realizing a loss
 this is an increasing cost industry

Q21 When total utility is maximum Marginal Utility is

 falling and positive
 falling and negative
 zero
 rising
Q22 If the money supply increases, the interest rate will ___and people will want to hold
a___quantity of money.

 fall; greater
 fall; smaller
 rise; greater
 rise; smaller
Q23 Demand curve slopes downward due to
 Income effect
 Substitution effect
 Diminishing marginal utility
 All of the above

Q24 If the price charged by a firm is greater than average cost of production, the firm
earns

 normal profit

 economic profit

 incurs losses

 any of these

Q25 Production of an additional unit of output by the firm gives rise to

 Explicit cost
 implicit cost
 incremental cost
 marginal cost
 Q26 If the economy experiences a contractionary gap and the RBI stimulates the
economy,

 The money supply is decreasing because the RBI makes open-market sales
 The money supply is increasing because the RBI makes open-market purchases
 The money supply is increasing because the RBI prints more money
 The money supply is decreasing because the RBI hoards money

Q27 In autarky,

 each country's consumption possibilities are the same as its production possibilities
 equilibrium is attained with the maximum gains from specialization and trade
 equilibrium is attained with the maximum amount of international trade
 a nation is governed by an individual with absolute authority

Q28 Cross elasticity between a battery and a car would-be

 Positive
 Negative
 Unitary
 Zero

Q29 Cartel is

 a form of overt collusion

 a form of tacit collusion
 used to explain price rigidity
 non- c o l l u s i v e oligopoly

Q30 If the Indian rupees depreciates in the foreign exchange market, Indian exports will
be____ and Indian imports will be _____
  more expensive; more expensive
 cheaper; cheaper
 less expensive; more expensive
 less expensive; less expensive

Part 2

Q1 The output rises at an increasing rate in the first stage of law of diminishing marginal
returns due to
 Excess plant capacity
 division and specialization of labour
 Both a and b
 None of the above

Q2 Contractionary gap can be controlled by

 increase in taxation and decrease in public expenditure
 increase in taxation and increase in public expenditure
 decrease in taxation and decrease in public expenditure
 decrease in taxation and increase in public expenditure

Q3 Which of the following industry most closely approximates the oligopoly model
 Automobile
 Nuclear energy
 Services of doctors
 Wheat wholesaler
Q4 Gross domestic product is
  the sum of money value of all intermediate goods and services produced within the
domestic territories of a country during an accountant year
 the aggregate final goods and services produced during an accounting year
 the aggregate intermediate goods and services produced during an accounting year
 the sum of money value of all final goods and services produced within the domestic
territories of a country during an accounting year.

Q5 Given the same cost and revenue schedules, a profit-maximising monopolist will
produce

 less output than a competitive industry

 more output than a competitive industry
 the same amount of output as a competitive industry
 output that cannot be determined

Q6 If the price charged by a firm is greater than average cost of production: the firm
earns

 normal profit
 economic profit
 incurs losses
 any of these

Q7 The Law of demand refers to

 the proposition that price and quantity demanded can be expected to be inversely
related showing that consumers will be willing and able to buy more of a good at
lower prices that they are at higher prices
 a shift in the demand curve that occurs when a variable other than the good' s own
price changes
 the amounts of a good that that consumers are willing and able to buy and other
relevant variables such as income or the prices of other goods
 A functional relationship between the various possible prices of a good and the
quantity supplied by sellers of it per time period
Q8 A firm earns maximum profit when

 MC=MR
 MC= ATC
 Total revenue equals total costs
 TR is greater than TC by the larger amount

Q9 If a 12% fall in price of burgers leads to a 3% increase in quantity demanded of

burgers, then price elasticity would be

 —1.25
 —4
 -0.25
 -0.5

Q10 Oligopolistic industries are characterized by

 a few dominant firms and substantial entry barriers

 a few dominant firms and low entry barriers
 large number of firms and low entry barriers
 large firms and high entry barriers

Q11 . The money spent for MBA course rather than investing back in business by an
entrepreneur gives rise to

 explicit cost
 historical cost
 opportunity cost
 Imputed cost

Q12 The current account of balance of payments records

 Last year’s flows of funds into and out of the country

  Current flows of imports and exports of goods and services, net income earned by Indian
residents from foreign assets, and net transfer payments
 Current flows of imports and exports of goods only
 Only net income earned by Indian residents from foreign assets

Q13 A purely competitive firm is in short run equilibrium and its MC exceeds its AC. It
can be concluded that
 firms will leave the industry in the long run
 the firm is realizing an economic profit
 the firm is realizing a loss
 this is an increasing cost industry

Q14 Which of the following is assumed constant along the aggregate expenditure line?
 the price levels
 consumption
 unintended inventory adjustment
 actual investment

Q15 Fixed costs are those costs

 that are embodied in calculation of marginal cost

 that are independent to rate of output
 that are implicit to a competitive firm
 that are subject to law of variable proportions

Q16 . Under perfect competition there are

 large number of buyers and sellers
 large number of buyers
 large number of sellers
 large number of buyers and sellers and sells are small in size

Q17 Production of an additional unit of output by the firm gives rise to

 Explicit cost
  implicit cost
 incremental cost
 marginal cost

Q18 An increase in the money supply leads to a(n)

 decline in interest rates, an increase in investment: and an increase in aggregate

demand
 decline in interest rates, a decrease in investment: and an increase in aggregate
demand
 decline in interest rates: an increase in investment: and a decline in aggregate
demand
 increase in interest rates, an increase in investment: and an increase in aggregate
demand

Q19 The total revenue curve that corresponds to a downward-sloping linear demand curve

 Slopes downward
 Slopes upward
 It is horizontal line
 First rises, then falls

Q20 Prices are measured in India by

 Consumer Price Index
 Wholesale Price Index
 Consumer Price Index and Wholesale Price Index
 None of these

Q21 Cross elasticity between a battery and a car would-be

 Positive
 Negative
 Unitary
  Zero

Q22 Macroeconomics does not comprise of

 Study if unemployment in a country

 Employment of factor inputs by a firm
 Growth of national income
 Inflation in a country

Q23 Negative cross-elasticity of demand indicates that

 The product is an inferior good

 The product is a necessity
 The product is a luxury
 The two products are complements

Q24 the percentage change in the demand for the film divided by the percentage change in
the price of cameras indicates

 The cross-price elasticity of demand between film and camera

 The cross-price elasticity of demand for photographs
 The cross-price elasticity of demand for film
 The cross-price elasticity of demand cameras

Q25 When total utility is maximum Marginal Utility is

 falling and positive
 falling and negative
 zero
 rising

Q26 The law of diminishing marginal utility states that

  the total utility falls continuously with consumption additional unit of a product
 the marginal utility falls continuously with consumption additional unit of a product
 the average utility falls continuously with consumption additional unit of a product
 the marginal utility falls continuously with consumption total units of a product

Q27 To close a contractionary gap using fiscal policy the government can

 increase government spending by the size of the gap

 decrease government spending by the size of the gap
 increase government spending by less than the size of the gap
 decrease government spending by more than the size of the gap

Q28 Gross domestic product can be calculated by adding------------ in accounting year.

 Adding Income earned by all factors inputs

 Expenditure approach
 Adding output produced by all sectors
 Any of these methods

Q29 If a good is inferior, then the income elasticity of demand for that good is

 Positive and greater than one

 Negative
 Positive and less than one
 Perfectly elastic

Q30 The equilibrium quantity of aggregate output occurs when

 Planned aggregate expenditure equals income generated from production

 The economy reaches the full employment of labour
 Actual aggregate expenditure equal real GDP
 Inventories of goods and services are increasing